With record numbers of shoppers planning to shun brick-and-mortar stores in favor of spending billions for presents purchased online and via mobile devices, advertisers are gearing up for the largest digital holiday advertising blitz in internet history.
As ad dollars follow consumers online, so will fraudsters looking to benefit from the massive spend flooding into digital channels the final seven weeks of the year. According to a report by cyber-security White Ops, fraudsters could siphon off up to $3.5 billion.
There are six key steps every advertiser should take to ensure ad dollars reach consumers this holiday season:
1. Trust but verify.
Many exchanges and SSPs today offer “fraud free guarantees,” but have failed to make the necessary investments to fight the fraud arms race. In some cases, the “guarantee” will only be honored if the exchange is “caught” dealing in fraud.
The IAB has established a clear benchmark to help buyers select technology partners that have met the highest quality standards through TAG certification. Only a handful of companies in the world have met these standards. Buyers can take a major bite out of ad fraud by partnering only with those companies that have embraced independent third-party verification.
2. Fight fraud in every form.
Between bots (non-human traffic), domain counterfeiting (spoofing) and unauthorized domain reselling, it’s projected that 15% to 20% of ad spend on low quality exchanges is siphoned off by fraud. Buyers should require their partners to scan all inventory for fraud ahead of time, as the random samplings deployed by many exchanges can allow billions of fraudulent impressions to slip through.
Buyers must also become far more discriminating with their partner strategies, working only with companies that have invested in extensive proprietary anti-fraud technology, as well as third party verification. And, to counter the risks from domain counterfeiting, buyers should seek out partners that are highly ranked in IAB's ads.tx and push their DSPs to only buy from authorized sellers listed in a publisher’s ads.txt file.
3. Fee clarity.
Fees charged by some SSPs and exchanges to a buyer ultimately result in a dollar-for-dollar reduction in a brand’s buying power. The fix here is simple, buyers should work with providers that offer clear fee arrangements for the transaction. In addition, rebates, or “kickbacks” peddled by some exchanges to incentivize the re-allocation of spend to their own platform directly reduces the buying power of every ad dollar spent, degrading confidence in the marketplace.
Contractual agreements barring DSPs from accepting any financial incentive from an exchange in return for a shift in spend will help maximize the impact of a buyer’s actual spend. Good exchanges can compete on the value they drive to both the buyer and the seller — and don’t need to incentivize spend.
4. Triple-check the ad quality parameters in place with your technology partners.
Ads that appear around offensive or harmful content, or in conjunction with too many other ads put brand reputation at risk and degrade the user experience. Partner with exchanges that have strict quality standards and have made the necessary investments to curate and cultivate the highest quality inventory available.
Require exchange partners to have clear protocols on the number of ads they will allow per page. Requiring a maximum benchmark of six or fewer ads per page for the buy environment will ensure a better consumer experience for your ad.
5. Require clear and fair auction mechanics
Auction transparency has become a hot topic as some exchanges have deployed non-transparent “shadow” first-price auctions to increase their ability to capture revenue. The “first-pricing” of what buyers believe to be a second-price auction reduces a DSP’s ability to tune its bidding strategies. This results in buyers paying three to four times what they expected for a given impression.
Ensure your partners offer clear and transparent signals, such as use of the Open RTB protocols for auction type and final auction decisions. If the auction rules are unclear, buyers should refuse to participate in that exchange. With the 100% shift to first-price auctions by some exchanges, buyers should seek out partners that offer first- and second-price auctions to retain maximum control of the buying process.
Remember to inspect your spend data closely, with particular attention to your “paid to bid” ratio for the higher dollar bid amounts — for example, for bids in the $50 range. No one should pay anywhere close to $50 if the exchange is running a true second-price auction.
6. Evaluate seller relationships and keep those who have direct partnerships.
The unintended consequence of unauthorized reselling of publisher inventory has allowed bad actors to take advantage of the distance between the buyer and seller. Domain counterfeiting, unauthorized resale and arbitraging of inventory are the primary consequences of this increased distance.
Buyers should require their exchanges to have a maximum “two hop” relationship with inventory sell. Direct publisher relationships are preferred, however, though working with an authorized reseller may be necessary. Any further separation (three or four hops) increases the risk of fraud.