• by Michael Chock , Op-Ed Contributor, November 3, 2016

Digital ad fraud is an estimated $7.2 billion catalyst demonstrating the need for an immense evolution of the digital ecosystem, according to a study done by White Ops and the Association of National Advertisers (ANA).  This problem has prompted countless new “fraud detection” companies like Forensiq, created new roles within agencies such as GroupM’s appointment of a “Global EVP of Brand Safety” and begun to attract the attention of external governing bodies such as Congress and the Federal Trade Commission, leading to massive dollars lost.

While companies seek external vendors for a solution, the true answer to ad fraud exists in two areas:
1. Increasing reciprocal transparency between tech platforms and advertisers
2. Leveraging prolific data available throughout the programmatic ecosystem.

Ad fraud proliferates because the digital standard of measurement is still based in archaic standard media metrics (click-through rate, etc.) Rather, the basis should be true custom business metrics such as return on ad spend, customer lifetime value, funded bank account, etc.  It follows that the most abundant fraud can be bucketed into impression (CPM), click (CTR/CPC) and conversion (CPA) fraud. These metrics were originally created because there was a necessity to create a standard system of measurement to prove the efficacy of digital. Moreover, advertisers’ lack of trust in ad tech has prevented them from sharing the most meaningful data.  

Reciprocal Transparency
The drive for increased transparency from ad-tech partners has been prevalent since the advent of programmatic. “Black box” solutions being offered spurred the aforementioned ANA study demanding transparency.

Advertisers hold the keys to the kingdom, as they control the flow and quality of data released into the digital ecosystem. The quality and the cadence of this data flow greatly impacts a tech platform’s ability to influence actual business results. With this increased requirement of transparency from partners, advertisers need to understand the enormous benefits of data sharing and to provide partners with data. Thus, advertisers will be able to effectively anchor the accountability of their partners to business metrics rather than media metrics, curtailing growth of ad fraud.

Use of data in the programmatic ecosystem
Programmatic technologies have allowed significantly more robust access to data sets that can further decrease ad fraud. In fact, this enhanced access has allowed programmatic platforms to achieve lower fraud rates than site-direct.  Greater access to data sets allows for real-time identification and categorization of bot behavior versus human behavior. Bots are known to click on an ad at the first available pixel, while human clicks are random or centered on focal points like creative or call-to-action messaging.

Even more crucial is the advancement in blocking fraud at the IP level. Ultimately, a bot is one infected machine, and blocking its IP is the most direct way of removing the bot, regardless of what Web sites it visits. Because bots like to trawl legitimate sites in order to look legitimate and gather valuable cookies, direct publishers still get hit by fraud. The responsibility to block fraudulent IP’s falls on the tech partner. Industry giants like Google have made this data available within its AdWords platforms, and companies actively block over 1 million fraudulent IP address daily.

In this digital age, almost every real world and online action creates a digital data point that programmatic ad tech can ingest, analyze, and take action on. The solution to fraud can be found within the connections to the omnipresent data sets and the enhancement of the reciprocal trust between ad-tech partners and advertisers.