Emerging TechnologyBlockchainOnline ad fraud in 2018 hit $19bn: How blockchain could eliminate it

Online ad fraud in 2018 hit $19bn: How blockchain could eliminate it

The DOJ recently indicted a massive digital ad fraud ring. Insight from Brave, Lucidity, Rebel AI, and AdLedger on how blockchain could have prevented it.

“$30 million dollars of fake ads is just the tip of the iceberg.”

At the end of November 2018, the Department of Justice indicted a massive digital ad fraud ring, exposing the myriad exploitations of the current ad tech model.

In 2018 alone, advertisers will lose $19 billion to fraud, according to Juniper Research.

Ad fraud, it seems, generally goes unpunished

The labyrinthine system of advertisers, publishers, brokers, and users has become so convoluted that fraud has become considered the price of doing business, a form of institutional corruption.

But it doesn’t have to be that way.

While blockchain technology gets the most attention for cryptocurrencies, Bitcoin and Ethereum being the most well known, that is but one application of the technology. Blockchain allows for a new level of trust and verifiability in industries where opaqueness is the norm.

While the digital advertising ecosystem was supposed to bring new levels of insight to advertisers, what it created was a system of players ripe for exploitation by bad actors.

Blockchain could have prevented the fraud described in the DOJ’s indictment. While in the nascent stages, projects are applying blockchain to the inefficiencies of digital ad tech and returning lost value to publishers, advertisers, and consumers.

By applying blockchain technology to the digital ad space, fraud in the guise of bots, malware, spoofing, and scrubbing websites cannot occur. Blockchain applied to ad tech does not only detect fraud; it prevents it from happening in the first place.

We spoke to three projects and one consortium: Brave, Lucidity, Rebel AI, and AdLedger to learn how using blockchain could have prevented the exact type of fraud outlined in last week’s indictment.

Brave

Brendan Eich, the creator of Javascript, has dedicated his experience and expertise in creating a new digital advertising paradigm. The Brave Browser natively blocks all trackers, ads, and scripts, protecting a users computer from malware and bots.

For Brave, attention is a currency.

And to commoditize that they created the Basic Attention Token (BAT). This token will allow for users of the Brave Browser to opt-in to view ads. For every ad viewed, readers receive BAT.  Those tokens are then used to reward, peer to peer, their favorite websites and publishers. Fraud is not possible in this environment. Clicks are not what brings revenue. A human being’s attention cannot be automated.

Considering that privacy is by default, the user must take initiative and open themselves to advertisements. The data collected will be more valuable than the current model. Once Brave Ads premiers, they will have accurate metrics (Basic Attention Metrics – BAM) for verified publishers free of fraud.

Luke Mulks, Director of Business Development at Brave, explains how this step of opting into the Brave model makes fraud all but impossible.

“Our users are seeing ten ads max a day, as opposed to ten ads in two or three page loads. It’s a numbers game. You are running a lot fewer ads, but we blocked the third party networks that are doing this stuff, too. If we’re blocking third party programmatic advertising and third-party tracking and we are validating that the publisher is legitimate, the surface is greatly reduced. This type of attack is something you are not going to encounter on our platform by design.”

If successful, Brave and the Basic Attention Token will be a new paradigm; it will be the culmination of the real potential of digital ad tech. Accurate, immutable data will allow publishers to tailor their products more directly toward consumers. Blockchain technology makes this possible.

Luke continues by explaining that “by default, Brave has strong privacy protection and that includes blocking third-party ad networks, third-party tracking, secure connection upgrades, all these things that these networks like to exploit. We basically kick the networks out and remove that threat.”

Some criticize the need for a cryptocurrency for this project. And while Brave has shown impressive growth over the last year, their current 4.6 million users are not large enough to prove their business model as of yet.

With that said, they have already entered into partnerships with big names in media like the Washington Post, the Guardian, and the Dow Jones Media Group. Brave may give users back their privacy, but its true customers may be the publishers who up until now could not gauge valid data because of ad fraud. Publishers can now recoup profits they would not have realized otherwise.

Lucidity

Sam Goldberg, President, and Co-Founder of Lucidity argues that fraud will continue to flourish in the absence of agreed-upon rules in the programmatic supply chain.

Lucidity is a blockchain-based platform that provides transparent, validated data for marketers to accurately measure the value delivered. With valid data, the effectiveness of publishers becomes clear, which in turn eliminates wasteful ad spend. At the heart of his argument is the need for standards across the board. The establishment of enforceable measurement standards across the supply chain would have caught data discrepancies that are telltale signs of fraud.

“What is extremely critical in order for us to get going in the right direction is the technological codification and enforceability of standards,” Sam argues. “These standards not only have to be enforceable, but they have to be transparent so a party doesn’t have the power to change rules to favor themselves or a preferred partner without everybody knowing about it. Shenanigans behind the fog of no transparency are far too prevalent in the industry today.”

Without rules, there can be no trust, no consensus. Consensus is a fundamental hallmark of blockchain technology. The issue becomes one of enforcement. With a large, international system such as digital ad technology, intermediaries spring up to exploit the disconnects in the supply chain.

A buzzword around blockchain is the idea of “trustless.”

What Sam sees in how blockchain can solve the problem of digital ad tech through the establishment of trust is a similar argument made by those who see the need for a “trustless” cryptocurrency such as bitcoin.

Bitcoin is peer to peer and exists without the need of a central authority enforcing trust or consensus. The consensus algorithm creates the standard. Enforcement falls to mathematics, not a human being. Lucidity brings this same enforceability to ad tech through their protocol.

