Bots are software that perform automated online tasks, such as web crawling. A botnet is a network or group of computers that run such software. Often bots and botnets can be used for nefarious purposes, such as click fraud, spreading viruses, or enabling fake ad impressions.
James Green, CEO of Search Retargeting Firm Magnetic on Bots:
What's a botnet? It's a combination of two words: robot plus network. The "robot" bit is code that resides on your computer to do something, and the "network" bit means that there are lots of them out there (thousands or more) and they are all coordinating to do the same thing.
In ad tech, that usually means making your computer look like you are visiting lots of sites and clicking on lots of ads. In advertising, we worry about botnets such as Chameleon, a bot discovered by Spider.io, which causes display ad impressions to be served to the botnot rather than to actual human site visitors. This one example of a bot is estimated to have over 120,000 infected computers in the U.S. that have been generating billions of ad impressions per month and have visited over 200 sites.
These sites in turn have put their ad inventory up for sale on ad exchanges. Because the inventory is from a known site, the ad exchange accepts the traffic and then advertisers bid for the right to show an ad. The person with the highest bid wins and delivers an ad that will never be seen by a real person.
Not only do advertisers pay money but receive no results, publishers are negatively affected by bots because they make it look like there is way more advertising available for sale than there really is. Publishers have had a hard enough time without now having to compete with ghosts.