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Everything marketers need to know about ad fraud & how to deal with it

The extent of ad fraud – which was forecast to cost brands $16.4 billion globally in 2017 – confirms just how crucial it is for marketers to ensure their programmatic ad dollars are spent accomplishing campaign objectives, rather than lining the pockets of fraudsters. Many types of ad fraud exist in the digital advertising ecosystem today and each player in the industry has its role to play in combating fraudulent activity.

One particularly prevalent form of ad fraud is ‘domain spoofing.’ Domain spoofing gained global media attention as a result of last year’s Methbot scandal, which was estimated to cost advertisers between $2 to $5 million per day. The practice involves fraudulent sites being offered on ad exchanges, masquerading as legitimate, premium inventory.

When the money changes hands and marketers delve a little deeper into campaign specifics it turns out that instead of buying premium inventory on well known and trusted websites, their ads were running on low quality or fraudulent sites – some of which may even offer file-sharing and pirated content, having circumvented the checks that many ad platforms have in place. The nature of this type of manipulation makes it difficult for buyers to identify domain spoofing, so the issue is largely down to exchanges and supply-side platforms to police.

This is just one type of fraud, however, and when approaching the issue holistically, there are a few clear steps that marketers can take to reduce their vulnerability:

Assess criteria ahead of bidding
Premium demand-side platforms (DSPs) offer the opportunity to assess suitable media ahead of bidding through pre-bid targeting segments. These segments are created using data points from billions of unique URLs, and score inventory using a variety of metrics, including brand safety. When DSPs use these segments as the selection logic for buying media they provide highly accurate targeting in line with the media buyer’s specific requirements. By taking this proactive action pre-bid, advertisers can filter out many fraudulent impressions ahead of time, rather than reacting and filtering out scams post-purchase.

Embrace industry-wide initiatives
To take an effective stand against fraud, all parties along the supply chain must work together as partners, and embrace a collaborative approach. Tools such as the IAB’s ads.txt standard, along with similar industry-wide initiatives, are invaluable in building barriers against fraud. Ads.txt addresses the problem of fraud, including domain spoofing, by providing a simple way for buyers to see which partners a publisher has identified as authorized sellers of their inventory.

Ads.txt will help reduce inventory arbitrage, where inventory is bought and sold multiple times, often without the owner’s knowledge and provide clarity to what has become complex payment chains that provide the perfect breeding ground for fraudulent activity. Marketers using buying platforms that only buy ads.txt authorized inventory can enjoy more transparent trading and can be confident their budget is being spent on accountable media, rather than counterfeit inventory.

Work with trusted partners
In a recent study by the Trustworthy Accountability Group (TAG) it was found that using TAG Anti-Fraud certified partners saw an 83% plunge in online ad fraud versus using partners who were not certified. Selecting the right exchange partner is a critical step in the fight against fraud. By only partnering with ad exchanges that prioritize quality and have stringent fraud prevention measures in place, marketers will significantly lower their risk of purchasing fraudulent inventory. When selecting a partner, marketers should look to third party verification standards as a guide during their decisions process. Marketers should consider requiring partners to have certification from in all categories (anti-piracy, anti-fraud, anti-malware and inventory quality guidelines) as the proven benefits of certification are so powerful in reducing fraud levels.

Marketers should also question their exchange partners on their policies and procedures. For example, what percentage of inventory is scanned for fraud? Have its anti-fraud credentials been certificated by independent third parties? Are they highly ranked on ads.txt?

Programmatic technology has proven to be an invaluable tool for marketers, but like anything in the digital ecosystem, it is vulnerable to bad actors. Ad exchanges are actively taking on fraudsters, increasing transparency and taking proactive steps to become trustworthy technology partners. But ad fraud tactics are continually evolving, and as the industry develops innovative technologies to combat it, marketers need to be stringent on the partners they choose to work with. To achieve the optimum level of marketplace quality the industry as a whole must band together to fight back against ad fraud.

Satoru Yamauchi is the Director of Partner Services for OpenX.