What's the deal with digital fraud?

For years the advertising industry has been tasked with trying to eliminate ad fraud from the digital eco-system. And yet, rather than decrease, the problem seems to worsen. According to Dr. Augustine Fou, Anti-Ad Fraud Consultant and Researcher, reputable publishers account for only 10 percent of the money spent on digital advertising and generate only about one percent of impressions. The rest is being wasted on fraudulent publishers. If this is true, why hasn’t the advertising industry put a stop to ad fraud? Candidly stated, it’s easier said than done and there’s something in it for everyone.  

Suppressing the Truth                                                                                            

Eliminating ad fraud will also make fraudulent publisher inventory disappear. This in turn leads to a decline in available ad space to purchase. Less ad space to purchase on behalf of clients means a substantial profit loss for media buying agencies. It also would send the cost of digital media skyrocketing and its impressive CPM metrics would be lost. This would lead to more scrutiny on a ROI level.

To make matters more complex, buyers and marketers hire third party fraud detection groups to act as a watchdog for fraud. However, many of these fraud detectors are paid based on accredited impression levels, so it’s financially more rewarding for them to approve questionable placements. In some instances, they’ve been known to make claims that after further investigation, cannot be substantiated.

Marketers also despise delivering bad news to the client, which is another reason third parties help buffer the blow of digital fraud.  What agency would want to report an unsuccessful delivery rate of 90 percent to a client? Third parties are utilized to act as a legitimate source to soften the blow of disappointing results of campaign delivery.

Performance Facts Distortion

Marketers can’t change what the best of technology has to offer in fraud detection, and most rely on performance-based metrics to justify digital deliverables. This medium is moving faster than the speed of light and the security divisions aren’t keeping up with the fraudsters, but they’re gaining on them every day. Until then ad agencies can only deliver what the world can evaluate at this time, and many agencies quietly feel their hands are tied in winning the battle over fraud resolution. And, they certainly can’t tell their clients.

Unfortunately, most performance metrics that result from digital advertising are based on incorrect data. True conversions clicks and even impressions are easily falsified by bots. If performance-based metrics truly had an impact on a company’s bottom line, then any big change in digital advertising should be noticed.

However, so far, it hasn’t proven to be true. In 2018, for example, P&G withdrew more than $200 million from one advertising quarter of their digital advertising campaign. As a result, their profits improved, single handedly proving that after a certain threshold level of digital is utilized that additional digital advertising didn’t improve any of their business outcomes.

Will It Ever End?

While many attempts have been made to eliminate ad fraud, almost none have had a positive, lasting effect. Most recently, a cross-section of advertisers, and a hand full of media agencies including A3 media, and DSP and SSP platforms have formed a union to investigate whether blockchain holds any promise to end digital ad fraud.

The technology acts as an incorruptible digital ledger of transactions. When applied to digital advertising, blockchain verifies impressions and provides programmatic supply chain transparency through a neutral, decentralized shared register—capable of processing and verifying high volumes of data from multiple parties to reach consensus on the ads’ success.

While the technology is still in the early stages of testing, the results have been positive.

To learn more about fighting ad fraud in your digital advertising campaign, contact A3 media at (610) 631-5500 or email ashley@a3media.com