Location-Based Ad Fraud: Probably Worse Than You Think

Juniper Research has estimated that total online, mobile and in-app ad fraud losses will reach $42 billion globally this year.

But almost by definition, video and other location-based advertising should be targeted to a degree that minimizes fraud and waste, right?

Well, that’s the theory. And there’s no denying that many brands are seeing enhanced performance by employing location advertising. That’s why location-targeted mobile ad spending within the U.S. alone is expected to reach $38.7 billion by 2020 — up from an estimated $26.5 billion this year, per BIA/Kelsey’s forecast.

Nevertheless, due to poor quality data and mis-targeted location impressions, anywhere from 30% to 80% of location ad spend is being wasted, according to new research by data intelligence company Location Sciences.

Specifically, based on the company’s audit of a total of 500 million digital location targeted impressions delivered in the U.K. and the U.S. between January and June of this year, up to $65,000 of every $100,000 spent on location advertising is outside the targeted area or is based on signals of insufficient quality to deliver targeting requirements.

Approximately $29,000 worth of impressions were delivered outside of the targeted area, and another $36,000 worth were possibly being wasted due to location signals of quality insufficient to deliver the targeting requirements.

While 90% of impressions should be of high enough quality to be used for specific location targeting, in this analysis, half of the suppliers had a signal quality score of less than 70%, according to the report.

Suppliers use GPS signals, IP addresses and other data to guide targeting, they explain. But just 14% of the impressions tracked in this study used GPS signal data, which is far superior for the purpose compared to IP addresses.

This is partly because some apps don’t secure users’ permission to access location data. More than a third (36%) of the top GPS-enabled apps were found to display location fraud.

Does Location Sciences have an agenda? Sure. It conducted the study because it’s in the business of using a proprietary platform to verify the accuracy and quality of data used in proximity-targeted advertising.

But the company lays out its methodology (and I’m sure there are other experts out there who can assess this far better than I): The data were collected directly from suppliers, via a tag embedded in digital creative, when the ads were served. Measurements and data recorded included latitude and longitude, device ID, publisher ID, and the IP address of where the ad was served and connected to the internet.

Furthermore, the company acknowledges that there are a number of competent suppliers out there.

Some location data suppliers “are doing an excellent job — in our analysis, 40% of suppliers showed nearly 100% accuracy in location and 35% near 100% accuracy in signal quality,” says Location Sciences CEO Mark Slade. Still, “there is a large percentage of suppliers who are significantly underperforming,” he adds.

The takeaway here seems obvious, if not perhaps all that comfortable, for those who haven’t peered into this kettle of fish yet.

“As with all data, the key to improvement is transparency,” sums up the company’s Chief Business Officer, U.S., Jason Smith. The analysis found that a 40% increase in location signal quality and a 10% increase in accuracy could be realized by enhancing transparency into data.

While it’s not marketers’ fault that bad data is on the market, it’s critical that they “understand the complexities of location data collection and distribution,” the company’s U.S. President, Warren Zenna, wrote in a recent blog. “If you haven’t already, start interrogating how your partners source and verify the location data they are using to build your campaigns. How successful have they been at targeting your desired audience? As time marches on and losses mount, it will become harder to raise your hand and admit you were complacent…”

2 comments about "Location-Based Ad Fraud: Probably Worse Than You Think".
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  1. Doug MacDonald from Advanced Media Advisor, August 27, 2019 at 1:26 p.m.

    Karlene -- The BIA/Kelsey chart says $38.7 billion by 2022 — up from an estimated $26.5 billion this year.

  2. Craig Mcdaniel from Sweepstakes Today LLC, August 28, 2019 at 4:17 a.m.

    Karlene, about 2 years ago, I started writing to Media Post writers and authors about this problem.  I have been a publisher for nearly 16 years, posted over 76,000 sweepstakes articles and secured over 2 billion entries. Our sweepstakes articles have never been hacked, scammed or a victim of fraud. Common sense would say I am doing something right. However the ad market is not interested in a very simple answer to the problem for much of the problem.  Go back to the trading desk and place banner ads by hand or by URL text link ads.

    This was the way business was done but the almighty dollar found a home in programmatic ad distribution. Programmatic have made some companies much money. However, now, the market refuses to say there was a mistake.  Having human involvement is better and always will be verses a computer program when it comes to security.

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