Sahm Adrangi Discusses Ad Fraud

Earlier this year, the Kase Learning Conference on short selling featured Sahm Adrangi, who talked to the group about ad fraud.

Sahm Adrangi is the founder and chief information officer (CIO) of Kerrisdale Capital Management LLC. The company was founded in 2009, and in its nine years of operation it has managed to achieve an impressive amount of influence in the industry; Sahm Adrangi says that they manage about $180 million these days. He also adds that it has a history of actively working against fraud, with its skills honed during its early years when Chinese scams were costing American companies somewhere between $10 billion to $20 billion.

Since then they have had experience with other would-be hucksters. For example, Sahm Adrangi mentions a developer in Florida who was trying to sell land for twice its actual value, a trick which they worked against. He recommends that anyone interested look at the Kerrisdale Capital Management LLC. website, where they publish much of their research about the frauds that they investigate.

The kind of ad fraud that he focused on, and the kind which most affects businesses, involves companies buying ad space on websites that are not actually meant for anyone to access; the page features ads but no normal content. Bots are then simply programmed to visit the fake sites and/or click on the ads repeatedly. This gives the impression that the ads have been viewed many times, but in fact the company paying for them is not receiving any benefit, since no potential customers have actually seen them.

“The more ad fraud that occurs, the less the online advertising buyers are going to be willing to spend on online ads,” Sahm Adrangi warned. “And that’s going to drive much-needed revenue from legitimate publishers.”

Sahm Adrangi noted that advertising companies do benefit from this, however, as they still make money from those many fake clicks; as a result, he believes that some of them have been slow to try to counteract this problem. He suggested that these days about 25 percent of the traffic on internet ads is falsified.

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