Three Steps to Combatting the Ad Fraud Challenge

Imagine a business where the CFO allowed a margin of error of 50% or the COO allowed 50% deficiencies in its supply.  Or where 50% of product wastage through theft was tolerated. It sounds crazy doesn’t it? 

And yet CMOs have been tolerating 50% inefficiencies in digital media for years.

An advertiser may buy 1 million impressions but, according to the latest report on digital fraud from ANA and White Ops, between 30,000 and 370,000 of those impressions will be a total waste as they will not be seen by one human eyeball.  The same report estimates that £5bn ($7.2bn) will be lost due to online ad fraud in 2016 – and with fraud only being one element of wastage in digital advertising, adding to other issues such as viewability and ineffective frequency capping, this is adding up to significant levels of wastage. 

Ad fraud is the single biggest issue in digital advertising today.  However creative an ad campaign is, and however smart an agency is at optimising it, this all amounts to nothing unless the ads are being viewed by humans.

Most marketers seem to think that fraud is hitting display advertising predominantly, but it’s everywhere.  Fraud in the mobile space is a huge issue; and then there are online video ads - the ANA report has quantified that one in four of these are viewed by bots.  With the higher CPMs, or cost, of buying video impressions compared to other digital advertising, the level of video fraud is set  to grow as it makes economic sense for fraudsters to focus on this sector.

Ad fraud affects the whole industry, but it is particularly affecting the advertiser as they are essentially having to pay for it.  Shockingly, for each of the 49 advertisers who participated in the ANA study, the average loss due to fraud was $10 million per annum – or, to put it in another, less euphemistic way, almost $30,000 is being stolen from each of them every day. 

With spend on programmatic continuing to rise, especially as traditional linear TV budgets are being shifted into video and programmatic TV, these levels are simply unsustainable. What is a $5bn loss today has the potential to be three times bigger unless the problem is tackled. The whole of the legitimate digital advertising ecosystem needs to work together to mitigate the problem of ad fraud but what can brands specifically do right now to turn the tide?

Shift from detection to prevention

Particularly for the large global advertisers who are losing most to fake traffic, there needs to be advancement from fraud detection to fraud prevention. Post bid detection is still important – by identifying where fraud is happening, brands can shift spend quickly away to other sites and create automated white lists and black lists to optimise the targeting of brand-safe, fraud-free sites.

However, they should also invest in the creation of an agile and effective automated decisioning process which continually learns (as fraud shifts) and makes a judgement based on all the data available on whether or not to bid before the bid happens. 

Create transparent partnerships

Another critical step is to demand greater transparency from partners. The majority of advertisers are still outsourcing their digital campaigns and/or using multiple technology systems, all of which makes it extremely hard to identify where their ads are actually being shown and who is viewing them. Indeed, Jim Kisza, senior manager for digital strategy at Kellogg’s, has likened getting a view on his digital spend to a detective story ‘where you had to piece together the evidence’.  

The opaque nature of much of the online advertising world is therefore acting as a cloak that helps fraudsters to hide their activity.  This is one of the reasons why the ANA set up its taskforce with the American Association of Advertising Agencies to tackle the transparency issue. Advertisers must ask difficult questions to identify every participant in their media supply chain and the role that each one plays – and then demand evidence of where their ads are running.  Media buying contracts should also stipulate that only authentic human web traffic will be paid for.

Marketers should also question the need for using a number of different technology platforms to manage their advertising as this can add another layer of unnecessary complexity – with each system using different tools and systems to detect fraud and often working against each other; one system may reject an impression it believes to be fraudulent, only for the same impression to be consumed by another system with different algorithms.

Only by de-cluttering the media supply chain is it possible for an advertiser to dissect where its media spend is going and get a clear view on the tools, platforms and techniques its technology partner is using to verify, detect and eliminate fraud. Without this kind of singularity and clarity it is extremely difficult to assess whether the fraud detection has the sophistication and effectiveness required.

Set the standards

The measurement of campaigns can also play a role in tracking where authentic human traffic is coming from. It’s important to question how campaigns are evaluated as measurements such as landing page visits and click through rates are prevalent with fake activity. Conversely, more stringent KPIs such as sales conversion, subscriptions or email sign ups are significantly more likely to indicate that you are reaching people rather than bots. 

It is also important to challenge technology partners to provide an understanding of how effective their anti-fraud capabilities are against industry standards. E.g. if media valuation firm Integral Ad Science has evaluated ad fraud in the UK at 7.8% of impressions, then this can be used as a benchmark against which to agree an ‘acceptable’ level of non-human traffic and should also be included in KPIs. 

As ad dollars increasingly move into digital advertising, more fraudsters will follow.  The key learning for advertisers should therefore be that they need greater transparency and control. Brands must be clear on expectations and set high standards to ensure that all industry players do their utmost to combat this problem.

Mike Peralta, CEO, AudienceScience