May 8, 2017 AudienceScience

Fighting Ad Fraud Takes Industry-Wide Collaboration

[This article was originally posted in The Drum on May 8, 2017]

One of the things I love about working in the automated advertising sector is that every day offers a new set of challenges. Because the industry is moving so fast, however, it sometimes feels like we’re reactively putting out fires without taking the time to look at cause and prevention.

Take Methbot for instance: one of the biggest marketing stories of 2016, it dominated the headlines in December. Touted as the biggest ad fraud ever, the Methbot scam suggested that the Russian fraudsters were syphoning off millions of advertising dollars by tricking ad exchanges into thinking their fake sites were premium websites.

Brands and advertisers went into panic mode when the report was released by White Ops, with headlines shouting about losses to the tune of $3 to $5 million per day. While our own analysis showed the impact was minimal (only $1.20 in every $10MM of our clients’ media spend was served to the Methbot-operated IPs), the perceived damaged was already done, throwing a shadow over programmatic advertising, and by extension, digital advertising as whole.

Many marketers responded by looking for fixes they perceived to be both obvious and quick. For some, that meant eliminating programmatic open auction budgets and investing solely via private marketplaces and well-known social networks (which are now facing their own credibility issues). For others, it meant eliminating digital altogether and retreating to the familiar entity that is TV.

So now that the dust has settled, were these really viable solutions for preventing fraud while achieving marketing objectives? Unfortunately, not.

For instance, Methbot managed to work its way into PMPs disguised as some of the most desirable premium inventory available. Likewise, direct buys with publishers – many of whom source web traffic, are also susceptible to fraudulent traffic. As for social networks, I can’t be the only person getting friend requests from plainly fraudulent accounts, can I? The fact is, the more lucrative the channel, the more incentive there is for fraudsters to invent ways to dupe advertisers.

It’s sad to say, there are no immediate fixes here. Fighting fraud is going to require long-term, persistent intervention from across the industry. So what can advertisers do?

First, The Trustworthy Accountability Group (TAG) – an industry group set up to create standards on fighting fraud – is a good start. One of the core functions of the TAG’s Anti-Fraud team is blocking domains and IP addresses that are deemed to be hubs of non-human traffic. While this can effectively cut out major sources of fraudulent activity, the reactive nature of the process means that advertisers have often been exposed to significant levels of non-human traffic before the offenders are blocked.

Second, marketers and their agencies should be demanding – and expecting – independent, 3rd party verification on all impressions. The recent issues surrounding fake news and brand safety, particularly within the walled gardens, have brought these issues to the forefront. While some implementation hurdles remain – especially in mobile environments – 3rd party validation should be a standard across all inventory sources.

Finally, we need to create greater financial transparency across the digital supply chain. The repeated buying, repackaging, and reselling of a single ad impression isn’t creating more value and actually harms both advertiser budgets and quality publishers. The industry needs to embrace concepts like Payee ID or other mechanisms that can provide a clear, auditable record of every ad transaction and the financial beneficiaries of that transaction. Only then can we truly eliminate the incentives for ad fraud.

Ad fraud is not going away – no doubt there are fraudsters already working on the next Methbot equivalent – but as with most crime, there has to be a lucrative prize to make it worthwhile. As an industry, we have the power and the responsibility to combat this by collaborating and sharing the knowledge that we gain every day. By enforcing an industry standard that combines both preventative measures, financial transparency and sophisticated third-party verification across all digital advertising, we are suddenly making the incentive a lot less attractive.