Commentary

Up To 80% Fraud? Business As Usual For Ad Tech

Doing this column can seem surreal sometimes. I have a 30-year history of covering media, with a focus on advertising, but can recall dealing with the issue of fraud only a handful of times. Once, when a con-man publisher printed only enough issues of a magazine to send out to the agencies that placed ads. And with radio, not all ads that were paid for actually ran.

Shocking? Maybe. But what do we make of the latest report from data intelligence platform Pixalate? This survey asserts that more than half of connected TV and over the top (OTT) ad impressions served programmatically were fraudulent in the first quarter of this year and that Android mobile ad fraud rates are 3x higher than iOS.

“Marketers need to be especially careful when buying mobile video advertisements on smartphones — particularly Web inventory, given that over half (56%) of such inventory was fraudulent in Q1 2017,” the report states. And, incredibly, Japanese desktop ad fraud reached 80%, closely followed by the sorry rates of Brazil. U.S. desktop ad fraud is about 38%, Pixalate says.

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Pixalate is a Los Angeles-based data platform focused on bringing “transparency to programmatic advertising.” Its Web site says it monitors “hundreds of billions of ad events in real time by tapping into the global RTB data stream, providing insights to optimize performance, benchmark supply quality, and eliminate fraud.”

So let’s assume these numbers are accurate. What do we conclude? That the ludicrous rush to domination by Google and Facebook makes sense. Ad tech companies can form all the coalitions they want, but marketers are still going to flock to Google and Facebook because they are assured of some basic honesty and reliable results.

What drives Japanese programmatic advertisers to place their ads into an ad tech cesspool where only 20% deliver what is claimed? We can’t imagine.

WPP reported this year that $16.4 billion could be lost from fraudulent traffic, clicks that are automatically generated by bots. This after the ANA estimated $7.2 billion was lost the previous year in the same manner. So ad-tech fraud more than doubles in a year?

I have often mused that the business has a very rocky future. Seeing results like this makes me wonder if it has any future at all. Put it in perspective. Suppose half of the ads paid for in Time Inc. magazines didn’t actually run? Time Inc. would be out of business in a week.

What’s the difference? Magazine ads are, shall we say, fairly easy to monitor. Either the ad is there or it isn’t. But, as Jalal Nasir, CEO of Pixalate, told Philip Rosenstein of Real Time Daily, “What is happening in the connected TV/OTT space is similar to what has happened in mobile. As in mobile, measurement in connected TV/OTT is very difficult to do, which has made it a breeding ground for fraudsters. They have moved from desktop display to mobile and connected devices.”

Sounds like an epitaph for an industry to me.

5 comments about "Up To 80% Fraud? Business As Usual For Ad Tech".
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  1. Mark Scott from Sage Projections, May 10, 2017 at 12:54 p.m.

    If this is true, why is this not  bigger news? I am afraid it probably is true but for some reason clients keep buying these mediums. It may explain why many marketers messages are never heard or seen.

  2. John Motavalli from Freelance, May 10, 2017 at 2:16 p.m.

    I can't speak for the veractiy of Pixalate's numbers but if they are fairly accurate, it is scarey, all right.

  3. Craig Mcdaniel from Sweepstakes Today LLC, May 10, 2017 at 3:32 p.m.

    John, I agree with you on some of your story, that fraud does exist and the numbers of high in certain areas but there is another side to the story.

    I have published over 64,000 sweepstakes ads by mainly Fortune 500 companies. We publish a customized and personalized with a text link from the advertiser. In 14 years and over 1.5 billion click/entries we have NEVER had a act of fraud committed against our advertisers.

    The reason? Simple. We hand process every single published sweepstakes ad. No automated algorithm is used to create the ad.  The only problems we have encountered has been with third party banner distributors.

    What I am suggesting is going back to human intervention between the advertiser and publisher.  While distributors like AdSense, OpenX and many other RTB's mean well there could be another layer of security or two with human intervention.
     

  4. John Motavalli from Freelance, May 11, 2017 at 5:48 a.m.

    Perhaps I see the irony here. The only way to verify online advertising is to forget algorithims and do it by hand? Back to the 90s, when men were men, media buyers did their jobs, and my Inside Media went to every ad agency.

  5. Craig Mcdaniel from Sweepstakes Today LLC replied, May 11, 2017 at 2:15 p.m.

    Hi John and thanks for the reply. I beleive it is human nature for machines and computers to make life easy for us. Worse we get addicted to those ways.  That's the core of the problem.

    The other problem is the pure cost of human involvement. A computer and a good programmer is far cheaper than a team of sales and customer service people.

    Maybe now someone will really look at the cost of computers, automation and algorithims.

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