Malvertising: The Internet's billion-dollar problem

September 24, 2015
4 min read

With Americans spending a growing portion of their time on the internet, the fight for their attention while connected rages on. As such, online advertising spend has grown considerably over the years. According to Mintel’s Internet Ads: Search, Display and Video US 2015 report, the online advertising market will continue to experience healthy growth, with spend projected to increase from $42.8 billion in 2014 to $79.6 billion by 2019. However, the industry has always faced challenges in gaining users’ attention due to the development of ad blocking services and other tools that give consumers a choice in whether they see ads. Now, the industry also faces threats from the cybersecurity arena.

Online security and privacy have become increasingly prominent issues across technology media and news outlets for several years. A number of observers, including Sophos, a prominent provider of network, end-user and server protection, referred to 2013 as “the year of the data breach.” As Sophos noted, approximately 800 million records had been compromised in 2013 – nearly double that of the previous annual record for data breaches set in 2011. The majority of those breaches affected US-based companies, but the UK was also among the top countries affected in 2013.

The concern over who has access to their data has not dissipated in consumers’ minds. Mintel research shows that 76% of adult internet users agree that online privacy is a concern, and this sentiment remains prominent among all age demographics, including 68% of consumers age 18-24 and 81% of those age 65 and older.

The spread of malware

One of the threats to online security and privacy that has come into focus is malvertising – malicious online advertising. When users click on a malvertisement, they are taken to a website that attempts to infect their devices with malware – an umbrella term for all malicious software, including viruses, Trojans and spyware.

Although the share of malicious ads as a percentage of all online ads is fairly small, their impact on the market is still significant. In 2014, cybersecurity researchers reported that 1% of all online ads served were malicious. For context, ComScore data shows that approximately 5.3 trillion ads were shown in 2012, meaning that 53 billion ads would infect users’ devices if they clicked on them.

66% of US internet users are actively avoiding online ads

These findings are consistent with an Aug. 2015 analysis from cybersecurity company Invincea. The company found that its customers were targeted by 2,100 malvertising attacks in the first half of 2015 alone. Although the malware was prevented from running on users’ devices, the attackers leveraged ad-bidding platforms to host the malicious content, meaning that the attacks still affected ad spending. As a result, Invincea estimated that such attacks cost the online advertising industry more than $1 billion per year.

The important thing to note here is that this data only estimates the direct costs of these attacks. There are likely a number of related costs that are not quantifiable. For example, increases in infections from malvertising are likely to severely damage consumer trust. Mintel data shows that two thirds (66%) of internet users are actively avoiding online ads, and approximately one in five (21%) internet consumers use an ad blocking service to avoid seeing ads altogether.

As a result of the high degree of consumer concern over online privacy, website owners face a challenge to more stringently vet the advertising platforms they use. Similarly, advertising platforms are challenged to take a closer look at the ads they serve, as a high-profile malvertising data breach will likely push more consumers toward actively avoiding ads rather than engaging with them.

Bryant Harland is a Technology and Media Analyst at Mintel. He brings almost a decade of experience working in the tech arena, most recently as a Senior Technology Writer with Brafton News.

Bryant Harland
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