Programmatic Media Buying 101: What Do Digital Marketers Need to Know About Ad Fraud?

Programmatic Media Buying 101: What Do Digital Marketers Need to Know About Ad Fraud?

How to Prevent Ad Fraud?

The digital ad industry—agencies, brands, DSPs, networks, publishers, and trading desks—are on edge about the impact of ad fraud. But few players really understand what it is, how to catch it, or most importantly, what to do about it.

Definition: ad fraud is any deliberate activity that prevents the proper delivery of ads to the right people at the right time, in the right place.

 

Current Effects of Ad Fraud

In 2015, IAB and Ernst & Young reported reported that invalid, fraudulent traffic cost the U.S. digital marketing, advertising, and media industry around $4.6 billion annually — around 72% occurring on desktop and 28% on mobile.

Across desktop display, 2-4% fraud is typical for direct buys, but for programmatic buys, it can reach 4x as much, usually 10-15%. Without any type of fraud detection or prevention, rates can balloon past 50% for both direct and programmatic advertising buys.

 

Types of Ad Fraud

Most often, fraud refers to certain kinds of web traffic. The landscape of fraud tends to shift constantly and even premium publishers can be victims of occasional attacks. As a result, every traffic source requires constant re-evaluation. Ad fraud comes in many forms, including:

  • Selling of inventory automatically generated by bots or background mobile-app services.
  • Serving ads on a site other than the one provided in a Real Time Bid – or  RTB request—this is known as domain spoofing
  • Delivering pre-roll video placements in display banner slots
  • Falsifying user characteristics like location and browser type
  • Hiding ads behind or inside other page elements so that they can’t be viewed hindering a user’s opportunity to engage by frequently refreshing the ad unit or page

Of these forms of ad fraud, bots and domain spoofing are the most prevalent, as they require little effort and or expertise. Bots and domain spoofing enable previously worthless ad inventory to be sold at high CPMs.

programmatic ad fraud

How Does Ad Fraud Occur?

There are multiple parties involved in ad fraud as a business— hackers, botnet operators who might take advantage of infected computers and devices— and keep it active for their own profit. Knowing who the players are and the tactics that they employ will help programmatic advertisers be more aware so that they can keep it from affecting their results.  

Some ad fraud tactics to be aware of:

  • Demand for advertising inventory increases, but actual available inventory does not
  • New cheap programmatic inventory is supplied directly by fraudsters
  • Ads are served to bots; fraudsters get paid
  • Campaign results indicate unusually high ad performance
  • Flawed success metrics focus on quantity not quality of ads

Industry Actions:

The Marketing Rating Council published guidelines on Invalid Traffic—or IVT— in October 2015, to address inconsistent methods of removing invalid traffic and to address the resulting discrepancies. They established minimum requirements for identifying and removing invalid traffic from advertising transactions.

Unfortunately, adhering to Invalid Traffic guidelines can sometimes cause systems to generate actions that take away from the proper delivery of ads to the right people at the right time, impacting display, video, mobile, audio, search, and social.

For example, when publishers need to engage in traffic sourcing to accommodate oversold inventory, they may sell the additional inventory to a third party to be satisfied— and that third party may be fraudulently serving this excess inventory to bots.

Best practices to avoid ad fraud:

  • If it’s too good to be true, it probably is. Don’t focus as much on low CPMs and CPCs, but instead focus on real KPIs based on your goals (sales, sign-ups, etc.).
  • Vet vendors and partners – and their vendors and partners.
  • Try to gain more visibility and transparency into where the programmatic advertising is being served.
  • Use data science to understand users and perform behavioral and network analysis.
  • Use web technologies to perform browser and device analysis.
  • Do surveys through malware analysis, software disassembly, and the infiltration of hacker communities to guide detection development and identify emerging threats.

Summary

Ad Fraud is a universal problem in today’s industry. From buyers to sellers to consumers it’s important to stay vigilant and informed to defend the market against fraud.

  • Ad fraud is often used to “fill the gap” when there is more demand than inventory,
  • Ad fraud is any deliberate activity that prevents the proper delivery of ads to the right people at the right time, in the right place — usually for monetary gain.
  • The ad fraud cycle takes advantage of over-demand and non-transparent inventory to deceive both sellers and buyers.
  • Industry guidelines have been developed to support players in taking action through careful vetting inventory, increasing transparency and viewability, and the use of technology.

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