How big of a problem is fraud in programmatic and what can advertisers and agencies do about it?

Digital advertising revenues hit $19.6 billion in Q1 2017, climbing 23% ($3.7 billion) year-over-year, according to the Internet Advertising Bureau (IAB) and Pricewaterhouse Coopers latest Internet Advertising Revenue Report. This marks the highest ever Q1 earnings for digital advertising in the U.S.

Programmatic buying is still on the rise – it is one of the fastest growing segments of digital marketing due to its inherent abundance, efficiency, and the control it provides to advertisers.

$10.1 billion was spent on programmatic display ads in 2014. By 2016, this had risen to over $25 billion, and eMarketer estimates that in 2017, programmatic display spending will reach nearly $33 billion, accounting for nearly four of every five US digital display dollar spent.

The term ‘programmatic’ covers a wide range of technologies that automate the buying, placement and optimization of advertising to create more profitable advertising campaigns. Programmatic buying allows media buyers to buy “eye-balls” – that is, only buying impressions that are going to be seen by a qualified viewer.

Or so the advertiser hopes.

The concerns around programmatic buying are largely focused on fraud and viewability – that is, is the impression being served to an actual human? And if so, do they actually have the potential to see the ad?

In a December 2015 survey, multi-device measurement was the leading obstacle to buying ads programmatically, with ad quality concerns (fraud and ad blocking) not far behind. (Source: eMarketer)

With Incapsula reporting that 52% of web traffic is bot traffic (29% being bad bots such as impersonators, hacking tools, scrapers and spammers), these are legitimate concerns.

According to an Association of National Advertisers and WhiteOps study, The Bot Baseline Report, $7.2 billion of digital advertising revenue in 2016 (up from $6.3 billion in 2015) was predicted to be based on fraudulent activity. In 2017, that number is set to decrease approximately 10% to $6.5 billion, which, despite the decline, is still a huge percentage of total digital advertising revenues. The ANA credits media agencies for improving controls in programmatic buying, making the automated ad buying processes “no riskier than general market buys.” The World Federation of Advertisers predicts that globally ad fraud will cost advertisers $50B by 2025.

The Bot Baseline Report also found that:

• Display ads sold by publishers with higher CPM rates (greater than $10) were 39% more susceptible to bots.
• Bots account for 9% of display ad views and 21% of video ads.
• Between 3% and 37% of programmatically bought ad impressions were found to be from bots.
• 3.6 times as much ad fraud came from sourced than non-sourced traffic. Legitimate traffic sources such as search engine advertising, social media advertising, content marketing etc. are not cheap. Be wary of anyone stating they can get you a high volume of visitors at a low cost.
• Less than 2% of fraudulent activity is from mobile app environments and mobile web display buys.

“Publishers paying handsomely for legitimate search traffic are competing against publishers paying much less for bot traffic, and the tools used by most marketers cannot tell the difference. Botty traffic vendors may defeat detection, but they never have a credible explanation for why they are able to deliver high volumes of visitors.”

The Bot Baseline Report

When ads are served that do not even have the potential to be viewed by a human user, it’s the advertiser who loses out. And this is a huge concern for the industry.

Advertisers want to buy viewable impressions – they want their ads to be seen!

The problem is that, according to the Bot Baseline Report, more and more, bots are exhibiting behaviours that cause them to look more human, which have made them better at evading detection. Over 75% of the fraud observed in this year’s study came from computers containing both a human and a bot on the same machine.

So what can be done to increase the viewability of ads for advertisers? How can advertisers know they are purchasing impressions that have the potential to be seen by a human?

The industry standard for viewability is as follows:

• Desktop display – at least 50% of pixels in view for at least one second
• Desktop video – at least 50% of pixels in view for at least two seconds
• For Rising Star ads or ads larger than 242,500 pixels/970 X 250, the standard calls for 30% of pixels in view rather than 50% for at least one second.

Advertisers are willing to pay big for vCPM (Cost-per-thousand viewable) impressions. But if advertisers have to pay more for a “viewable” impression, doesn’t it imply that the regular priced impressions are not viewable? A better solution for advertisers would be to take steps to increase viewabilty and eliminate fraud so that the concerns for all advertisers decrease, rather than simply charging more for “fraud-free” or “viewable” impressions.

With its Active View, Google has created a framework for publishers to get viewability measurement data and use it to understand and improve the value of their ad inventory.

In Active View terms, “An impression is considered a viewable impression when it has appeared within a user’s browser and had the opportunity to be seen.”

