Ad Ethics

Straight Talk about Digital Ad Fraud

By November 20, 2017 January 18th, 2018 No Comments

There is much being said across the digital advertising industry about how serious the ad fraud problem is. Having been thoroughly involved in the digital advertising industry for the last 12 years and since the inception of programmatic advertising, I feel I can confidently share some frank observations about digital ad fraud in an effort to provide a pragmatic viewpoint on this matter. I have also included multiple links to respected industry sources on this topic in an effort to be as thorough and objective as possible.

#1 – THE AD FRAUD PROBLE IS 97% PREVENTABLE RIGHT NOW

There is no ‘silver bullet’ that exists today to prevent bot traffic. However, a conscientious implementation of best practices in regard to the use of supply vendors and site lists, combined with IP blocking and monitoring through a best-in-class brand safety technology and rigorous human analysis of site placement and log files, will consistently deliver digital campaigns with fraud rates below 2%-3%.

A recent blog post from Coegi described in detail the approach our company takes to ensure our client’s campaigns are high quality – other responsible programmatic companies are seeing similar results. Back in 2015, Ad Exchanger published an article written by the CRO of Xaxis titled, “If You’ve Got a Problem with Fraud, You’re Doing Programmatic Wrong”.

Ensuring campaigns are essentially fraud-free requires a concerted plan and effort across multiple areas – planning, ad operations, the optimization team and the analytics team – but it is possible. The marketers who remain content to simply hand over the execution of their digital buys to non-transparent vendors or who do not dedicate the necessary resources to maintaining high quality campaigns will continue to subsidize the ad fraud industry. Large advertisers such as P&G have drastically cut back on digital ad spend, but this is less of an indictment of the digital media channel itself than it is of oversight and management of the campaigns. Programmatic can yield the absolute best value for online media buying when high-quality ad impressions are obtained at the market rate for a targeted audience – but there is no EASY button for effective programmatic or digital media buying.

#2 – ADVERTISERS ARE AS MUCH TO BLAME AS THE FRAUDSTERS FOR THE PROBLEM BECOMING AS BIG AS IT IS

In November 2015, I published an article titled, “4 Things Media Buyers can do Today to Improve Online Advertising”. It highlighted how insisting on transparency, establishing the right KPIs, placing appropriate value on the media and using retargeting responsibly are all within the power of the buy side to control and how by doing so, many of the problems associated with online advertising would be minimized. On the other hand, a failure to do these things usually results in wasted advertising spend. Fraudsters capitalize on digital campaigns that are optimized to vanity metrics, such as CTR (and even viewability rate if isolated as a KPI), the lowest possible CPM or last-click attribution. But rather than prioritizing digital campaigns that deliver high quality ad impressions in the right environment and take into account the upper and mid-funnel impact of good marketing, some advertisers are often quick to ‘cut’ these channels and move even more budget to the strategies that are delivering on these easily gamed tactics.

Two adages that come to mind in this regard are, ‘You can’t have your cake and eat it too’ and ‘You get what you pay for.’ Too often, digital advertisers insist on low-cost media measured on unrealistic or meaningless KPIs. To deliver on this expectation, digital vendors end up purchasing bottom-of-the-barrel inventory to meet cost expectations and optimizing to retargeting to get credit for as many conversions as possible or to some metric such as CTR or viewability rate that can be easily manipulated by bots. Unfortunately, the current ad tech environment necessitates a ‘buyer beware’ mentality – but the buy-side of the industry has to take some responsibility for maintaining a clean ecosystem. Old habits are hard to break, though, when it comes to setting bottom-of-the-funnel KPIs or making negotiating the lowest CPM a benchmark for good media buying. However, when digital advertising becomes a ‘race to the bottom’ to get credit for clicks and conversions, it can potentially lead to situations such as the one described in Ad Age this September. Avoiding this type of conflict is definitely worth having some hard conversations about performance measurement and media costs or simply walking away from unrealistic expectations.

