BALANCING EFFICIENCY AND QUALITY: FIXING PROGRAMMATIC’S FRAUD PROBLEM
Published on July 13, 2020
Ever encountered a website that looks just like your average website, but the content didn’t click quite right? What about websites with articles that you know were clearly published from your favourite publication, or similar looking domain names that are just that bit different from the original? These days, we are no longer just facing fake news, but also fake websites and fake ads that look legitimate at a quick glance. According to the "Bad Bot Report 2019: The Bot Arms Race Continues," by Distil Networks, bots make up almost 40% percent of web traffic.
In a rather damning article on the convoluted AdTech supply chain, a CNBC reporter, Megan Graham, set out to create her own website with content pulled from CNBC, all while monetising it, showing how easy it is for fraudsters to cheat the AdTech system. Despite AdTech platforms conducting proprietary checks with certified systems in place to evaluate publishers, the experiment highlighted a disconcerting scenario in which she was not only able to bypass the checks but also managed to engage legitimate ad partners with ads coming in from American household names such as Kohl’s, Wayfair, and Overstock.
As the industry continues to mature, ad fraud tactics also evolve across multiple channels, from video and mobile to web with bad actors slipping through the cracks. Topping an astronomical sum, the industry is estimated to lose $100 billion to ad fraud by 2023.
Now well into the age of digitalisation, programmatic advertising has grown into a dominant form of digital advertising across multiple channels due to greater targeting capabilities, wider audience reach, efficiency, and cost-effectiveness. However, even as advertisers continue to look to programmatic campaigns, digital ad fraud remains a glaring concern.
The Mechanics of Ad Fraud
Before we delve into why fraud continues to persist in the programmatic space, let’s look into the types of ad fraud and how they occur:
- Ad fraud by human traffic: This occurs when impressions are generated by human traffic but have zero viewability, resulting in fraudulent impressions.
- Ad fraud by non-human traffic: This occurs when impressions are generated by bots, which are scripts that create fake impressions and clicks. These bots can mimic human behaviour such as the surfing of websites, viewing ads, clicks, and form submissions.
In an ideal programmatic supply chain, real human traffic generates impressions when a person visits a website. Advertisers will purchase ad space from publishers and this buying and selling process is automated through programmatic advertising—taking place within a mere few seconds. If you need a much more detailed recap of the mechanics of programmatic, read our deep dive here.
However, as we’ve explained, easily exploitable gaps persist in the programmatic supply chain. This is due to the fact that AdTech service providers are unable to distinguish legitimate versus fraudulent websites and authentic versus simulated or synthetic human behaviour. We’ve unpacked this process in the diagram below:
A Persistent Problem with No End in Sight?
This past May, the Incorporated Society of British Advertisers (ISBA) commissioned a report in partnership with PwC to map out the programmatic advertising supply chain from end-to-end for the very first time, providing a clearer picture on just how opaque the supply chain continues to be. With ad fraud seeing no signs of letting up, the ISBA report has only served to place greater scrutiny on the programmatic space as it continues to come under fire for the lack of transparency and visibility across all players on the supply chain. To learn more about our thoughts on ISBA’s findings and how to improve the value of the programmatic supply chain for marketers, read our blog post here.
Plagued by a complex media buying process that is increasingly weighed down as more platform intermediaries are added into the supply chain, the flow of ad spends and costs are harder to track. The end result is one that has huge holes in the value chain. Compounding the fraud problem is a lack of standardisation across both demand and supply-side platforms. As discrepancies in impressions on platforms occur due to differing methodologies for metrics such as viewable impressions, the true costs of ad fraud become much harder to identify.
As the current economy contracts, cost constraints become a reality with global ad budgets expected to fall 36 percent in the first half of the year. Yet most advertisers fail to see that in their quest to meet their ROIs of enhanced efficiency and cost-effectiveness, they’ve ended up turning to low-cost publishers in their programmatic ad buying. This not only results in an ecosystem that allows fraud to fester, but also poses a risk to a brand’s reputation—whether by way of the quality of ads on the website or cumbersome and cluttered ad placements.
A Panacea for the Industry
The AdTech industry stands disrupted in a climate where cost-efficiency matters more than ever, with marketers seeing a renewed drive to extract greater value from the programmatic supply chain. How then can the industry rally together to achieve this? We map this out below:
- Industry-wide collaboration and standardisation: In order to reach an industry consensus and address the fraud problem rife in programmatic, collaboration between all players on the supply chain participants lies at the heart of it all. Across the board, agreeing on consistent industry standards to ensure that both publishers and brands are aligned when it comes to the terms and conditions can be a good start to plug the gaps in programmatic.
- Harnessing the benefits of emerging technologies: Emerging technologies such as blockchain have shown a great deal of potential in not only addressing the issue of ad fraud but also supply chain transparency. As a decentralised, immutable ledger, blockchain can provide advertisers with real-time visibility of their programmatic campaigns. By running campaigns through automated smart contracts based on viewability verification methods, advertisers can be certain that they are only paying for ads that are viewable, brand safe, and free of ad fraud. Simultaneously, this would allow advertisers to have a clearer picture of where their advertising dollars are spent.
As long as it remains lucrative, there will always be fraudsters who continue to game the system. While there is admittedly still a long way to go in completely eradicating fraud, collaboration aided by progressive technologies can encourage greater transparency and accountability across the programmatic supply chain.
In seeking to cure the ills of the programmatic space, it’s important to remember that every player on the supply chain can only stand to gain when ad fraud is tackled. The only way is up.