We’re currently in the middle of a retail revolution, with the rise of online direct-to-consumer (D2C) brands showing it’s possible to build a multi-billion dollar company without the aid of stores.
D2C has also created a new marketing model that, by cutting out the ad agency, avoids some of the more dubious practices of the online advertising industry. However, the problem of fraud hasn’t gone away for the D2C brands, with many companies facing increasingly sophisticated attacks that threaten the very roots that D2C is built upon.
D2C brands have changed retail from being a best-guess numbers game to a precisely targeted process where marketing is personalized at an individual level and social media is increasingly where outreach to customers takes place.
D2C seems to offer a way forward that not only enables brands to communicate directly with both existing customers and their target audience, but also hugely reduces their potential exposure to ad fraud schemes and the criminal networks that run them.
However, much like the agency model, where fake traffic and false impressions are reported as true because the client is pushing the agency to secure eyeballs at whatever cost, D2C brands can fall victim to scams that appear to give them exactly what they want. The results of these attacks are potentially disastrous because they also strike at the very heart of the D2C model: data quality.
It’s exactly because D2C brands have specific KPIs that define their ideal customer that makes them vulnerable to fraud. A key part of their methodology is spotting “lookalikes” to existing customers on social media and serving creative to them based on shared metrics in terms of interests, career, age etc.
The problem with this is that fraudsters also know what these KPIs are, and are able to create fake lookalikes that display the exact attributes the brands are searching for, but don’t actually exist. These “ghost profiles” are designed to generate fake traffic, despite happening within the supposedly safer environment of a walled garden social media platform.
More than just losing potential sales or revenue, such scams chip away at the foundations of D2C’s raison d'être by skewing the data that they base their campaigns upon. They might think they’ve had numerous positive interactions with consumers, and therefore their campaign is successful, when in fact many of these responses are false.
The more that this happens, the more it invalidates the entire D2C model, with their precision-based outreach ultimately built on lies. And the problem of dedicated attacks in the D2C space is growing simply because the brands often don’t realize they’re being targeted in this way.
D2C is vulnerable because it’s still relying on old-school measurement tools left over from the agency model that are unable to spot attacks such as fake lookalikes. To stop D2C from becoming yet another online space polluted by fraud, brands need to become as innovative and forward-thinking in their verification methodologies as they have been in their customer relationship management.