#3 – THE AD EXCHANGES, DSPS AND PUBLISHERS NEED TO ACCEPT RESPONSIBILITY FOR ELIMINATING AD FRAUD

A recent panel at Programmatic I/O promoted the opinion that everyone from brands, to agencies, publishers and technology companies need to accept responsibility for fixing ad quality issues in the digital ad ecosystem. While all parties can accept some responsibility, as spoken to in the previous paragraphs, there are certain entities that actually have the ability and position to eliminate, or at least significantly minimize digital ad fraud to the point where it is no longer as profitable for criminals. The ad exchanges, supply-side platforms and demand-side platforms all play a critical role in determining if fraudulent inventory enters the advertising supply chain and is sold to the end advertiser in the first place. Putting the burden on advertisers to filter out the bad inventory and charging them for this inventory if they fail to do so or only providing refunds when they have gone to great lengths or expense to prove that they are justified is, quite frankly, unfair. Some publishers have been found to buy cheap traffic in order to fulfill demand and pass this along at direct-buy or PMP rates. It’s safe to say that the majority of advertisers would rather move their money elsewhere rather than purchase low-quality or fraudulent inventory in order to meet the contracted impressions with a publisher.

Recently, there have been positive developments among inventory suppliers to address fraud concerns. The development and implementation of ads.txt is a good step forward in the fight to prevent domain spoofing. Google has taken the initiative to refund money that was spent on fraudulent impressions and DSPs such as the Trade Desk are working on deeper integrations with fraud prevention technology providers such as White Ops. The IAB also took on this issue a while back and continues to work toward establishing some standards in the industry. Ultimately, if payment is cut off to the fraudsters by the supply chain, whether it is because their inventory never made into the system or because once identified payment was denied, the incentive to perpetuate the fraud will diminish.

#4 – BRAND SAFETY AD TECH VENDORS ARE NEEDED BUT NOT THE SOLUTION

As mentioned earlier, partnering with a reputable ad tech fraud prevention vendor is an important aspect of maintaining quality. However, right now the primary role of these companies is to monitor and minimize the bidding on bad impressions, not eliminate them from the supply chain. In fact, doing so would also actually eliminate a large portion of their revenue model. Digiday released an article from the recent Dmexco conference titled, ‘Overheard at Dmexco: Ad tech vendors are ‘selling fear’  that included the following quote from an industry professional –  “If you look at these viewability and ad fraud technologies here at the conference, they’re doing great business, but their models aren’t just about fighting fraud; they’re selling fear because if they don’t, they can’t sell the tech to the SSPs or DSPs.” Making ad tech the sole defense mechanism for ad fraud fuels a digital arms race between these companies and the criminals as they continually develop methods to outsmart the other.

SO WHAT NOW?

Blaming Programmatic for the ad fraud epidemic is akin to blaming the Stock Market for investment fraud. At times unwary investors are defrauded of their money in the financial system due to the actions of unscrupulous criminals and the naivety of the investors in regard to their offerings. A noteworthy difference is that the criminals are held accountable in the financial system. Another difference is the government plays an active role in efforts to prevent fraudulent activity in finance. Sadly, things have gotten to the point in our industry where the FBI is now investigating the digital ad fraud problem and we may soon see more legal repercussions and government involvement with the issue. Interestingly, the government Web site Investor.gov has a page dedicated to the topic, ‘What You Can Do to Avoid Investment Fraud’ with the statement, “How do successful, financially intelligent people fall prey to investment fraud? Researchers have found that investment fraudsters hit their targets with an array of persuasion techniques that are tailored to the victim’s psychological profile.”

Many of the ‘red flags’ or warnings listed on this page can equally apply to digital media buyers, including:

Know what to look for. Make yourself knowledgeable about different types of fraud and red flags that may signal investment fraud.

If it sounds too good to be true, it is. Any investment opportunity that claims you’ll receive substantially more could be highly risky – and that means you might lose money… Claims like these are hallmarks of extreme risk or outright fraud.

Beware the “halo” effectInvestors can be blinded by a “halo” effect when a con artist comes across as likeable or trustworthy. Credibility can be faked. Check out actual qualifications.

Reciprocity. Fraudsters often try to lure investors through free investment seminars, figuring if they do a small favor for you, such as supplying a free lunch, you will do a big favor for them and invest in their product… Always make sure the product is right for you and that you understand what you are buying and all the associated fees.

I am sure there are plenty of other thoughts on this subject among the many smart people in our industry. Feel free to share your comments on the above. A continued, open and productive dialogue on this topic can only help in the fight against ad fraud.

Author: Sean Cotton, President @ Coegi

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