War on ad fraud

Industry bodies need to wake up to the menace.

"...We keep feeding the beast by pouring incredible sums of money into this unproductive, unmanageable abyss. Remarkably, we keep doing so even though we know that only 25 per cent of every digital dollar reaches the consumer. ... represents more than $20 billion in marketing waste, inefficiency and ineffectiveness." - Bob Liodice, CEO, Association of National Advertisers (ANA), USA.

Manas Mishra

In an era when digital has trounced all other media, except TV, on ad spends, Bob's statement is a major indictment. How did it come to this, especially for a medium that grew ostensibly because of its ability to provide precision targeting, hence, efficiency and measurability and hence, ROI and transparency?

The duopoly and the longtail

The Digital Adex beast has two large heads and a long tail. According to The World Advertising Research Center (WARC), Google and Facebook will account for 61.4 per cent of digital ad dollars in 2019 (up from 56 per cent in 2018). With digital advertising accounting for over 46.6 per cent of the global Adex (US $617Bn in 2019), this implies the duopoly has a 28.6 per cent share of the global Adex. Yes, one in every four ad dollars is spent with either Google or Facebook.

What about the other 40 per cent or $110Bn? In his 2006 book - The Long Tail - Chris Anderson popularised the idea that collectively, many small sites could rival the scale of a small number of large sites. Digital media, at that time, was primarily purchased from large sites that had large human audiences. With a growing number of smaller, specialised sites, the audience is now highly fragmented. It, therefore, makes sense to look beyond a few well-known sites.

Contextual Vs Behavioural targeting

When the context of a website was the basis of targeting, it was simple. For example, it was easy to presume all sports websites attracted sports-loving audiences. And if a brand wants to reach them, it has to advertise on that site.

But with a near-total ability to 'track' web users through cookies and the like, brands can now follow a certain surfer across the web. The behaviour of the target determines the buying criteria, not the context of the website.

ALSO READ: 2019 panel discussion on ad fraud, brand safety, viewability

The advantages of buying behaviourally are economy and precision. Behaviourally targeted ads are generally bought programmatically. Programmatic buying currently represents about 80 per cent of all online display advertising, outside of the duopoly, of course. Globally, that's about $85Bn and counting.

However, at least four aspects of behavioural targeting are problematic:

1. Accuracy: Behavioural targeting is only as good as the data that informs it. There is troubling evidence that data residing in the AdTech ecosystem, particularly the kind bought from data brokers, is not accurate. We experience it every day when we get ads for stuff we bought three months ago and ads for products we have no interest in.

2. The 'tech tax': According to the World Federation of Advertisers (WFA), AdTech, the technology that drives behavioural buying, costs about 60 per cent of every ad dollar. Which means, of every dollar spent on behaviourally targeted advertising, only 40 per cent is 'working media'.

3. The 'fraud tax': The web is riddled with ad fraud. Experts would agree that in open ad exchanges, web fraud is probably at least 20 per cent greater than it is when buying direct.

4. The 'long tail' of trash: There are tens of millions of websites. Many are pure junk. Many buy fakes to appear successful. Many aren't even real; they're basically software that mimics a website for the purpose of attracting ad dollars. But they all sell ad space. Programmatic systems see low prices on these fake sites and bid on the worthless ad space they are selling to meet CPM goals. A famous case in point is Chase bank.

We know that programmatically bought behavioural advertising is questionable because of issues like a lack of brand safety/transparency, data abuse, privacy abuse and data leakage. Yet, why is 80 per cent of online advertising bought programmatically? Because the 'extractors' have convinced marketers that lower CPMs equal better value. But studies show that lower CPMs are not necessarily the result of more efficient buying. They're often the result of bottom-feeding - more trash, more waste, more bots, more fraud, and less value.

Digital ad fraud

Ad fraud is reported to have caused Indian advertisers $1.6Bn in 2018 (Source - techARC/WARC). This number is poised to grow. According to experts like Vertoz, it's important to understand the ways in which a brand could get defrauded.

In 2018, The Guardian, Google and Mighty Hive came together to test two things:

1. How deep is ad fraud

2. How effective is ads.txt in addressing ad fraud

It was found that 72 per cent of video inventory purchased was fraudulent; money for ads bought to appear on Guardian US websites was syphoned off when the buy was made through open exchanges. The Google-Guardian operation leveraged the Interactive Advertising Bureau's (IAB) 'ads.txt' tag to show that all ad revenue from ads.txt-authorised inventory reached the website owner, viz. Guardian US. When buying was done through open/unauthorised exchanges, 72 per cent of the revenue from video inventory never reached Guardian US.

For the record, the IAB has advised all publishers/website owners to identify themselves through an 'Authorised Digital Sellers' (ADS.txt) tag - a text file that helps tag authorised websites ensuring all money meant for them, reaches them.

As for ads.txt in India, it's critical that industry bodies ISA, AAAI, IAMAI, TRAI and others join hands to make ads.txt a success. We need a clarion call from key industry bodies and support from all ad buyers/exchanges.

(The author is co-founder and managing director, Mediant Communications, a new-age media and communications agency)