Digital Video Advertising Becoming Next Frontier For Ad Fraud

As marketers increasingly shift brand advertising budgets from television to digital video, online ad fraud perpetrators are shifting their focus from lower CPM static banners to premium digital video ads from leading brands. Programmatic, or automated, ad buying technology used increasingly in media buys for digital video makes bogus ad views harder to track, and fraudsters continue to display ever-evolving ingenuity in their scams.

Reporting by the Wall Street Journal spotlights some of the latest tactics being used to defraud the booming digital video ad ecosystem.

Lured by the promise of advertising they could be sure was being seen by the right people, marketers are now contending with a deep bag of tricks that includes Web-crawling robots, server-based “drone pools” and the pixel-size video sites that has them paying for dubious Internet traffic.

The process of buying and selling ad inventory programmatically — via automated online auctions transacted in milliseconds — means advertisers and the media buying firms representing them are often left in the dark about where and how video ads are actually served. The lack of transparency can come about because an ad may be passed through a chain of ad exchanges. Ben Edelman, a Harvard Business School professor who tracks online ad fraud told the WSJ, “in one case, he estimates, the ads had gone through nine different exchanges, ad networks and other third parties”.

The Interactive Advertising Bureau has called the problem of online ad fraud a crisis, suggesting some 36 percent of web traffic is considered fake. While some argue its in the media sellers’ best interests to turn a blind eye to the fraud, others point out that many in the industry is stepping forward to combat the problem. As an example, earlier this month, Extreme Reach, which distributes advertising across TV, mobile and online channels, announced it had acquired BrandAds, a start-up video ad verification service to help bring the level of authentication it delivers on TV advertising to digital.

But fighting online ad fraud is a game of whack-a-mole, as the WSJ reports:

For instance, investigators say that fraudsters are now renting giant servers with the capacity to mimic millions of personal computers. Known as cloud computers, they can be deployed across hundreds of websites to trick advertisers into paying for fake visitors …

Cloud-based “drone pools,” as the latest schemes are dubbed, perform more reliably for the scammers than an army of PCs that have been infected with viruses. These drone pools, say researchers at security firm MdotLabs, can’t be switched off by users with antivirus software, meaning the bots will carry on.

An IAB report last fall noted that 85 percent of advertisers surveyed have bought advertising through real-time bidding platforms. Over 90 percent of advertisers said they expect to be using programmatic approaches to media buying in the next two years. In that study, one third of advertisers said that brand safety issues were holding them back from adopting programmatic ad buying methods.