The High Cost of Fake Traffic on the Web
by Matt Chanoff
Problem
Humans have become a minority on the Internet. Although the Web was conceived as a medium for human communications; automated traffic sent for illicit purposes now accounts for more traffic, by many orders of magnitude, than human beings. Bots and agents now send 95% of all email and at least 15% of advertising clicks. They bias polls and contests, defraud customers, steal identities, and damage brands. This problem is growing rapidly, because bots and similar systems are cheaply scalable, replicating themselves and infecting both personal and enterprise computers. At least 250,000 computers are infected by zombies per day (trusted source.org)
Social Networks and Web 2.0 Communities: Bots and automated systems threaten the core business model of social networks and Web 2.0 communities. These sites are predicated on the idea that users and their interactions, not third-party content generators, make up the value of the site. Bot interactions such as inappropriate or commercial posts, false “friending” and the like, displace valued content, destroy trust, and drive users away. Hosts are left with a dilemma: security features meant to block artificial traffic, like captchas, passwords, and isolated environments, also keep out legitimate users. Better security usually means a worse user experience and fewer users.
Figure 1. Rise of Bot initiated traffic
Significant Toll on Multiple Segments
Gaming Fraud
In the MMOG and gambling worlds, bots use a variety of exploits to cheat players and hosts, to subvert game environment for illegal activities like money laundering, or simply for outright theft of convertible online money. Gambling and MMOGs together represent a market with annual revenue of $20 – $30 billion (eMarketer, Christensen Capital Advisors). The storm of automated traffic drives down users and revenue, and exposes hosts to significant liability. A recent article in the New York Times predicted that the multi-billion dollar online poker business will collapse as players respond to the influx of bots by moving back to playing poker in person.
Virtual Blight
Domains and web properties infiltrated by automated traffic are like neighborhoods suffering from urban blight. Billboards go up all over the place, transactions are suspect and often illegal, kids aren’t safe to roam around; and people move out: virtual blight; human flight. In physical cities, urban blight hollows out the tax base. On the Web, virtual blight destroys brands. Hotmail and Geocities are just two examples of Web neighborhoods that have been impacted by virtual blight.
Clickfraud
Cost per click (CPC) advertising is the dominant method of advertising on the internet, credited with ushering in the era of profitable websites. CPC advertising is expected to generate $8-9 billion in 2007. Estimates of the volume of click fraud range from 10% – 50% (Wired Magazine), implying a problem space of over $1 billion annually.
Transaction Fraud
Transaction fraud is a blanket term for direct financial frauds conducted by false or stolen credit cards and bank accounts, or by “man-in-the-middle” exploits that alter transactions such as bill payments. E-Commerce merchants in the U.S. expect to lose $3.6 billion in 2007 to transaction fraud, constituting approximately 1.3% of all accepted orders (Cybersource). Artificial traffic plays an integral role in stealing, distributing, and deploying credit and debit card numbers and related information.
