Alvin Wong
Mar 27, 2017

How to stop losing sleep over ad fraud

Alvin Wong of DataXu write a three-step prescription to save marketers from dreading ad fraud.

How to stop losing sleep over ad fraud

Ad fraud is a growing problem for the industry and has become part of every marketer’s vocabulary. It affects how our entire ecosystem is perceived, and impacts the central issue of whether a brand can even trust their digital advertising investments, not to mention the loftier goal of driving a better return on investment. Recent reports of ads from renowned brands being served on dubious websites impact marketers’ concerns further, with brand reputation being put at risk.

Ad fraud is set to cost the industry an estimated US$50 billion by 2050—one-tenth of the US$500 billion global digital ad market—as reported by the World Federation of Advertisers (WFA Issues First Advice for Combatting Ad Fraud, 6 June 2016). With clients still in nascent stages in high-growth Asia Pacific markets, the door is wide open for fraudulent traffic, due in large part to the region’s focus on clicks as an indicator of campaign success.   

Waste, distraction and noise are three of the most visible industry challenges associated with fraud. But who exactly is at fault? Are publishers to blame for not incorporating enough fraud prevention from their end before selling their inventory? Or are the brands’ own retargeting pools not safe from fraud? While there is no definite answer, there are three key industry developments that need to take shape in 2017 to save marketers in Asia from losing sleeping over fraudulent ads.

Improving quality by discussing fraud and viewability together

Fraud and viewability are distinct drivers of impression quality. Advertisers and media buyers will need to become even more discerning when it comes to quality, and discuss fraud and viewability together rather than separately, to enable deeper discussions on the overall quality of media and the actual efficiency of digital advertising. Media buyers will need to expand their focus beyond fraud perpetrated in the form of bots or hidden ads, and evaluate publisher techniques that water down the value of inventory, such as impression arbitrage, rapid refresh rates, and below-the-fold auto-play inventory.

Greater focus on tackling mobile ad fraud

Fraud will become ever more pervasive on Mobile in 2017. This is especially critical in markets like Singapore, where smartphone penetration is the second highest globally at 86 percent (We Are Social Mobile in 2017 Global Overview, 25 January). Mobile ad fraud is becoming increasingly sophisticated, employing methods that go beyond the click and have a greater impact on campaign reporting—app install fraud being one example. In addition to defining a pattern of ad fraud, or detecting suspicious IPs that have generated large volumes of installs and clicks, a valuable solution would be to create an industry-shared blacklist that industry players can access and contribute to.

Attribution fraud

Attribution fraud is fast becoming the ad industry’s next big quality headache. It occurs when publishers intentionally or unintentionally try to “game” the marketer’s measurement system by taking credit for conversions attributed to their media. This leads marketers down a rabbit hole of fundamentally misunderstanding their customers’ behaviour. Digital media buyers are misled to optimise budget toward publishers gaming the measurement system, while potentially taking budget away from publishers actually influencing conversions. To combat this, marketers need to leverage crucial technologies that identity the role of each touchpoint, and how much each device/platform contributes to the consumer’s overall conversion journey.

Proactivity, transparency and collaboration key to prevention

The fact of the matter is that fraud is a thorny and ever-evolving issue, and it’s not going to go away any time soon. As a first step, advertisers in Asia should move away from the pay-per-click model and look at other metrics such as return visits, conversions and time spent on site, to drive out click fraud.

Though the majority of fraud typically happens on the publisher side, it is important to note that even a brand’s own retargeting pools are not safe from fraud. One of the most effective techniques we have found to tackle ad fraud is in filtering out bots from retargeting audiences. Fraud-laden audiences need to be pruned at the source—meaning from first-party data—to ensure investments are generating ROI.

Ultimately, the most effective way to prevent fraud is to build a clean digital advertising ecosystem through proactivity, greater transparency and collaboration. Marketers nor advertising tech providers can afford to wait for the supply side to act. By also working with independent third-party measurement or analytics partners (as compensation is not pegged to media spend), we can create greater confidence that investment in digital advertising - and programmatic specifically - can be trusted to live up to its promise of transforming the business of marketing.

Alvin Wong is sales director for Southeast Asia with DataXu

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