The digital ad industry has long played whack-a-mole with fraudsters, and 2019 will be no different. A mammoth mobile in-app fraud scandal uncovered last October was a stark reminder of how sophisticated and tenacious fraudsters are.
While initiatives like ads.txt have helped reduce domain spoofing and reselling of unauthorized inventory, there’s a way to go. In fact, some industry executives believe ad fraud is worse than ever. “It’s a daily, hourly fight,” said Shane Shevlin, svp of strategic development at IponWeb.
Here are some things to keep in mind.
OTT ad fraud is on the rise
Ad tech vendors are hungrily circling the rise of over-the-top video distribution and all the opportunities it promises, namely: video ad stacks are thin on the ground and the Facebook-Google duopoly hasn’t swallowed the majority of the video ad market as they have for display.
Fraud hasn’t been a problem for the TV world as it has for digital. But with video content being delivered over the top increasingly into connected TV or set-top box devices, that’s changing. Video is where the money is, and therefore where the fraudsters tend to focus. Ad tech firm Pixalate, which measures 55 million OTT device IDs monthly, recently reported that global OTT fraud rates are 19 percent globally. Based on that figure, the firm has estimated that marketers could lose to fraudsters up to $10 billion annually in OTT spend in 2020.
“A few years ago in-banner video was a septic tank of crap, it will be the same with OTT as that’s where the budgets will go and where the fraud detection is less advanced,” said Dan Wilson, CEO of London Media Exchange. “It’ll be a case of buyer beware, if it looks too good to be true, it probably is,” he added.
Out with the old
Given the speed at which fraudsters evolve their techniques, it’s hard to imagine a future advertising market entirely devoid of fraud. But some executives believe that the digital industry needs to rid itself of proxy metrics entirely if it’s to have a hope of outsmarting fraudsters. Approximately $20 billion is estimated to be lost to ad fraud a year. Needless to say, it has CMOs attention. But to attack it at the root, brand marketers must push their agencies to drop metrics that are easy for fraudsters to game, like click-through rates.
“CMOs need to tell their teams to forget about driving clicks or conversions that can be gamed,” said Shevlin. “They really need to have very uncomfortable conversations with their agencies about the behavior and habitual approach to media buying that has led them to that point.”
Supply-path optimization will help
SPO, which helps improve bidding efficiency in online auctions and also highlights any shady supply-side platform tactics, has become a common part of buyer strategies thanks to the market-wide push for more transparency in digital ad supply chains. Demand-side platforms adopted the technique. SSP incentive structures have been criticized over the years for rewarding high volumes of inventory passing through, and therefore not being as vigilant to fraudulent traffic creeping in as a result.
“The onus is on the seller [SSP] to fix this, there need to be better incentives to police this stuff. They also need to stop relying on tag-based integrations, which can open the door to anything really,” said an ad tech executive who preferred not to be named. But the SPO trend could help oust bad practice, according to the same executive. “The SPO trend will likely unearth some shady things, and lead to SSPs having to turn off large amounts of their supply.”
Market fragmentation plays into fraudsters’ hands
Europe’s markets are highly fragmented, a factor that plays into fraudsters’ hands. “Repackaging of specific content across borders means you have in theory more vendors who get to make that content available. That means more intermediaries between the content producer and the advertisers and that’s where fraudsters will target,” said Shevlin.
The Trustworthy Accountability Group released its first report dedicated to the European markets and found that the picture was less bleak for those companies that had adopted TAG accreditation, which requires companies to meet a checklist of requirements including having a dedicated TAG compliance officer and implementing ads.txt. The report revealed that fraud rates dropped from an industry average of 8.99 percent to 0.53 percent — a 94 percent drop — according to the research.
The current state of ad fraud for desktop display impacted up to 10 percent of U.K. digital impressions, according to Integral Ad Science’s Media Quality report from the first half of 2018. However, similar to the TAG findings, when brands used tools or strategies to protect themselves against ad fraud, that figure significantly dropped to 0.7 percent on average, added Victoria Chappell, senior marketing director, for Europe, Middle East and Africa, Integral Ad Science.
“It will take significant, industry-wide efforts to truly bring alignment on consistent measurement across entire media plans to identify and weed out ad fraud from new inventory sources,” she said.