• by Tobi Elkin , Staff Writer @tobielkin, May 17, 2016

Is ad fraud a more pressing issue than ad blocking? Both are discussed within the same conversations, but at least one media executive believes ad fraud is taking a bigger bite out of advertisers’ wallets than ad blocking—for now, at least.

Jordan Bitterman, the former chief strategy officer, Mindshare, North America, takes this view. “Most sites aren’t in sell-through situations,” he said. For example, if most Web sites aren’t selling 100% of their inventory, perhaps they’re selling only 80% of their inventory. That means that if 20% or 30% of impressions are ad-blocked, publishers are still doing OK: “They’re not losing that inventory just yet,” Bitterman said.

On the media buyer side of the equation, you only pay for the ads that get served. If publishers are in a 90% sell-through scenario and have only a 10% vacancy rate, and say 50% of all ads are being blocked, then there’s a serious “pocketbook problem,” Bitterman explained. “[Ad blocking] hasn’t become a pocketbook problem just yet. It’s on all of us to get this solved.”

He’s not saying blocking won’t become a bigger problem, but smart brands and agencies are creating experiences for audiences that will help inoculate them from the problem. They’re doing that by attempting to create compelling content, promotions, or some sort of “value exchange” for audiences.

Ad fraud, Bitterman maintained, is a much bigger issue than ad blocking: “Ad fraud is already hurting people in their pocketbooks. If a bot is being served an ad, then the brand is paying for that impression, and that’s a problem for the advertiser and the publisher.”

The problem will catch up to any publisher that allows this to happen, according to Bitterman: “Ad fraud is already affecting the industry financially. Ad fraud is already  affecting the financial mechanisms of ad buying and ad selling, whereas ad blocking is a serious issue that all parts of the industry has to solve individually and collectively.”

Ad blocking, Bitterman said, hasn’t changed the cost of media from a supply and demand standpoint. “Prices haven’t changed because of ad blocking, but they have with ad fraud. The economics have have already come home to ad fraud.”

“One of the knocks on programmatic—any kind of automated buying—is that it’s just rife with these types of challenges, because there’s an arbitrage going on with the media. …Media agencies and brands really have to do their homework on who the most technologically sound partners are,” Bitterman explained.

So what’s Bitterman looking to do next? “I think what’s missing is the ability to easily translate issues for all the different constituencies. Media companies and brands often don’t know how to distill things down to two or three sentences.  … Companies need to try to make sense of how the world is changing [the ad and marketing world], what it means for them and where they need to go next.  The idea of helping making sense of the transformation that’s going on right now, the growing importance of data, video, native, algorithmic buying, are what’s interesting to me.”