“With the fair and consistent application of standards, we can drive real value for advertisers, just like Lucidity’s work with Toyota. Blockchain technology is the only way to deliver on this promise of enforced standards.  We can think of some pie in the sky methodologies that might be able to do this in a hypothetical world, but in the real world, we cannot actually do this without blockchain. Otherwise, we would have done it already because the value prop to advertisers should have been done ten years ago. Every advertiser deserves to know that they are getting what they pay for.”

But such a move could not have been made ten years ago.

Bitcoin, the first application of blockchain technology, is only ten years old. But in that time companies like Lucidity are applying protocols to bring trust to a system that has flourished without it.

With defined standards, players who provide value will be able to prove their worth through the consensus brought by blockchain technology. Transparency such as what Lucidity provides dissuades bad actors even attempting fraud.

And that is where Sam positions Lucidity.

“We don’t see ourselves as an anti-fraud company; that’s not the technology we are bringing to the table. We’re setting up an ecosystem that prevents a lot of things from happening in the first place because bad actors get exposed in a transparent ecosystem just as good actors get to prove the value they’re delivering.”

Rebel AI

Rebel AI brings the focus on identity, consensus, and currency to the digital ad model. Identity is fundamental in avoiding fraud, and Rebel AI uses public-key cryptography to ensure the identities of publishers, agencies, and advertisers. One of the keys to blockchain adoption is avoiding disruption to current workflows. Lindsey Galloway, Rebel AI’s CMO, described as much.

“We work with publishers to install a public and private key, and so they have an immutable identity that can’t be fabricated. We then work on the agency or advertiser side to encrypt their existing ad tags. The rest of the current workflow doesn’t need to change.”

The resulting creative ad tag “envelope” contains the identity of  the verified publishers. The verification allows for movement through the supply chains with the end result  unlocked only when it “lands on a certified publisher.” If the keys match, the ads are displayed.

This use of public-key cryptography validates that transactions can only be unlocked when received by the assigned public-key. Only one in possession with the associated Private Key can decrypt. This decryption mechanism weeds out any possibility of fraud from occurring. Fraudulent actors without a private key would be powerless.

Spoofing a domain becomes impossible, explains Lindsey:

“It’s in these cases where someone’s trying to spoof the domain, the keys will fail and it won’t match. We’ll send all that negative information back to the platform so we have an idea of who’s doing it, what the volume is, what countries it’s coming from so that we can stamp that out as well. The advertisers are not losing any money because impressions are never rendering on those fake sites.”

Here again with a feature of the blockchain in the form of public-key cryptography, we have fraud being prevented before it occurs, avoiding any loss in revenue for advertisers.

AdLedger

AdLedger is a non-profit research and development consortium charged with implementing global technical standards and solutions for the digital media and blockchain industries. The goal of AdLedger is to further trust and transparency within the digital media space.

We asked Cristiana Cacciapuoti, Executive Director at AdLedger, how blockchain could have prevented the fraud.

“You need a warehouse full of devices in order to perpetrate a scheme like that. If each device is only allowed to show one out ad a time, they just can’t scale a fraudulent operation. You can hash a device ID or an IP address to a blockchain and then say, okay, at that point anybody who is trying to execute a meth bot type scheme would need a different device to show an ad.”

Fraud-free internet

These three projects and consortium demonstrate how blockchain can create a fraud-free Internet. Brave, Lucidity, and Rebel AI prevent fraud, producing significant cost savings at every point along the supply chain. As these solutions become adopted, policing will become redundant.

Lucidity’s Sam Goldberg described the fraud exposed last week as the “tip of the iceberg.”

And while it may have been a banner bust for the DOJ, $30 million is a drop in the bucket compared to the $6.5 billion stolen from advertisers in 2017. As law enforcement and advertisers become savvy to threats, the scammers will evolve.

Blockchain can end this cycle. There is nowhere to hide. The iceberg as a whole will be exposed, melting away. That will be a kind of climate change everyone — except the scammers — will be happy with.

Carlos Acevedo is VP, Content, and Donny Dvorin is GM, Never Stop Marketing, Research.

Related Articles

Blockchain for ad tech: an anti-fraud panacea or placebo?

Blockchain Blockchain for ad tech: an anti-fraud panacea or placebo?

2m Ivan Guzenko
Can you explain the difference between blockchain and Bitcoin?

Blockchain Can you explain the difference between blockchain and Bitcoin?

3m Mike O'Brien
Blockchain opens door to smarter decentralized digital advertising

Blockchain Blockchain opens door to smarter decentralized digital advertising

9m Emie-Claude
Blockchain 101: AdLedger, IBM and Salon Media team up to make sure marketers understand the technology

Blockchain Blockchain 101: AdLedger, IBM and Salon Media team up to make sure marketers understand the technology

10m Mike O'Brien
Crypto marketing: What does the recent Google/Twitter Ad Ban actually mean

Blockchain Crypto marketing: What does the recent Google/Twitter Ad Ban actually mean

11m Jeremy Epstein
If you want to understand Blockchain, try to understand Switzerland

Blockchain If you want to understand Blockchain, try to understand Switzerland

11m Jeremy Epstein
New Blockchain MarTech Landscape shows 400% growth in 6 months

Blockchain New Blockchain MarTech Landscape shows 400% growth in 6 months

12m Tereza Litsa
Brands and blockchain: How Walmart, Burger King and De Beers are snuggling up to decentralization

Blockchain Brands and blockchain: How Walmart, Burger King and De Beers are snuggling up to decentralization

1y Mike O'Brien