Investors Zero In On Ad Fraud Detection

The sizable round raised by digital media measurement and fraud detection firm Integral Ad Science shows that investor interest in ad tech has not evaporated. The argument could be made, however, that investor interest in the space has shifted.

The $67 million round -- raised through a combination of funding and debt financing --  shines a light on the important of quality in the marketplace. Over the past several years, the slew of ad tech platforms that sprung up, received funding and continued to grow helped beef up the programmatic marketplace. Companies like Integral aim to trim the fat.

And Integral, though it’s considered one of the leaders in the digital ad fraud detection space, is not the only one drawing interest from investors. Just one month ago, bot detection firm Distil Networks raised $21 million. 



“In today’s digital age, the problem isn’t only attribution of ad spend, but also the quality of each impression,” stated Nino Marakovic, CEO and managing director of Sapphire Ventures, the company that led Integral’s latest round.

Integral gave Real-Time Daily a look at the type of fraudulent activity the company attempts to sniff out. The company’s most recent discovery, according to Jason Shaw, director of data science, revolved around dynamic ad loading. Shaw acknowledged that this issue has been noted before, but said “it’s very underreported.”

It works like this: A fraudster sets up a Web site and populates it with content. It’s not the highest-quality content, but it’s not a blank page. But this site is just a front.

Behind the scenes, the fraudster is buying traffic from “traffic merchants,” and those traffic merchants have certain deals cut with malware developers. Bots are sent to the Web site through the traffic merchants, whose links redirect the bots to a blank page that dynamically loads ad on top of ad until the browser is closed. This happens in the background on an infected consumers’ computer.

And major advertisers are buying these fraudulent impressions. After just a few seconds, ads for Nordstrom, JC Penny, Groupon and more appeared. There were also ads for certain ad tech companies -- given that I have cookies stored on my computer from visiting their sites -- which was somewhat humorous given that the ads were appearing on a fraudulent page.

That’s not to single out those companies, however. Using the Ghostery plugin, I was able to see a list of all the ad tech platforms that were active on the site. Most of the big names in data management appeared, as did several demand-side platforms (DSPs) and supply-side platforms (SSPs). And the site Integral showed me was just one of hundreds or thousands -- or hundreds of thousands -- in a botnet.

Because the site is fraudulent, the bot behavior is not “normal.” So if one of the DSPs or advertisers goes to investigate the suspicious behavior that’s coming from one of these fraudulent sites, they may go look at the URL themselves. But remember, the the main site is set up as a front. It just looks like someone’s blog. The suspicious behavior is hidden behind the scenes and is only reachable through the links that the “traffic merchants” provide.

Shaw said he didn't have an estimate as to how much this particular botnet was costing advertisers, but it’s this type of skeevy behavior the entire ad industry is up against, which is exactly why companies like Integral are still raising tens of millions of dollars from investors.

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