In a world where one-third of digital advertising traffic is fraudulent, Twitter has an opportunity to add real value.
Television was the undisputed king of ad spend for decades, but digital outlets -- on the strength of mobile -- have recently registered tremendous growth at the expense of other outlets.
The Interactive Advertising Bureau, by way of Ad Age, details the tremendous growth of the domestic digital advertising market. According to the IAB, digital ad-spend increased 19% on a year-over-year basis during the first half of 2015 to $27.5 billion, the highest mark in the history of the nearly 20-year-old survey.
Social-media juggernauts Twitter (NYSE:TWTR) and Facebook (NASDAQ:FB) have benefited by this increased digital ad spend, increasing their top lines by 67% and 40%, respectively, compared to the same period last year. However, there's another opportunity for Twitter and Facebook to add to gains: limit fraud on their platforms.
Digital ad spend is rife with fraud
Nearly $18.5 billion of digital marketing is lost to fraud each year, according to a report from Distil Networks and the IAB.
Using an annual run rate of $55 billion (as first-half digital ad spend was $27.5 billion), this means that roughly $1 out of every $3 of digital marketing spend is induced by fraud through a combination of fake clicks, fake users, and other non-human traffic. And while I personally think $55 billion is a little low, as second-half ad-spend tends to be higher than first half, $18.5 billion is a significant sum of wasted money.