How big of a problem is fraud in programmatic and what can advertisers and agencies do about it?
Programmatic buying is on the rise
According to a report released by the Internet Advertising Bureau (IAB) and Pricewaterhouse Coopers, total digital advertising revenues reached a historic high of $12.4 billion in Q3 2014, and programmatic advertising has become one of the fastest growing segments of digital marketing due to its inherent abundance and efficiency. $10.1 billion was spent on programmatic display ads in 2014, and a recent Advertiser Perceptions survey reports that 78% of high-level decision makers are now using programmatic technologies and strategies across campaigns.
The term ‘programmatic’ covers a wide range of technologies that automate the buying, placement and optimization of advertising to create more profitable advertising campaigns. Programmatic buying allows media buyers to buy “eye-balls” – that is, only buying impressions that are going to be seen by a qualified viewer.
Or so the advertiser hopes.
The concerns around programmatic buying are largely focused on fraud and viewability – that is, is the impression being served to an actual human? And if so, do they actually have the potential to see the ad?
In a May 2015 survey, fraud and quality/brand safety concerns were the leading obstacle to buying ads programmatically, with viewability not far behind. (Source: eMarketer)
With Incapsula reporting that 56% of web traffic is bot traffic (29% being bad bots such as impersonators, hacking tools, scrapers and spammers), these are legitimate concerns.
Bot fraud will cost the industry $6.3B over the next year
In December 2014, AdWeek reported that, according to an Association of National Advertisers and WhiteOps study, digital advertising will take in $43.8 billion next year, and $6.3 billion will be based on fraudulent activity. The average bot level for display ad campaigns throughout the study was 11%, but for programmatic ad buys that number rose to 17% (55% more).
- Bots account for 11% of display ad views and 23% of video ads
- Up to 50% of publisher traffic is bot activity, just fake clicks from automated computing programs.
- Between 3% and 31% of programmatically bought ad impressions were found to be from bots, with an average of 17 percent.
“Fraud is a real and serious problem, but some, we think, still hold a mental image of fraudsters as one-off bad actors sitting in a dark room racking up clicks on ads on their site to make a few extra bucks. The truth is far more troubling: the majority of ad fraud today is perpetrated by sophisticated organizations that devote vast resources to build and operate large scale botnets run on hijacked devices, to reap multi-million dollar payouts” (Source: DoubleClick Publisher)
Do ads purchased programmatically even have the potential to be viewed by a human?
When ads are served that have not even have the potential to be viewed by a human user, it’s the advertiser who loses out. And this is a huge concern for the industry.
Advertisers want to buy viewable impressions – they want their ads to be seen! According to DoubleVerify, as reported on MarketingLand.com, RTB buying dipped from 48% viewable to 43% from Q3 to Q4 2014. The percentage fell from 55% to 51% on ad networks and from 64% to 58% on publisher-direct exchanges. So what can be done to increase the viewability of ads for advertisers? How can advertisers know they are purchasing impressions that have the potential to be seen by a human?
Digiday reported that Business Insider allows advertisers to purchase inventory based on viewability, but for a premium. But if advertisers have to pay more for a “viewable” impression, doesn’t it imply that the regular priced impressions are not viewable? A better solution for advertisers would be to take steps to increase viewabilty and eliminate fraud so that the concerns for all advertisers decrease, rather than simply charging more for “fraud-free” or “viewable” impressions.
The IAB reported at the end of 2014 that “100% viewability measurement” is not yet feasible, because, says Randall Rothenberg, President and CEO “different ad units, browsers, ad placements, vendors and measurement methodologies yield wildly different viewability numbers. “ and that “Publishers, agencies, marketers, and ad tech companies can resolve these differences by working collaboratively to make measurement make sense.”
The IAB provides 7 principles that marketers, agencies, and publishers should adhere to, in order to foster stronger collaboration and trust. These 7 principles can be viewed here.
- Google, in a recent article, outlined the steps it was taking to reduce the issue of advertising fraud. These steps include:
- Ensuring bad actors can’t hide with ‘Supplier Identifiers’ – as things stand today, there is no way of identifying which seller or reseller is responsible for inventory that has been misrepresented (where the ads are said to appear vs. where they will actually appear) and Google is looking to change that so that if fraud is identified, the buyer can get a refund, and can avoid that supplier in the future. As Google say, there is a need for more transparency.
- Cleaning up campaign metrics – if campaign metrics contain fake activity, how can a buyer know which are good inventory sources, and which should be avoided. Google wants to avoid giving credit to fake traffic, therefore removing the incentive for publishers to buy it, in turn, removing the incentive for bad actors to create and sell fraudulent traffic by “cutting off their access to advertising spend and making it difficult for fraudsters to hide”.
- Advertising agencies are taking their own steps to protect advertisers from fraud. Here at Mediative, we have developed an advertising solution that allows advertisers to leverage user interest and intent-based data to deliver relevant display ads to particular audiences only – in a brand safe environment, as only high-quality, premium inventory is purchased.
- Canadia’s Premium Audience Exchange (CPAX) is a real-time-bidding (RTB) exchange that was jointly developed by Canada’s largest media owners, to help brands programmatically buy premium digital inventory.With over 100 premium sites on the exchange, it is the premier access point to top tier real time English and French digital inventory in Canada, in a clean, brand safe and transparent programmatic environment.“We are committed to providing quality inventory to buyers, by building and curating premium content and rich audiences that are free of fraud, non-human traffic, and other concerns currently on the minds of marketers,” (Jeff Clark, VP of Audience & Analytic Solutions, Post Media)
The Wall Street Journal provides these tips to reduce the likelihood of getting your ads “seen” or clicked on by bots rather than humans:
- Bots are nocturnal: Most human Web users tend to sleep during the night, but White Ops found that bot percentages spiked between 11 p.m. and 5 a.m, so advertisers might consider not running any ads during the night.
- Bots like some types of content more than others: Sites related to finance, family and food had among the highest percentages of bot traffic, the study found, ranging from 16% to 22%. Tech, sports and science-related sites had among the lowest bot percentages, ranging from 3% to 4%.
Buzzcity recommends advertisers do the following:
- Ask your suppliers what they are doing about ad fraud.
- Use 3rd party technologies – like comScore, DoubleVerify, Moat, etc. – to identify bots and ensure that you do not (re-) target them.
- Go with your gut – if something looks too good to be true, then it probably is.
- Bots won’t make purchases or fill out online forms. So if ads are leading to sales – or other sorts of human interactions – keep advertising on these sites, and drop non-performers.
An April 2015 survey by ExchangeWire in association with OpenX reports 94% of digital marketing professionals worldwide said programmatic marketplace quality was a very or somewhat serious issue, and 84% believe that, if the programmatic marketplace quality issues could be overcome, media buyers would invest more (Source: eMarketer).
Fraud is a serious issue – one that is costing publishers in lost revenue.