Ad Fraud – The Biggest Threat to Programmatic?

June 20, 2016

Ad fraud in the programmatic realm is a serious issue that affects all key industry players, and that’s why it has been the prime focus of all sides concerned for the last couple of years.

Ad fraud is one of the first things that marketers must address when analyzing the overall ad campaign quality. Before discussing and improving brand safety, or finding ways to increase viewability, ad fraud should be at least in the top three concerns in a digital strategy, because it can be disastrous if overlooked.

What is ad fraud?

A broader definition of it would be that it’s an action, or a set of actions by a software designed not to deliver ads in front of the intended audience. Instead, it extracts money from the digital system, regardless of the audience.

But it has to be made clear that ad fraud is not only non-human or bot traffic. Even though bots are typical of some types of ad fraud, the bigger picture shouldn’t be missed out: a large percentage of fraud falls to human traffic. In other words, fraud goes beyond bots – it includes ads that have zero chance to be seen by humans, or ads that are deliberately misrepresented by publishers.

The two main categories

Non-human traffic

The majority of this type of traffic is used to generate fake page views and clicks. Sometimes, they can even generate fake form submissions and therefore generate fake conversions.

There are simple and sophisticated bots. The former are simply scripts which run from a server or a hosting provider. They are usually easy to identify because they are simple – they have a static IP and a cookie ID, so ad blocking should go quite easy with these. On the other hand, sophisticated bots can function as rotating user agents and use random proxies to rotate IP addresses, thus imitating regular click-through rates. They can sometimes even imitate mouse movements, and this makes it harder to block them. Botnets are groups of bot compromised computers. Using a set of commands, these can sell inventory while premium users visits sites intending to buy something. Meanwhile, they collect cookies from these sites before users visit them and click an ad.

Human traffic

With human traffic, the end users are real, but the impressions and clicks aren’t. This type of fraud is more difficult to identify because there are human users in the end, and vendors searching to detect bots can have a hard time.

Now let’s look at the sub-types:

Hidden ad-impressions (ad stuffing)

When fraudsters place 1 pixel by 1 pixel windows throughout a page and serve ads there, or stack layers of ads on top of another in the same space, where only the top ad is visible. This results in a huge ad inventory on ad exchanges which can be sold, but very few of it will be seen.

Domain spoofing

This is arguably the most difficult fraud type for detection and prevention, but also very lucrative for fraudsters. Fraudsters can change the URL of a site, even a whitelisted site, with a simple code. In this way, advertisers can be tricked into thinking that fake or piracy sites are the ones of reputable, quality publishers.

Advertisers will always naturally aim for premium quality publishers because they believe their campaign will have the best results there, and that’s why they put those publishers on their whitelists. Whitelisted premium sites are also considered to have the best defense against fraud. But these whitelists also attract fraudsters right due to these reasons.

Site bundling

In the RTB ecosystem, inventory is classified under site IDs. Each site ID should correlate to a single domain. In practice, however, publishers and exchanges bundle networks of domains under a single site ID. Therefore, an advertiser could think they’re buying inventory on one site, but end up on a completely different one.

Ad injection

A technique with which ads are inserted in pages without the permission of the owners or without paying to them. There are several forms of this practice, one of which is an injected ad that replaces another ad completely, or an ad appears on a page that doesn’t include ads at all.

Share of responsibility

Essentially, every stakeholder in the ecosystem should be accountable in the fight against fraud. Both the buy and the sell side have their share of responsibility in identifying and eliminating it. However, fraudulent activities are something that can never be fully and completely eradicated, though all parties working together towards finding solutions will certainly be helpful. It will also lead to creating a more stable digital ecosystem.

The advertisers’ side

Detecting fraud, especially bot traffic is much easier if done by measuring post-install activity. This will show whether the install is really human. This is where advertisers can help in the fraud fight, by sharing first-party data with their networks or demand-side platforms. These, on the other hand, should be transparent and offer solutions against fraud.

Also, advertisers should make sure they aren’t buying third party traffic (be assured from publishers), look out for suspiciously low conversion rates, and be particularly careful with very low pricing – this might be a cause for concern.

The publishers’ side

On their end, publishers could take several precautions to address the ad fraud issue. Some of them include checking and scanning all traffic sources to ensure better quality, implementing solutions that are certified to IAB/MRC standards, including rights for audit in contracts with traffic providers, and adhering to the IAB’s Quality Assurance Guidelines, which contain a framework for general industry adherence to practices that increase brand safety and trust.

Is mobile at risk?

Since mobile advertising is expected to grab the majority of programmatic ad dollars in the US by 2017, there are serious concerns that mobile won’t be spared by the fraud wave. According to a research conducted last year, estimates suggest more than a third of mobile programmatic impressions are at risk of fraud.

The state of affairs with desktop is at least clearer – ad fraud has been around it for a while, so the market has already established tactics and strategies for fighting it. With mobile, things are yet to become trickier, since fraudsters continuously find new, sophisticated ways to extract ad dollars.

Future prospects

The industry won’t be able to completely eradicate ad fraud, and nobody expects that. It will surely remain a central issue in the digital ecosystem in the years to come. But the good thing is, key players are taking a much more serious approach in the fight against it. As stakeholders are less tolerant of this, technologies that fight ad fraud are improving. Even more, now that real-time bidding technologies are preventing fraud on an impression basis, there’s an increased optimism that ad fraud can be ruthlessly fought.

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