This article originally appeared in The Drum on December 14, 2018.
Some commenters estimate that fraudulent and misrepresented inventory is likely to cost $66bn globally in 2018, putting a value on the problem somewhere in-between the annual GDPs of Haiti and Oman. That’s a figure that should be keeping most marketers and publishers up at night.
Thankfully, it is being taken very seriously – and major progress is being made towards finding and prosecuting (witness the FBI’s recent ad fraud investigation). But make no mistake, ad fraud cannot be eliminated. The nature of digital technology will always allow those savvy enough to game the system. It is an incredibly lucrative practice, not only for the fraudsters, but also for the many companies that make money processing and evaluating every transaction. So, it stands to reason that when only advertisers and publishers really feel the pain from fraud, it will equally be up to them to demand the change we all talk about so frequently.
As an industry, we can take some comfort in the progress we’ve made in fighting back; Adx.txt, for example, while it had flaws, was a simple but productive step in reducing arbitrage.
However, if we are really serious about attempting to combat the issue of fraud, we need to start showing fraudsters that we mean business. And it is up to the principal parties in the transaction (publishers, brands and agencies) to put a stop to it by adopting practices including the following:
1. Embrace new standards
The IAB has worked hard to combat fraud, and all of us should be doing everything possible to support those efforts. The release of OpenRTB 3.0 will be a major step forward, essentially rewriting the foundation of the RTB protocol to reduce fraud by encouraging authenticated bid requests. This new standard requires publishers to stamp encrypted IDs onto potential impressions so buyers know they are legitimate. While the heavy lifting falls on ad tech companies to adopt the new protocol, brands, agencies and publishers shouldn’t be afraid to demand it of their partners to accelerate its adoption within the industry.
2. Rethink how success is measured
Marketers (and agencies) need to abandon the idea that cheaper inventory gives them better value. The mounting demand for lower conversion costs has only led to lower quality (i.e. lower priced) inventory flooding the programmatic pipes and has created ambiguous metrics and nebulous attribution methods that make brands think their digital spend is working. In reality, most are being gamed by far more sophisticated algorithms and least-common denominator measurement systems developed by the same vendors they entrusted to drive greater ROI.
Overly relying on standard performance metrics such as CTR and CPA to measure success opens marketers up to being duped. Instead, marketers should place greater focus on creating incremental returns when evaluating digital media success, putting tools and tests in place to properly analyze which conversions occur as a direct result of advertising versus those that would have occurred anyway.
3. Choose partners wisely
Most publishers think that the more demand partners they onboard, the more money they make. While this can be true, by making their inventory available so broadly, they actually increase the risk of spoofing or misleading traffic coming through, while also reducing the scarcity of their inventory and its associated value. Just recently we saw former ad tech company Rocket Fuel outed for mixing client data that wasn’t meant to be mixed.
Publishers need to ensure that all programmatic platforms they partner with are working in their best interest. By selectively choosing partners that align with their values and provide the best representation for their inventory, publishers can start to build long-term ROI, rather than just taking a quick buck from non-strategic partners.
Righting the ship is a long-term game
We can no longer assume technology partners will take on the whole burden of repairing the fraud problem that plagues our industry and that also creates a consistent and enticing revenue stream for them. That leaves it to brands, agencies, and publishers to take a stand and no longer look for short-term benefits that foster fraudulent activity. Turning a ship is never fast or easy, and the same will prove true with re-directing our industry’s focus and priorities (and it will almost certainly result in some short-term loss). But complacency only benefits the fraudsters. And if we permit that, we should only expect their GDP to grow.