Group M's Move Away From Open Exchanges

GroupM’s recent announcement that they plan to pull out of all open exchanges by the end of the year is surprising in some ways and predictable in others. But overall the decision is a positive first move that will require significant follow-up steps to have any impact whatsoever on the growing issue of ad fraud.  The decision was driven by a range of factors, Ari Bluman, GroupM’s chief digital investment officer for North America, , told the Wall Street Journal, including concerns about the level of ad fraud associated with exchanges. Even though ads purchased through open exchanges are sometimes very cheap, the cost savings are regularly negated by quality issues, he said.

Why is the move surprising

Mostly because, to date just about every ad agency or conglomerate on the planet has denied that online ad fraud is a significant issue requiring major changes in their buying patterns.  Nearly every story on ad fraud has included a denial from an agency group saying more or less, “We know that ad fraud is a threat, but we have it handled through our manual controls and brand-safety/viewability vendor relationships.”    This shouldn’t be surprising since there is no incentive for agencies to tell their clients - which are generally charged on a per-impression-served basis - just how big the problem really is. 

How was this move predictable? 

The cacophony of articles citing hard evidence and examples of ad fraud has grown so loud that the issue can no longer be ignored.  At this moment, there are scores of campaigns running on “quality” websites, networks or exchanges rife with fraud. Yet so little focus has been placed on campaign transparency or 3rd-party auditing by capable fraud-detection platforms. So it was only a matter of time before a major client or group of clients demanded this type of move from the GroupMs of this world. 

But what will this move actually solve in regards to ad fraud in the short-term? 

It WILL partially address a key issue. Pressure will be placed on the open exchanges that allow anonymous sellers to quickly post inventory for sale while offering audience demographics and engagement data that are faked or bot driven.  In a private exchange, sellers are supposedly vetted and invited onto the exchange and aren’t allowed to sell anonymously.  Even with audience extension networks (additional publisher sites not owned by the main publisher) within a private exchange, someone will need to verify inventory quality and watch for suspect click patterns that point to bot activity. 

But this move WON’T solve several key issues around ad fraud. 

There are nearly 600 new sites created each minute on the web (or close to 1 million new sites per day), and manual vetting of new sites is not feasible – unless digital marketers want to give up completely on the benefits of programmatic AND give up on the idea that they can market on the hottest sites as they emerge. Moreover, scammers always evolve their tactics and will most certainly make their way onto many of the private exchanges (through an extended audience partner, through a well-meaning agency not able to recognize sophisticated fraud techniques, or though the hundreds of other middlemen in any given ad transaction).

So, GroupM’s move is a positive first step if taken as part of a multi-tiered approach.  But the market leader in combatting ad fraud, Google, has clearly shown that real-time and post-campaign analytics – created by software developers and data scientists with expertise in and on the lookout for fraudulent patterns and activity – is the ultimate weapon against ad fraud. 

The rest of us should follow suit as soon as possible.   

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