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You Are Stupid if You Continue to Ignore Advertising Fraud

  |  August 8, 2011   |  Comments

Ad networks that lie about their reach and other deceptions could harm the interactive ad sector.

In addition to using technologies, I spend up to a few hours a day visually inspecting websites and networks that are known to be bad players. Occasionally a day goes by when I, or my scripts and searches, don't find any clients showing up anywhere. But each time, I find a half-dozen video fraud violations, brand ads showing up on porn sites, or a weird scheme to defraud an advertising network.

Sometimes, I send screenshots and log files to networks, agencies, and publishers who are not my clients. From this exercise, I've concluded that a majority of companies have no idea what's going on. Worse, most don't have resources to actually prevent fraud.

Here are a few things that advertisers and publishers needs to know about fraud and interactive marketing:

1. A large percentage of video advertising is still fraudulent. If you didn't already know, media buyers are lazy. Several CEOs of established video networks have told me that they are consistently underbid by websites and "video properties" that claim reach that exceeds YouTube's, but with a significant discount. In order to lower the eCPM for their client, media buyers are either really lazy or completely complicit in putting video on sites that have a history of pop-ups, adware, or invisible 1x1 pixels.

2. Everyone knows who the Bad Guys are. Bad networks - the ones that clients are predominately warez and torrent sites - are known throughout the industry. Examples include fake video sites that use pop-ups to promote their business and video networks that engage in rampant fraud. Still, despite overwhelming evidence identified by the likes of Harvard Business School Assistant Professor Ben Edelman, ClickForensics, and me, fraudsters are still in business. Why? Because they have traffic. With so many new companies popping up every day, many are willing to take crappy traffic to get started.

3. The exponential growth of display exchanges is contributing to significant fraud. Let's face it, everyone wants to be the biggest exchange and get the big investors. In order to do that, you need as many websites as possible and as many connections as possible. While the Internet is growing exponentially, there is only a limited amount of websites and traffic - and most of the legitimate traffic goes to major advertising networks or direct sales. Because of that, the junk websites such as torrent websites, naked celebrity sites, and other sites that have no value put their inventory on exchanges under a variety of names and URLs, knowing that they will make money. Let's not forget that many exchanges are pulling inventory from…other exchanges.

4. Fraud prevention works only some of the time. I see advertising all over the place with pixels from the top fraud protection companies. While I recommend using these companies - they are your best bet in protecting yourself - there's only so much they can do. As soon as a fraud detection technology is created, hackers and fraudsters develop an easy way to get around it. There needs to be more in-house compliance and fraud detection people in almost every company.

You are probably wondering: Am I simply complaining or do I have real solutions? Sometimes I wonder if fraud is a battle that many companies don't want to win. There's too much money to be made by looking the other way. When fraud is detected, there are always lists of excuses ready to be given to advertisers and agencies.

Still, here are some potential solutions:

1. Exchanges must stop working with other exchanges. This practice, which makes absolutely no sense, is a major complaint from agencies. When exchanges work with other exchanges, it cannibalizes crappy inventory and allows for it to be sold at above market price. Eventually, agencies and brands will catch on that they are buying the same inventory over and over again from different people.

2. Media buyers must start using their brains when it comes to video advertising. I can't believe that any media buyer believes that she can buy pre-rolls from a legitimate source at $1.50 and it really gets more unique visitors than YouTube? Use the tools that are available. If comScore tells you the company only does 5 million unique but the company can manage to book 20 different video campaigns for 20 million impressions, you should be suspicious. If a video website magically gets more traffic on Compete.com when you buy media, it's probably fraud.

3. Stop buying CPM from crappy banner networks. Most banner networks depend on the performance marketing industry, which knows what they are doing when it comes to media buying. This part of the industry will pay $0.10 CPM, but once in a while someone at an agency will believe the media kit and actually pay $2. Good clue to a bad network is that it has a bunch of X's in the name or the word "Adz" in it.

4. If a company has an excuse why they won't install a fraud solution, run really fast the other way. 'Nuff said.

Seriously, how many warnings do we need before the industry takes pro-active measures against fraud? If we do not deal with this issue, the possible ramifications are immense. Similar to what happened to the banking industry, one major exposé or lawsuit could send shockwaves throughout the industry.

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ABOUT THE AUTHOR

Pace Lattin

Pace Lattin has been working in interactive advertising since its inception. From being a co-owner of the company that sold advertising in ClickZ before the turn of the century to founding a major interactive advertising publication, he has been involved with all aspects of the interactive advertising industry. He is currently the executive director of the Executive Council of Performance Marketing, an industry organization that represents over 100 C-level executives. 

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