It’s difficult, maybe even impossible, to know exactly how much money is lost each year to digital advertising fraud. The Interactive Advertising Bureau estimated that fraud cost advertisers $8.2 billion in 2015, while advertising verification firm Adloox predicts that this figure could be as high as $16.4 billion in 2017. Regardless of whose estimate one accepts, the problem is real and persistent.
Fraud represents theft of marketer dollars. It also poses an existential threat to the digital ecosystem—the very system that funds compelling journalism, music, gaming and online information— because it undermines brands’ trust in the programmatic marketplace. According to a recent report from the CMO Council and Dow Jones, 72 percent of programmatic advertisers are concerned about brand integrity and control.
Much of the problem rests with the complexity of the programmatic supply chain, which Procter & Gamble CMO Marc Pritchard sharply described as “murky at best and fraudulent at worst.”
Simply put, we need to restore trust and transparency to programmatic advertising. Digital publishers rely on their technology partners to help them fund important and compelling content. Marketers need a trusted and brand-safe marketplace where they can engage consumers and achieve return on their advertising investment.
AppNexus has long viewed trust and transparency as core to its mission. Two and a half years ago, we rolled out an aggressive initiative to crack down on invalid traffic, low-quality inventory, domain spoofing and unauthorized reselling. We subsequently imposed some of the industry’s most far-reaching prohibitions against hate speech and fake news. And we have committed significant resources to develop advanced detection tools and to understand (and shut down) the various business models that bad actors deploy.
But there’s still a lot to do. In 2018, we plan to make trust and transparency our battle cry. And we hope others will join us. There is no single playbook. But here are a few principles that should guide our efforts.
You can’t stop what you can’t see; you can’t prevent what you don’t understand
Lots of companies invest in fraud detection, and that’s both important and foundational. But detection assumes that fraud is a static endeavor; that the markers we searched for in January will look the same in December. That’s a dangerous assumption. Bad actors have proven themselves highly adaptive. We need to do more than just detect; we need to delve deeply into the business models that inform fraud schemes and use that understanding to stay ahead of bad actors. Here’s an example: at our recent Summit event on the future of trading, AppNexus discussed how traffic acquisition patterns are common to traditional ad farms and sites that propagate both hate speech and “fake news.” This represents months of study by our data science team. It doesn’t propose a silver bullet, but it helps us better comprehend the strategy behind fraud.
There is no room for moderation; take a firm and punitive approach
For too long, many perfectly reputable companies in the programmatic ecosystem have been willing to engage in activity that exists in the borderland between legitimate and illegitimate, or to work with partners that do the same. That has to stop. If you’re an ad tech company, don’t work with publishers that buy large amounts of cheap and suspect traffic. If you’re a marketer, demand that your exchange or SSP provides regular updates: How many domains did it turn off in any given month? What ongoing investments is it making to shut down invalid traffic? What measures is it taking to prevent domain spoofing? If you’re a publisher, demand that DSPs buying your inventory make ads.txt enforcement the mandatory default, and not just an optional filter. That’s what AppNexus is doing. If your partners aren’t doing the right thing, stop working with them. It may prove disruptive in the short term, but we won’t fix the problem until we make it too expensive to turn a blind eye to bad activity.
There’s no medicine like radical transparency
The more opaque the supply chain, the easier it is for bad actors to infect the system. So let’s make 2018 the year that we all embrace transparency. AppNexus is currently working with publishers selling inventory directly in its marketplace to disclose their fee structures to buyers. We also intend to integrate with payment companies that use blockchain and other emerging technologies to document each bite out of the advertising dollar. If marketers can see and verify how much of their budget reaches high-quality publishers, and how much goes to paying technology fees, we can restore much of the trust that’s currently lacking in the programmatic ecosystem. We can also make it more difficult for bad actors to siphon off spend.
Working together, we can make 2018 the year that programmatic advertising restores trust with marketers and agencies. The stakes are too high for inaction.