Ad Fraud Under the Vertical Contract Structure

36 Pages Posted: 13 Nov 2018 Last revised: 1 Jul 2019

See all articles by Yitian (Sky) Liang

Yitian (Sky) Liang

Tsinghua University - School of Economics and Management

Xinlei Chen

University of British Columbia (UBC) - Sauder School of Business

Yuxin Chen

New York University (NYU) - Department of Marketing

Ping Xiao

affiliation not provided to SSRN

Date Written: October 31, 2018

Abstract

Ad fraud has serious consequences for brands. However, only limited theoretical works have addressed this topic, and empirical research is scarce. In this paper, we examine ad fraud behavior at different levels of vertical contractual structure. Using two unique data sets separately containing click fraud information for agents and publishers, we examine the difference in ad fraud scale and strategy between upstream agents and downstream publishers. The findings reveal that upstream agents are more sophisticated players than downstream publishers when committing ad fraud. Agents’ ad fraud rate shows decreasing effects on the size of the campaign, while publishers’ fraud rate is uncorrelated with their ability to attract authentic traffic. In terms of strategy, while publishers adopt a relatively uniform strategy and seem to be myopic, agents are more sophisticated and show clear patterns of forward-looking behavior. We speculate that different market environments and incentives drive these differences.

Keywords: ad fraud, advertising, media market, vertical contract

Suggested Citation

Liang, Yitian (Sky) and Chen, Xinlei and Chen, Yuxin and Xiao, Ping, Ad Fraud Under the Vertical Contract Structure (October 31, 2018). Available at SSRN: https://ssrn.com/abstract=3275958 or http://dx.doi.org/10.2139/ssrn.3275958

Yitian (Sky) Liang (Contact Author)

Tsinghua University - School of Economics and Management ( email )

Wei Lun Building 543
Tsinghua University
Beijing, 100084
China

Xinlei Chen

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Yuxin Chen

New York University (NYU) - Department of Marketing ( email )

Henry Kaufman Ctr
44 W 4 St.
New York, NY
United States
212-995-0511 (Phone)
212-995-4006 (Fax)

Ping Xiao

affiliation not provided to SSRN

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