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Lost Trust is Hard to Rebuild

It was the mother of all ad frauds. A group of Russians working with the Kremlin and desperate to have anyone elected but Hillary Clinton set up a pseudo- ad agency with a budget of $1.25 million a month and bought ads on social media platforms like Facebook and Instagram, measuring viewability, comments, and engagement. The ads were paid for with fake Paypal accounts. In addition to their advertising campaigns, the group ran a cross-channel marketing campaign for Trump, staging rallies and counter-rallies and paying people to participate.

And although Deputy Attorney General Rod Rosenstein made a point of saying the results of the election weren’t swayed by all the bots and ads and phony grass roots efforts, how can we be sure?

Indeed, there are more ways to sway an election than just stuffing a ballot box. Thinking the election wasn’t influenced ignores the power of advertising to create brands. These Russians could sway the election by organizing massive rallies and making Trump appear more popular than he really was. That would create a bandwagon effect — something ad campaigns try to achieve all time.

As a result of this highly successful campaign, over a hundred “unwitting” Americans  participated in the Russian government’s effort to interfere in our elections, and our major social platforms were besmirched as they were ringing up the ad revenues. Until recently, Mark Zuckerberg did not grok the extend of Facebook’s complicity.

There are lessons for the online advertising industry in all this. We have all been busy reaching for scale. But we haven’t put sufficient controls on the messages we are sending, and we haven’t devoted enough time or effort to combatting ad fraud. News outlets desperate for ad revenues in a changing market were willing to run ads that annoyed consumers. Brands bought ads in places they should never have appeared.

What will be the result of all this, beyond indicting 13 Russians who will probably never be extradited? We suspect it will be a massive loss of trust in digital platforms on the part of consumers. And with it, an equally massive pullback from social media advertising on the part of brands.

We were long overdue for this correction. It’s another consequence of mishandling customer trust, as the use of ad blockers is. Our industry could use a giant dose of quality.

In the consumer advertising business, just as in the public opinion business, lost trust is difficult to regain. We’d have been better off sacrificing scale to quality and using better targeting techniques, just as the social platforms would have been better off scrutinizing their advertisers more carefully..

Publishers Speak Out at Advertising Week

It seems as if the biggest takeaway from Advertising Week is that the Financial Times announced it has been ripped off by ad fraud, even though it doesn’t sell its own video ads programmatically. And it was a big loss.  The fraud happened entirely outside the magazine’s control,  which only served to underline the lack of trust in the supply chain surfacing again this year. Although a couple of new organizations have formed to solve the problem of fraud in the media supply chain, not much appears to have changed.

Here’s what happened:

The Financial Times found display ads against inventory masquerading as FT.com on 10 separate ad exchanges and video ads on 15 exchanges — the publisher doesn’t even sell video ads programmatically — with 300 accounts selling inventory purporting to be the FT’s. The equivalent of a month’s supply of bona fide FT.com video inventory was fraudulently appearing in a single day. The FT estimates the value of the fraudulent inventory to be $1.3 million (£1 million) a month.

This is called domain spoofing, and it’s the main problem of using open exchanges. The Financial Times had to write to the exchanges involved and ask them to remove the fraudulent inventory. Then it had to write to agencies and their clients telling them not to source inventory from anywhere but Google AdX or TrustX, through which FT sells its display.

“The scale of the fraud we found is jaw-dropping,” said Anthony Hitchings, the FT’s digital advertising operations director. “The industry continues to waste marketing budgets on what is essentially organized crime.”

This is why we developed a totally secure private exchange a couple of years ago.  When we handle transactions end to end, we know where every ad is at any given time, and we can also track its response. We have never understood why the industry tolerates wasting marketing budgets as it has in the past, although we hope this is (slowly) changing.

How can we tell it is changing? Agencies holding companies are reporting poor financial results. That’s because brands are now far more careful about entrusting their budgets to trading desks that engage in arbitrage. Who knew that one of the biggest ways agencies made money was by buying media in bulk and not passing on the savings to their clients? We thought that only happened in the world of late night TV and informercial companies.

The other important media announcement out of Advertising Week was the re-branding of Advertising Age Magazine as AdAge, and the promise to guide this industry through a disruption the publisher admits is under way. We’re a bit suspicious of the publisher’s new recognition that

Everything is a brand. Everything is an ad for itself. So our coverage needs to reflect the broader culture beyond the weeds of our industry. We’ll still get into those weeds, but we’ll also explore the flowers. And we’ll do it with a tone that’s inviting, accessible, wry, witty and sharp.

This leads us to believe that Ad Age is going to be less an industry publication than a cultural publication, and we wonder how its core audience, advertising and brand professionals, will respond to that.