“The business impact of buying (ad impressions) based on MRC standard is real. Marketers are not saying that they want a ‘percentage of their campaign’ to be seen; rather, they are saying they want to pay only for viewable impressions.”

Neal Mohan, VP, Display and Video Advertising Products, Google

According to Google, publisher viewability averages at 50.2%. The IAB has produced a primer to aid publishers in their endeavours to increase the viewability of display and video ads on their site, directly addressing:

• site redesign to ensure that ads are positioned optimally;
• latency improvements to cut down on long rendering times; and
• ad tech strategy and policy changes to bring tactics in line with best practices.

Advertisers can reduce the extent to which they are the subject of advertising fraud by demanding more transparency from all the vendors they are involved with. According to eMarketer, more than 60% of US ad agency professionals are concerned with the quality and transparency of their inventory sources. Buyers need to explicitly be in the know about where their ad is being served, who sees the ad, to what extent the ad was seen, how long the ad was viewed etc., and they and should be demanding this information. A study from the World Federation of Advertisers (WFA) found that nearly 90% of the advertisers it polled are reviewing their programmatic advertising contracts and demanding more control and transparency.

Forbes published an article earlier this year about Los Angeles startup, MetaX, which aim to solve the ad fraud problem using blockchain – a database that is shared among parties in an ad campaign, storing data such as impressions and audience segments. According to Forbes, “a brand or retailer buys ad impressions through a real-time buying platform that finds target audiences in ad exchanges that provide access to online publishers’ inventory. The impressions are encrypted and broadcast to each participant in the blockchain, who approve the impression. The block becomes part of the permanent ledger and the impressions are verified.”

Ads.txt, released in May 2017, is a new tool that is impactful in fighting ad fraud. Ads.txt (Authorized Digital Sellers) is a simple, flexible and secure method that publishers and distributors can use to publicly declare the companies they authorize to sell their digital inventory, with the goal of increasing transparency in the programmatic advertising ecosystem. Publishers can post a list of Authorized Digital Sellers to declare allowed sellers and resellers of the publisher’s inventory. Buyers can use ads.txt files to shift media spend to authorized supply paths. The goal is that publishers will receive revenue for ads purchased from their inventory, and buyers will not waste spend on fraudulent inventory. (Source: Iab Tech Lab)

The Wall Street Journal provides these tips to reduce the likelihood of getting your ads “seen” or clicked on by bots rather than humans.

• Bots are nocturnal: Most human Web users tend to sleep during the night, but White Ops found that bot percentages spiked between 11 p.m. and 5 a.m, so advertisers might consider not running any ads during the night.
• Bots like some types of content more than others: Sites related to finance, family and food had among the highest percentages of bot traffic, the study found, ranging from 16% to 22%. Tech, sports and science-related sites had among the lowest bot percentages, ranging from 3% to 4%.

Buzzcity recommends advertisers do the following:

• • Ask your suppliers what they are doing about ad fraud.
  • Use 3rd party technologies – like comScore, DoubleVerify, Moat, etc. – to identify bots and ensure that you do not (re-) target them.
  • Go with your gut – if something looks too good to be true, then it probably is.
  • Bots won’t make purchases or fill out online forms. So if ads are leading to sales – or other sorts of human interactions – keep advertising on these sites, and drop non-performers.

Advertising agencies are taking their own steps to protect advertisers from fraud. Here at Mediative, we have developed an advertising solution that allows advertisers to leverage user interest and intent-based data to deliver relevant display ads to particular audiences only – in a brand safe environment, as only high-quality, premium inventory is purchased.

The Trustworthy Accountability Group (TAG) has verified and approved Mediative for listing in the TAG Registry of known and trusted players in the digital ad ecosystem, created to assist in solving the challenges of fraud, malware, piracy and transparency facing digital advertisers today. As a TAG verified company, advertisers can be sure that Mediative is a responsible, trusted player across the entire digital advertising ecosystem, with a demonstrated commitment to higher standards of transparency and disclosure to our partners.

Mediative is also a member of Canada’s Premium Audience Exchange (CPAX) – a real-time-bidding (RTB) exchange that was jointly developed by Canada’s largest media owners, to help brands programmatically buy premium digital inventory. With over 100 premium sites on the exchange, it is the premier access point to top tier real time English and French digital inventory in Canada, in a clean, brand safe and transparent programmatic environment.

“We [CPAX] are committed to providing quality inventory to buyers, by building and curating premium content and rich audiences that are free of fraud, non-human traffic, and other concerns currently on the minds of marketers.”

Jeff Clark, VP of Audience & Analytic Solutions, Post Media

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