Automatic Ads: An Invitation For Fraud?

Advertisers are spending billions of dollars on ad campaigns that human eyes never see, and understandably, they’re not too happy about it. Google is issuing platform fee refunds after discovering that the advertising tool DoubleClick Bid Manager had placed campaigns by hundreds of its marketers and ad agency partners on websites with fake traffic.

It’s called ad fraud, and according to PK4 Media CEO and Co-Founder Tom Alexander, it’s a way bigger problem than people realize. PK4 Media is an omni-channel private marketplace (PMP) company serving ads across desktop, mobile, in-mall, in-theater, and VOD channels, among others.

According to a study by Adloox, ad fraud cost brands $12.5 billion globally in 2016 and could cost them another $16.4 billion this year. The Association of National Advertisers (ANA) and WhiteOps were more conservative with their numbers, tallying $7.2 billion in losses last year through a study of 49 ANA members. The study predicted an ad fraud decrease to $6.5 billion in 2017.

Alexander blames the boon on programmatic advertising, that is, tools like Google’s DoubleClick Bid Manager that automate ad placement to drive more views in more places for less investment and effort by the advertiser. When websites can’t sell their ad space, they open up that space to bidding, and programmatic platforms connect advertisers with those open slots.

There’s nothing wrong with the placement, said Alexander; the spaces aren’t undesirable. The site may not have been able to find enough advertisers to fill all their slots, or they may have been running the same ad for so long that users are numb to it, and it’s time to replace it with something new.

So far, it sounds like a match made in heaven. Those websites get to fill empty spaces and therefore generate ad revenue that otherwise would have been forfeited. And those advertisers get exposure in a wide variety of avenues. According to the stats, they’re getting lots of impressions.

But the stats, unfortunately, are wrong a lot of the time. Alexander said that as many as 30 percent of impressions from programmatic advertising comes from invalid traffic, or IVT. In other words, the only eyes seeing those ads belong to bots, and, “Bots don’t buy,” Alexander said.

Who (Or What) Is Clicking

Some bots are harmless. Google has bots that trawl sites for relevancy and keywords, and those generate invalid traffic counts. They may trigger tags to play a banner ad, and the advertiser pays for the ad to play even though only a web crawler can see it.

But that, said Alexander, is a very small percentage of bots. Most of the ones that generate invalid traffic are doing it on purpose, directed by savvy cybercriminals who recognize that digital is overtaking broadcast for dollars spent on advertising. With so much stored on the cloud today, Alexander said it’s easy for a hacker to go in and take over placements without anyone noticing until later. That saves the criminals from building their own brand and making money the hard way.

Third-party companies can help advertisers understand where impressions are coming from. Real people on real machines have cookies stored up in their browsers, whereas bots might be brand new and not have a single cookie, said Alexander. Or, the IP address may have shown up in too many other places. Atypical surfing habits can be a dead giveaway that those clicks aren’t coming from a real user.

The problem is when advertisers get greedy. They want to see fast growth and dramatic year-over-year results. Programmatic is so new, said Alexander, that advertisers got excited about the low rates and didn’t stop to think about site-by-site transparency until now.

Programmatic advertising can deliver that dramatic growth, but it’s a gamble. On top of that, it’s a black box, giving brands no visibility into where their ads are being placed or how many impressions a certain site is generating. Alexander said that control is not something brands should be so quick to relinquish. JPMorgan Chase, for example, lost control of its ad tag, and the tag got passed around and ran on unapproved sites.

Bottom line, says Alexander, ad click growth doesn’t always equal true growth. Invalid traffic doesn’t work for brands or advertisers and should therefore be avoided at all costs for any company whose mission is to add value for its clients, he said. And definitely, definitely don’t charge for IVT!

Clicks That Count

Alexander offered five tips for getting more of the right kinds of clicks.

First, don’t rely on programmatic advertising. Retain control of ad content by taking a direct-to-publisher or PMP route. That way, the ad will only appear on a list of curated sites where it can generate impressions with real human users.

Second, incorporate human oversight. Have dedicated employees who are responsible for placements. Each time an ad appears, three parties should understand the placement: the brand, the publication and the company serving the ad.

Third, PMPs and other companies that serve ads should set up terms and conditions to protect the brand advertisers and the publishers they work with. Standards terms include rules like 50 percent of the pixels must be in view for at least one second for a view to count. For videos, it’s two.

Fourth, join forces with an independent verification partner to provide third-party reporting. Task them with auditing impressions and keeping IVT percentages low.

Finally, work with data scientists to understand where the most valuable impressions come from and focus investments there. Even though the strategy isn’t programmatic (and therefore not automated), it can still be optimized, Alexander said.

A Happy Ending For Google?

Advertisers aren’t thrilled about Google’s offer to refund platform fees, since these only amount to 10 percent or less of their total purchase. But perhaps this issue will only become less common as Google develops its solution to introduce more transparency and accountability in digital advertising. The search engine giant is reportedly looking into which partners are placing ads on sites with fake traffic so that it can automatically refund advertisers who may fall victim to ad fraud in the future.