 

Ad Fraud Ruins Analytics

Ad fraud. The gift that keeps on giving.

Marketers are beginning to understand that ad fraud affects their actual spend (they get less for their ad dollar), but they haven’t yet caught on to the fact that it affects their metrics as well.  Fake traffic and clicks generated by bots throw off analytics and can cause a marketer to optimize a campaign for the wrong things and waste even bigger dollars.

One way to make ad fraud less lucrative for the fraudsters is for marketers to stop paying for “each,” or volume, and start paying only for quality. That would mean coming to terms with the fact that low quality traffic is even worse than no traffic at all. At the recent IAB Annual Leadership Summit, P&G Chief Brand Officer Mark Pritchard announced that his company, one of the largest advertisers in the world, will only pay for traffic if they can see where it is coming from and whether humans actually viewed ads. Since P&G spent $7.2 billion last year, his announcement caused more than just a slight ripple in the industry.

A casualty of the big wave that rolled over the media supply chain happened to be Facebook, which has always provided its own metrics, and has announced this week that it will allow its ad platform to be verified by the Media Rating Council’s standards.

This will be fun.

And you can’t blame this all on the rise of programmatic. It’s not how the ads are sold or bought, but the kinds of sites selling inventory on the exchanges. Most of the bots happen to be in programmatic ad exchanges, because, as fraud researcher Augustine Fou says, “when those bots cause an ad impression to load on a “long tail” website, they earn ad revenue for that site. Bots don’t make money by causing ad impressions on mainstream publisher sites.”

This is the drum we have been  banging for what seems like forever: buy smaller, higher quality audiences. Again, from Dr. Fou,

one key thing for [marketers] to realize is that there are only a finite number of real human beings. So when they target real human identities, the volumes of ad impressions will probably be far less than they are buying now—but that is a good thing, because they want their ads to be shown to real humans, not bots.

Marketers know who has purchased from them before, who has signed up for email newsletters, or who has visited their website.

By onboarding their own data, they can more easily achieve the identity targeting we just talked about—and thus make their media much more effective because they are actually getting their ads in front of real humans.

We are not sure why this is such a difficult lesson for marketers to learn.

 

 

 

 

 

 

 

 

 

Verified by TAG Gains Momentum

If you’ve been in the ad tech industry, you know that until a couple of years ago, although many people knew the industry contained fraud, nobody was really incentivized to do anything about it. And then, suddenly, the lights came on for the advertisers, who realized they were footing the bill for some of these fraudulent ads, and for the consumers, who realized that they were paying for ad fraud in malware and data costs. Now, with the new Verified by Tag initiative, ad fraud is at the top of everyone’s list of things to erase.

A survey conducted by E&Y for IAB revealed that in the $52b ad industry, $8.2 billion can be saved each year if the digital advertising industry worked together to eradicate corruption across the supply chain. Invalid and fraudulent traffic takes $4.6 billion out, internet piracy takes $2.5 billion, and malvertising takes $1.1 billion. Thus, every responsible company has a role to play in combatting fraud.

Last year, IAB created the Trustworthy Accountability Group (TAG). TAG is creating a meaningful seal of approval system for the digital ad ecosystem; it wants to be the leading organization promoting transparency. Because it was formed at precisely the right time, TAG has a fancy board composed of all the big players, from the Association of National Advertisers to  Mondelez to Facebook.

We’ve been working on the business transparency committee, which is developing the registration and payment ID procedures. We have also been working on incorporating the new Inventory Quality Guidelines. At present, companies can still self-attest about their inventory quality, but that’s going to change in the future, with independent audits replacing self-attestation. We want to be ready.

The TAG registry is a closed system of supply chain participants that demonstrate a commitment to higher standards of transparency. It’s called “Verified by TAG.”   “Verified by TAG” is the gateway to all of TAG’s other certifications, tools, and working groups.

We sent our Compliance Officer through a training program at which she was shown how to create a “Description of Methodology” for what processes, procedures, and controls we have in place to assure that our inventory is clean when it enters our platform, and the transaction between buyer, seller, and any intermediary who might be involved, is completely transparent.

We’re excited that the industry has finally come to recognize the importance of good business practices, even though this will entail a lot of work for our team as we increase the sophistication of our detection and reporting tools.

 

 

Ad Industry Insiders See Lack of Trust as Big Obstacle

Somehow we missed that moment at ANA when former MediaCom CEO Jon Mandell startled the ad industry by calling out his industry colleagues as self-serving rogues:

“Media agencies aren’t living up to their fiduciary duties to clients and ‘cross the line of acceptable conduct in a partnership,’ Mr. Mandel said. ’They are not transparent about their actions. They recommend or implement media that is off strategy or off target if it works for their financial gain.’

