How Our Industry Can Prevent Digital Ad Fraud From Getting Even Worse

Patience Haggin of The Wall Street Journal recently reminded us of a pitfall in the ad industry this week, reporting that more than a dozen ad-tech companies had information about Gannett repackaging and reselling lower-quality websites as its own USAToday.com inventory. Historically, the digital ad industry is not good at protecting itself from misfeasance in its programmatic ad practices. And don’t even ask how badly the industry has been in protecting advertisers from malfeasance by companies intent on doing bad things and hiding them.

We have a lot of fraud in digital advertising, and it’s getting worse, not better.

But why is it getting worse? More and more money is being spent on programmatic digital advertising. If you know what you’re doing, it’s easy to spoof programmatic digital ad systems to create fake inventory. Virtually every player in the programmatic ad ecosystem makes more money the more transactions they process.

We are also seeing a massive increase in demand for CTV advertising -- from $6 annually in the U.S. to more than $20 billion in three years -- but CTV ad inventory is only growing 25% per year (most streaming channels carry few or no ads). Something is going to have to give.

What happens when demand for a scarce, valuable and easily forged product exceeds supply, and when there are open exchanges that don’t seem to care about vetting the quality and veracity of products on their marketplaces? Fraudsters manufacture fake supply and sell it on the exchanges.

You can’t stop this fraud with blacklists. Millions of new domains and delivery paths are created daily. You can’t stop this fraud with “Good Housekeeping” seals on websites. They are meaningless, and most of the organizations behind them don’t have the scale, technology, resources or strategies to get rid of the much more sophisticated and better resourced fraudsters.

According to Juniper Research, there was $68 billion of digital ad spend lost to fraud in 2021. Yes, $68 billion. If you want to see examples of how the fraud is perpetrated, and how easily companies are fooled by it, all you need to do is follow ad researcher Dr. Augustine Fou on Twitter or LinkedIn.

We only know about the Gannett situation because two independent researchers, Braedon Vickers and Krzysztof Franaszek of Adalytics, decided to dig into some data that lots of other companies had -- but none of them seemed interested in discovering what was wrong and then sounding an alarm. Thank you to both researchers. Our industry desperately needs more of this kind of work.

So, how are we going to stop digital ad fraud? Certainly not the way we are currently doing it, if mistakes like this can hide in plain sight and nobody notices. Even worse, often most or all are incented by the number of transactions processed, not the amount of misfeasance or malfeasance caught and stopped.

Rather, we need to reshape our industry compliance efforts around supporting independent work from folks like Adalytics and Dr. Fou and the many dozens of others out there -- forensic diggers who can search, find and out the bad stuff and bad actors in our programmatic platforms, not put more pretty seals on websites.

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