‘Larger than usual’ ad fraud on exchanges prompts Google to offer advertiser refunds

According to a report in The Wall Street Journal (WSJ), Google is providing refunds to some advertisers that used DoubleClick Bid Manager in conjunction with ads that were placed on sites with fraudulent or invalid traffic:

In the past few weeks, Google has informed hundreds of marketers and ad agency partners about the issue with invalid traffic, known in the industry as “ad fraud.” The ads were bought using the company’s DoubleClick Bid Manager.

Google’s refunds amount to only a fraction of the total ad spending served to invalid traffic, which has left some advertising executives unsatisfied, the people familiar with the situation said. Google has offered to repay its “platform fee,” which ad buyers said typically ranges from about 7% to 10% of the total ad buy.
DoubleClick represents that it offers “industry-leading fraud protection.” While that may be accurate, traffic fraud is a growing problem on programmatic exchanges.

A recent report from The&Partnership, m/SIX and Adloox estimated that invalid traffic and fraud would waste $16.4 billion in ad budgets this year globally. An earlier report from the Association of National Advertisers estimated that fraud would cost advertisers $7.2 billion in 2016.

The WSJ report characterized the fraud behind Google’s refund as “larger than usual.” Google did not release any data on the extent of the fraud or the dollar amount of refunds offered.

The article also reports that Google is smartly seeking to put in place what amounts to a money-back guarantee from exchanges if fraud is found. The notion is that those unwilling to participate would be identified and agencies and brands could avoid those networks:

The company said it is entering discussions with the 100-plus exchanges, ad networks and publishers DoubleClick Bid Manager plugs into and asking them to display to ad buyers whether they are willing to refund the entire media spend if ad-fraud instances occur. Buyers could then opt to filter out the sources of inventory that don’t have such a policy.
Google says the instance of ongoing traffic fraud is small relative to the volume of impressions and spending. However, any fraud creates a kind of stigma that can scare some advertisers away or cause them to be less aggressive in digital than they might otherwise be.

Fraudulent traffic goes along with viewability and brand safety issues on a list of digital quality concerns. Facebook has also had to issue refunds in the recent past for various mistakes and measurement errors.