Rebates,’kickbacks,’ and other incentives for agencies that are at least potentially adverse to client interests are happening virtually everywhere in the U.S. media landscape, including TV, he said. Mr. Mandel said the practice has migrated from cash incentives to free Inventory, which agencies may then deal back to clients in scatter buys or sell via ‘dark pools’ that are either traded programmatically or liquidated in barter transactions.”

No wonder the first panel at this year’s AdAge Digital Conference was titled “Elephants in the Room,”  and took a frank,sometimes  scathing look at the big problems in the industry, the biggest of which turns out not to be ad blocking, but conflict of interest on the part of agency trade desks.

“Have you ever wondered why fees to agencies have gone down and yet the declared profits to these agencies are up?” Mr. Mandel said. He said that advertising spending broadly has long stayed within a narrow band of 1% to 1.25% of gross domestic product globally. “So if agencies are growing at a higher-than-GDP basis, the money is coming from somewhere.”

Somewhere along the way, the trust relationship between agencies and their clients has eroded.Global brands have learned to ask the right questions of their agencies, but transparency about how trading desks make money is important if smaller advertisers are to be protected from predatory treatment by their own agencies. The two major industry associations, AAAA and ANA,  can’t even agree on what constitutes transparency, but AAAA is acting guilty and taking the responsibility for creating greater visibility into kickbacks and arbitrage.

Moreover, agency trading desks are driving media prices down, to the detriment of the publishing industry, Without passing the savings on to their own clients. Once they have banked the inventory on their books, they can no longer be objective in what they tell their clients to buy; they’re guilty of conflict of interest. In this new market, in which agencies are both buyers and sellers, they seem to have lost sight of the fact that advertisers need healthy publishers, and driving ad rates to the floor helps neither side.

Not to mention the consumer, who, pummeled by cheap ads that are neither useful nor relevant, responds by downloading an ad blocker.

This lack of trust extends even beyond agencies and their clients,  to consumers themselves. Consumers who have been enduring pop ups, pop unders, page takeovers and non-skippable video ads have become increasingly intolerant of an industry they see as violating their privacy for no good reason.

Most of the speakers agreed that advertising has divorced efficiency from effectiveness, sacrificing storytelling for data. As a result, marketers are not only being undermined by consumers with ad blockers, but by themselves, because bad ads mean consumers don’t feel passionate about brands anymore.

Compared to the enormity of the kickbacks and arbitrage scandals, the other issues on the table, like visibility and  fraud, seemed inconsequential.  Neither of them is being solved, but at least MOAT and Integral Ad Sciences are working on a metric for viewability and the Trustworthy Accountability Group has taken on fraud.

 

 

Don’t Penalize AppNexus for Cleaning Up Fraud

Like everyone in the industry, we were surprised to hear that AppNexus had filtered out 65% of its traffic as fraudulent. That’s a pretty big number, and yet we don’t think the industry should be as quick to condemn the company for not taking action sooner as some people on Twitter have done. There’s evidence that Appnexus has been working on the problem of fraud for at least a year.

Last year, at ExchangeWire’s ATS in Paris, Geir Magnusson, AppNexus CTO, identified seven different types of invalid traffic

  1. Non-human generated impressions
  2. Non-human generated clicks
  3. Hidden ads
  4. Misrepresented source
  5. ‘No quality’ site – site’s whose sole purpose is to serve ads
  6. Malicious ad injection
  7. Policy-violating content, e.g. porn, piracy

And said “what our industry needs is an open and unbiased discussion of the issues in depth to create a common understanding of the problem and the best ways to tackle it. As a technology company, our job is to work with both buyers and sellers to build the tools for them to tackle the problem effectively, and that is exactly what we are doing.”

He then said the company also had

several distinct teams focused on the problem. We have a team of data scientists who are continually developing new algorithms and methods for detecting invalid traffic. Our anti-fraud analysts engage with customers and others sources of information to help track down bad actors and learn of their ever-evolving techniques. Finally, we have an inventory auditing team that audits the inventory brought to the platform.

A year later, the Trustworthy Accountability Group has come into being, and the issue of fraud has come front and center, which is why AppNexus reported its numbers at the ATS event in London. There’s now a forum in which to do that. The numbers were reported by one of the AppNexus data scientists, which does underscore the fact that Magnusson was telling the truth a year ago.

The snark on Twitter from the industry does no one any good. AppNexus has set a high bar, and everyone in the industry will have to cop to the ad fraud problem before we get it cleaned out. There will be many more reports before our supply chain is cleaned up and becomes as trustworthy as it needs to be to support the dollars spent.

