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Last year, it was reported that ad fraud cost advertisers an eye-watering $16.4 billion globally in 2017, and the Association of National Advertisers (ANA) predicted that economic losses due to bot fraud reached $6.5 billion. The figures are clear; fraud is plaguing the industry and advertisers are facing a crisis of confidence as a result. Many brands are pulling back their advertising spend with online publishers due to fears over brand safety, but what steps are the publishers caught in the cross-fire taking?
Earlier this year, The Financial Times became the latest publisher to speak out against ad fraud. The FT publicly warned advertisers last year after discovering high levels of domain spoofing occurring against its site, and it was one of the first news organisations to adopt ads.txt, the Interactive Advertising Bureau Tech Lab’s tool created to help publishers combat ad fraud. As a result of its measures to tackle brand safety and online ad fraud, it has just been accredited by the Joint Industry Committee for Web Standards (JICWEBS). This begs the question whether collaborative forces such as these will turn the tide on ad fraud and increase regulatory control in the sector.
The rising reputational risk
So, what are the issues driving industry bodies such as JICWEBS to act? Well, there is undoubtedly the financial implications, but the risks go far beyond the huge financial losses; it can cause significant damage to a brand’s reputation. Case after case have hit the headlines in the past where major brands have unwittingly had their ads placed on sites with inappropriate, offensive or even illegal content – such as terror-related activities, paedophilia and incest – to the horror of the brands involved.
Programmatic has been partly blamed for this rising risk. Programmatic buying is on the rise due to the inherent abundance and efficiency it offers advertisers, but concerns around fraud and viewability remain around this still-developing area. Many brands are left in the dark as to where their ads will actually appear due to a lack of transparency from their ad-buying agencies. The well-established and widespread influence of bots boosting advertising viewing figures, and fed up brands speaking out, has brought the issues to the fore.
As an agency built on a mission to offer a transparent service to brands, we feel it is important to get to the heart of the issues. In November last year, we surveyed 150 CMOs at major brands, each with a revenue of more than £100m a year, to find out how they felt about ad fraud. Eight out of ten said that they are worried that their current programmatic processes could lead to their ads appearing on webpages related to offensive content, such as terror-related activities. Not surprising then, that almost half (41%) said they have lost trust in programmatic advertising as a result of fraud.
Tackling ad fraud: the tipping point
It would seem that brands are taking action as a result of the high-profile cases of ad fraud. In March last year, a series of major brands including M&S, McDonald’s, Pepsi and RBS, pulled their advertising from YouTube as a result of an investigation by a national newspaper that revealed the brands’ content was being displayed next to Islamic extremist content. Similarly, at the end of last year, one of the world’s biggest consumer brands, Diageo (the company behind popular alcoholic beverage brands including Smirnoff, Baileys and Guinness) announced that it plans to pull back ad spend in areas of digital media over concerns surrounding ad fraud, brand safety and transparency.
One in five brands surveyed said they plan to decrease spend on programmatic advertising; 41% said that this was due to a lack of transparency over how much their programmatic ads cost and 39% said that it was because there was a lack of transparency over which sites their ads would be placed. It is no surprise then that publishers are concerned about the impact of ad fraud with the revenue they receive from online advertising at risk.
Publishers fight back
Publishers are victims of ad fraud, too. A report published at the end of 2017, found that 16 programmatic publishers including Business Insider, The New York Times and The Washington Post are losing around $1.27 billion annually to ad fraud.
In addition to the financial losses, it’s not just brands who risk having their reputation tarnished by fraud; publishers may find themselves in hot water. Last year, The Guardian withdrew all its online advertising from Google and YouTube after it emerged that its ads were being inadvertently placed next to extremist material – as a result of actions taken by an agency acting on the media group’s behalf and using Google’s AdX ad exchange.
Publishers work hard to establish a reputation that fraud unravels, even where they are not responsible for it. They are on the front line in the battle against advertising fraud and have a duty to educate both brands and agencies on programmatic processes to ensure transparency.
Is a brighter future on the horizon?
It is clear, brands are starting to call for a stamp-down on the worst excesses, but what is really needed is oversight and authority. With major publishers taking firm action to combat fraud, we expect to see more collaboration between brands, publishers and industry bodies. It sounds as though this would be welcomed by brands, in our Programmatic Ad Fraud Transparency Report 2017, 85% told us that they thought independent trade bodies, such as the IAB, should have more authority to monitor and penalise those knowingly committing ad fraud.
However, should more regulatory control be introduced, experience elsewhere suggests it needs to be applied intelligently. The finance industry, for example, has been overwhelmed by compliance and regulatory red tape in the past. The trick will be finding a balance between introducing more oversight over the bad actors, without stifling the industry. Brands using programmatic advertising should seek out independent, authoritative voices such as JICWEBS, the IAB or independent digital marketing consultancies, that can form working groups to have their voices heard and guide them through a transparent approach to programmatic. By working together, we can understand the risks and build a more transparent ecosystem in the future.
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