Industry leaders answer questions about digital ad fraud

At this year’s DMEXCO event, Oracle Data Cloud will be joining Trustworthy Accountability Group (TAG) for a panel surrounding criminal activity in the programmatic digital era. Specifically, we will be covering the latest in ad fraud and how it’s affecting industry players and consumers.

We took a moment to ask a few of the participants some questions about ad fraud and what they are doing to address this increasingly crucial industry challenge.
 

1. How does ad fraud affect your business? What specific initiatives is your business taking to combat or deal with ad fraud?

Mike Zaneis CEO, TAG

TAG works to fight advertising fraud by working with both the buy-side (advertisers and ad agencies) as well as the sell-side (ad tech firms, anti-fraud vendors and all the way down to publishers). Our initiative is about making sure that any inventory that is either purchased or sold is being filtered for fraud, particularly by an MRC accredited fraud vendor such as Moat by Oracle Data Cloud. To us, it's sort of a shared responsibility across the supply chain. Buyers should be responsible for what they're purchasing and sellers have to be responsible for what they're selling as well.

Sebastian Höft Director, Market Quality, Smaato

While it’s difficult to measure fraud’s true impact, recent ad fraud estimates vary from $6.5 billion to $19 billion in 2019. Most of this loss will be generated in the APAC region, but it’s no secret that buyers and sellers of all regions are impacted. As an exchange, Smaato is addressing issues of fraud on both sides. As such, we have dedicated teams that support both ad and traffic quality worldwide, who constantly monitor our exchange. We also work with leading fraud specialists, such as Forensiq, Protected Media, and Moat by Oracle Data Cloud, to ensure that we are actively deterring bad actors. Additionally, we support industry initiatives like the Trustworthy Accountability Group (TAG), Open Measurement (OM) viewability, and app-ads.txt. In terms of onboarding new clients, we have stringent policies in place that help us create a safe and transparent mobile marketplace.

Arne Kirchem German Advertisers Association (OMW) Representative

First off all, ad fraud means that advertisers pay for ad impressions that are never seen. Assuming the digital ad spent in Germany may reach almost 8 billion € in 2019, even an ad fraud rate of 5% would mean 500 million € wasted, regardless of the origin of the fraud. And be aware: As the share of digital spending rises from year-to-year, the total amount of money wasted grows also from year-to-year! A situation that can’t be accepted by any advertiser, no matter if the ad fraud rate is about 5% or even higher (we see even higher rates in the market which causes at least irritation or more a lack of trust on advertiser´s side). That’s why it is so important that advertisers use tools to prevent ad fraud and know on top what agencies and publishers have in place to protect brands from ad fraud. We (as OWM) expect the market to take the problem seriously and to do anything to fight ad fraud. There needs to be a joined industry initiative to get a clear view of the size of the problem (this means we need to measure a representative ad fraud rate for the German market) and then take measures to erase it.

2. Often ad fraud doesn’t get taken as seriously or dealt with as harshly as other forms of fraud. Any thoughts on this? How do you think the industry can change this perception?

MZ: I think generally when the public thinks of fraud, they think of consumer financial fraud. A bank account is hacked and somebody loses money or their credit card is misused. That, of course, resonates with folks because it impacts individuals. Probably all of us have had some sort of problem with fraud. But that downplays the impact that advertising fraud has because people think that since it's perpetrated against large companies, then it doesn't have any negative impact— that it's not as important. That is simply not true. First and foremost, if you think about the scale of advertising fraud and taking tens of billions of dollars of the digital supply chain out of our economy essentially and handed it over to criminals—that has an immense impact, of course.At a more macro level, if you take this to its logical end, if you're allowing criminal enterprises to have billions of dollars in revenue, they're going to use that for other criminal activity. There have been links by these same networks to things like human trafficking and drug smuggling. So there are these incredible harms to individuals and to our economy.

SH: The end-user in the case of ad fraud is typically not affected, so there is less public outrage at the moment. But government entities around the world are starting to pay closer attention to ad fraud, and we welcome that. We can also thank investigative journalism from publications like BuzzFeed, who are doing great work to uncover more schemes and shed light directly on the advertising industry. Furthermore, having industry initiatives like TAG help to strengthen the safety and trust across the entire programmatic ecosystem.

AK: We need to clarify how big the problem is in reality. Honestly, I do not trust the current figures and even if they are right, it would still be too much waste. As we have the industry bodies in place, OWM, AGOF and BVDW will need to start a joint effort to get a to a reliable research on which base than concrete actions have to be taken.

3. What is the future of ad fraud?

MZ: I think Drainerbot was one of the key tent poles for success that the industry is experiencing now. And we're seeing a lot of interest by just not just domestic law enforcement, like the Department of Justice and FBI, but also globally with Interpol, Europol and other local agencies. They see the success and ultimately they want to bring criminals to justice too. Something like Drainerbot is essentially a proof of concept for the industry that we can proactively protect ourselves and put criminals behind bars.When you think about traditional display advertising, we're actually having a tremendous amount of success in mitigating fraud. And part of that is because we have fantastic vendors that are able to identify the nonhuman traffic there. And more importantly, we have an industry that we have incentivized to use these services. So you see fraud rates going down in this area. But as ad dollars migrate to mobile and eventually to OTT digital video, that is where the criminal activity is migrating. They always follow the dollars. So in the mobile app space, for example, we see relatively high rates of fraud. And I think we're, we're really just now sort of getting to an inflection point where the industry is being able to identify that effectively. You're seeing a lot of adoption of frauds, anti-fraud services, which is fantastic.

SH: Mobile ad spending is expected to grow over 20% to nearly $280 billion worldwide next year. This means that 72% of total digital ad spend will go to mobile, and will constitute almost 40% of the entire media spend globally. With that, it is reasonable to expect more attempts by bad actors. We do hope to see more regulation, ideally on a global scale, but until that time comes, it’s essential to work with trusted buyers and sellers, invest in market quality initiatives, and partner with leading third-party fraud specialists.

AK: There is a lot of money earned in the media industry and we will see ad fraud and new forms of ad fraud in the future as well. But I am positive, if we get all partners at one table, take the problem serious and become better to filter out fraud the problem could become smaller and by getting this problem solved the trust will come back again. To reach this goal more transparency e.g. in form of quality certification of vendors, especially ad networks that shows their inventory is safe, would help. As advertisers are looking more and more into this, I assume we will see a trend towards there in the next months. Again I see an opportunity that joined industry committees can contribute to such a solution.

For more information about ad fraud, and specifically invalid traffic, check out our white paper on how to protect your ad spend from invalid traffic. To see Moat by Oracle Data Cloud's latest data on invalid traffic, check out our infographic.

If you are going to be at DMEXCO and would like to attend this panel, please reach out to info@tagtoday.net. Panel details:

Restoring Trust and Quality in Digital Advertising

11am CET on Thursday, September 12th 2019

DMEXCO, Cologne, Germany

The event will be a panel discussion – to be chaired by Mike Zaneis, CEO of TAG – to talk about the developments and challenges in tackling criminal activity and promoting brand safety in digital advertising. We will be joined by the following speakers:

• Sebastian Höft, Director of Market Quality at Smaato
• Ben Geach, Senior Director, Global Product Strategy at Oracle Data Cloud
• Peter Szyszko, CEO at White Bullet
• Arne Kirchem, Board Member of German advertiser trade body, OWM