The good news? AppNexus’s chief data scientist said CPMs didn’t suffer because advertisers are willing to pay more for higher quality. After the filters were employed, view-through rates also rose 75 percent, while post-click conversion rates surged 130 percent as a direct result.

We’re convinced that without fraud, the entire industry will do better.

 

 

 

 

Will An End to Ad Fraud Mean Bigger Budgets?

As buyers begin to demand better metrics on both ad fraud and viewability from publishers, the definition of how to measure  ad fraud keeps changing. Like viewability, fraud numbers can vary depending on the third-party monitor. And if you’ve ever seen a rat on a charged grid stop moving because of operational neurosis, you know that marketers won’t unleash the biggest budgets unless they have some standards with which they can feel comfortable.

The only thing that will change all this is greater transparency. Earlier this year, IAB in partnership with ANA and 4As started an industrywide initiative known as the Trustworthy Accountability Group to help promote transparency. The MRC is also trying to establish a certification for fraud detection. But as with viewability, it’s not so simple. In March, the group released list of first principles around fraud detection, source identification, process transparency and accountability.

The first step is to arrive at a common definition of what constitutes fraud.

There exists a set of ad-related actions generated by infrastructure designed not to deliver the right ad at the right time to the right user, but rather to extract the maximum amount of money from the digital advertising ecosystem, regardless of the presence of an audience. There also exists a set of actions generated in the normal course of internet maintenance by non-human actors – search engine spiders, brand safety bots, competitive intelligence gathering tools. These and other actions, whether they be page views, ad clicks, mouse movement, shopping cart actions and other seemingly human activities  must be expelled from the supply chain.

The supplier (ad network, exchange or publisher) must institute technology or business practices to eliminate bots, adware and malware traffic, and other sources of malicious activity.

At ZEDO we have been active in anti-malware efforts and have been selected for the Online Trust Association’s Honor Roll four years in a row. We were on the front end of this movement long before it became fashionable, and we developed our own technologies to weed out adware and malware.

Buyers should be able to identify the URLs  on which their ads appear. If the URL is masked, there must be enough trust and transparency so the buyer still feels comfortable. Suppliers must also able to supply information about what processes we employ to root out fraud. This is now becoming an industry-wide supply side requirement. There must be a rating scale, and an explanation to the buyer about how that scale works, how it is used, and what happens to the lower quality traffic.

The intent of the industry efforts is to develop a set of best practices so companies trying to achieve compliance will know what their guidelines should be. For publishers, exchanges, and networks, this should be a big opportunity, because compliance will unleash bigger marketing budgets. And since we already comply, we’d be happy to see the fraudsters chased out of the supply chain.

 

A Quick Way to Solve Your Fraud and Viewability Problems

 Switch to ZEDO. And we’re not kidding. Our platform has been tested and shown to contain less than 3% ad fraud, coupled with over 90% viewability. We’ve got the numbers to prove it.
 What does that mean? It means we’ve been working at this problem since we were founded, and every year we get better and better at serving viewable ad units and firing sites where we identify fraud. If we didn’t have to deal with third party networks, we’d probably have zero fraud, because we never include suboptimal sites in the campaigns we serve. Spotting those has been a major focus of our technologists, as has been viewability.
 Three years ago, we pledged to own the phrase “viewable impressions.” Our InView slider, released at the same time, was the first ad unit to test 99% viewable by comScore.
 We have just been waiting for the industry to figure out how much money was being wasted. And sure enough, 2015 has been the year in which ad fraud and its cousin viewability have become major concerns.
They existed before, but there was tacit agreement that not much could be done, and besides, no one knew what percentage of ads were either not viewable or fraudulent. But it was only a matter of time before our ability to mine and manipulate the data associated with advertising transactions began to surface the extent of the problem.
 According to Ad Age, 30% of all programmatic ad buys could be fraudulent, and 90% of the fraudulent traffic is coming from bots. This fraudulent traffic costs the industry as much as $1 million a day, says DoubleVerify. What doesn’t come from bots is due to video fraud, which is more difficult to spot and even harder to get rid of.
We don’t have that either. And on the viewability side of the fence, we’ve just completed a test with MOAT, one of the only certified vendors to track both display and video viewability.
While the Media Rating Council sanctioned buying on viewability last year, the IAB has recently set a standard of only 70% viewability for this year because many vendors couldn’t get much higher. Indeed, MOAT told us the industry benchmark was 62%.
Our ads? 90% in view, and that would be higher again if we didn’t deal with other networks.
 Sure, self-serving blog posts aren’t the best way to get the information out, but there are only a finite number of hours in the day for our sales teams to spend contacting people who don’t yet know how badly they need us and how much we can help them.