By Tom Drouillard, CEO, president and managing director, Alliance for Audited Media

Losses from digital ad fraud range from $6 billion to $16 billion annually, and the current supply chain structure makes it easy and attractive to commit ad fraud with little chance of retribution. Marketers, agencies, publishers and technology suppliers are frustrated. Trust is at an all-time low. The industry is nearing crisis stage as marketers are seriously questioning, rethinking and redoing their digital investments.

How do we solve the ad fraud crisis? By recognizing three truths.

Truth #1: Ad fraud occurs on both fake and legitimate websites.

Let’s look at how it takes place.

1. Fake-Site Fraud: Marketers’ ads are placed on fraudulent websites with content that is pirated, fake or non-existent, and displayed to bots.
This occurs when the fraudster creates a bogus website, plugs into programmatic exchanges, buys traffic for the site, sells and displays the ad impressions, and collects the money for doing so. The fraudster steals ad dollars that were supposed to go to real publishers.

2. Legitimate-Site Fraud: Marketers’ ads are placed on legitimate websites with real content and displayed to bots.
This occurs most often when a legitimate publisher’s organic audience is supplemented with third-party traffic to fulfill demand. Often this is completed through the purchase of traffic that may appear to be human but is, in fact, illegitimate bot traffic.

Fraudsters create bots to commit both fake- and legitimate-site fraud. But fraudsters do not covertly send their bots to legitimate publishing sites in substantial numbers because they don’t make money that way. Instead, they make money by selling manufactured bots as “traffic” to publishers. Traffic sourcing is a common means for publishers to fulfill advertiser demand, but many publishers do not know the traffic they purchase is not human.
When an ad is displayed on a legitimate site, that publisher receives the revenue. . This is important to understand as legitimate site fraud occurs when a publisher, knowingly or unknowingly, introduces bots onto the site.

Truth #2: Illegitimate traffic sourcing is the main cause of fraud

Traffic sourcing is any method by which digital media sellers acquire visitors through a third party. These are the two primary types:

1. Legitimate marketing activity is when a publisher engages in audience acquisition methods that drive people to their site such as running sponsored posts on social media.

2. Illegitimate traffic sourcing occurs when a publisher pays a traffic supplier for a fixed number of visits to their website. Traffic vendors often promise the publisher that the traffic is human and will pass through all ad fraud detection filters.

This type of traffic is likely artificial, but publishers might not recognize it as such because it may appear human in their fraud detection reports. Likewise, it may appear human in advertiser’s fraud detection reports as well.

Truth #3: Ad Fraud Measurement is Used to Transact but Does Not Minimize Ad Fraud

Ad fraud detection services that measure and filter non-human traffic are an important part of how the market transacts business today. These tools introduce friction that helps deter fraudsters.

However, while these tools are critical, the existence of multiple vendors, each with proprietary methods and technical measurement limitations of their own, can compound the confusion surrounding ad fraud. To understand the limitations, consider the two techniques used to measure ad fraud today: in-ad and on-page measurement.
In-ad measurements is employed by advertisers and agencies to detect fraud within their campaigns. Typically a vendor platform is used to track a tag placed within the ad container.

There are two problems associated with in-ad measurement. The first problem is ad fraud detection vendors all have proprietary methods for calculating instances of fraud. The second problem is that through in-ad measurement, it is only possible to see what is happening within the ad container. Because the ad is limited to a small area of the entire page, there are fewer data points that the tag can collect to determine whether the exposure was a human or bot.

On-page measurement is typically employed by publishers who place a tag on the page where an ad is displayed. This tag can produce a more accurate measurement of fraud because it detects engagement across the entire page, including scrolling and clicking. This is one reason that advertiser’s in-ad measurements are often incompatible with publishers on-page measurement. On-page measurement is also subject to the same vendor-based challenge of complexity and lack of transparency that affects in-ad measurement tools.

When you combine the technical limitations of fraud measurement and proprietary methods from multiple vendors with the practice of purchasing bot traffic that is engineered to pass fraud detection, it quickly becomes clear why there is frustration at all sides of the market. The measurements the industry relies on to transact business can often deliver a false sense of security.

Confronting the truth

By looking deeper into the business of fraud – how the money is made and how it leaves the ecosystem – it’s clear that ad fraud is a problem that can be conquered. . The war on fraud is winnable. Marketers can steer their budgets away from fraudulent sites to legitimate sites with verified human audiences, but the way marketers buy digital audiences must change. Learn more about how the entire supply chain needs to change by downloading the full white paper: Three Truths That Help Confront the Digital Ad Fraud Crisis.