Opinion: Don't be cheap or you'll end up with programmatic fraud

Nikki Retallick
By Nikki Retallick | 6 March 2014

It’s reasonable for advertisers to expect that there’s a real person sitting behind every screen. Sadly, it’s not the case. Fraud is an issue the industry needs to come to terms with.

While fraud can be expected in any business where large amounts of money changes hands, advertisers and agencies are surprised it can happen in our industry. After all, they spend their budgets only with reputable media partners. No company would risk their business by knowingly engaging in fraudulent activity. Yet fraudulent traffic buying is occurring, obscured by an unknowingly complicit publisher, ad network, or exchange.

Some publishers and ad networks regularly sell more impressions than they can actually deliver on their digital media properties (websites, apps, etc.). To make up this shortfall they’ll do one of two things: (1) buy traffic – pay money to third-parties to drive additional traffic to their sites, or (2) buy “audience extension” media – source additional impressions in placements on other websites that they believe have complementary audiences. These practices are totally legitimate, and neither is fraudulent. They do, however, provide an entry point for perpetrators of fraud.

Those third parties delivering traffic, for example, could be using bots to simulate human browsing behaviour, driving extra traffic to the publisher’s properties. It is often hard for publishers and networks to distinguish between the legitimate and fraudulent traffic sources, as these companies don’t provide much transparency into the means they use to generate traffic.

An industry response
It’s a complex problem that will only be resolved by bringing together the leaders in the digital advertising industry to establish best practices and educate everyone on the process.

This has already been happening in the US, where the IAB’s ‘Traffic of Good Intent Task Force’ authored two important documents: Digital Simplified: Understanding Online Traffic Fraud and Traffic Fraud: Best Practices for Reducing Risk to Exposure. They were released on the IAB US website on December 5 last year.

In Australia we have the benefit of being fast followers. We can take what’s been done in the US and adopt it for our own local guidelines. AdNews has already reported on the formation of a cross-industry ‘impression fraud council’ which aims to tackle these issues locally.

Realistic Expectations
To an extent the industry helps promote this fraudulent behaviour. For video advertising, the last couple of years have seen a 20 percent growth in unique users and a 108 percent increase in market value (Comscore July 2013). Yet CPM rates have remained stable, despite a shortage of inventory.

Programmatic can help when it comes to determining the right price to pay. It's driven for the most part by auction-based buying. The technology learns the market value of an ad impression with a certain set of audience parameters and can forecast volume delivery accordingly. If you try to beat the system by bidding lower, then at best you risk under-delivering and more worryingly you're paving the way for lower quality, potentially fraudulent traffic. Put simply, there is good reason certain inventory is priced cheaper - if you want to reach humans you have to be prepared to pay the market price.

Responsibility for ‘clean’ inventory clearly sits with the vendor but, as a buyer, if you either actively or inadvertently encourage bad practice then you are creating opportunities for the fraudsters.

Nikki Retallick
Senior Director Client Strategy

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