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Skewed analytics cost businesses 4% of their revenue

Businesses waste a great deal of time and money serving customers who do not exist.

Bots skew data analytics and lead to poor management decisions. Every year, skewed data costs businesses 4% of their revenue.

Ad fraud, where paid adverts are loaded and clicked on by bots rather than legitimate potential customers, is a phenomenon that receives far more attention than skewed analytics. It costs businesses 4% ($42 billion) of their revenue each year. Juniper Research assumes that this number will rise to $100 billion by 2023.

Bot detection and mitigation company Netacea claims that skewed analytics is a problem of a similar scale.

“Hackers use bots to buy goods before other customers, hack accounts using stolen passwords, check the validity of stolen card details, and steal content or prices by bulk scraping. But even if they do not do damage directly, bots can skew data that leads marketing teams to make bad decisions. Analytics skewed by bots can hide what real customers are doing, making it impossible to target genuine audiences,” the company said in its newly released report The Bot Management Review: How Are Bots Skewing Marketing Analytics?

Netacea surveyed 440 businesses across the travel, entertainment, eCommerce, financial services, and telecoms sectors in the US and the UK. It found that click fraud or “ad fraud” affected 73% of businesses and caused an average of 4% loss in revenue.

However, while detected by slightly fewer businesses (68%), skewed analytics did a similar amount of damage, costing companies approximately 4.07% loss in revenue. For the larger businesses surveyed for the report, with an annual turnover of over $7bn (25% of our respondents), 4.07% amounts to $284,900,000 per year.

“Security teams are responsible for protecting websites from attack, but when it comes to bot activity, it’s the marketing team that may be impacted first—skewed analytics affect their decision making and their effectiveness,” Andy Still, CTO, Netacea, is quoted in a press release.

Due to bots, over half of the respondents have run promotions and ordered new stock based on incorrect data, wasted investment, and “burned through” marketing budget.

“Our research shows that those making marketing decisions don’t understand how they can avoid making bad decisions based on bad data from bad bots. It’s crucial that marketing teams and security teams work closely together to fix the problem. Marketing teams are often best placed to identify the problem, but security teams are needed to fix it,” Netacea concluded.

If you suspect bots are skewing your marketing analytics, here’s how to identify the issue:

1. Has the number of new sessions on your site spiked? An abnormally large number of new sessions alongside a high bounce rate and low session duration indicates automated traffic activity.

2. Is your average session duration below three seconds? A recurring low session duration may not be due to the speed of your website but crawlers scraping your site for images and content.

3. Is your average bounce rate high? Whether it’s site-wide or on a selection of pages, a high bounce rate of between 95% and 100% implies the presence of bot traffic.

4. Has your conversion rate dropped? A spike in new sessions without an increase in conversions will reduce your overall conversion rate.

5. Has direct and referral traffic increased? These two channels are common sources of bot traffic, and there you are likely to see the highest spikes in traffic.

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