I recently spoke with Forensiq an interesting startup based in New York that has technologies capable of shutting down advertising fraud — a huge problem for the media industry.
The Interactive Advertising Bureau (IAB) trade body estimates ad fraud in 2013 to be at least $6 billion to $7 billion but it could be as high as $16 billion in the US. The Wall Street Journal reports that 35% of internet traffic is bogus. And no one is prosecuted.
The WSJ says that the fraud "cheats advertisers." But that is not true, it is the media industry that is being cheated.
The advertising agencies always knew half of their advertising was being wasted, now with digital advertising, it is only one-third wasted through ad fraud, so they're ahead of the game.
Ad agencies aren't seeing their revenues plunge because of ad fraud. But media companies are facing massive revenue shortages and ad fraud is one part of that reason.
The fraud is done knowingly by the ad buyers whose interest is in looking good by topping up their numbers for their ad campaigns. They know full well the traffic is, as the WSJ plainly says, bogus.
But it's easy to stop most of the ad fraud. I recently spoke with David Sendroff, CEO and founder of Forensiq. Its technologies allow ad buyers to identify in real-time if a site is fraudulent with a high degree of accuracy.
Here's some notes from our conversation:
- We inject a tiny bit of code into a client's ad and that enables us to detect many types of fraud based on where the ad is shown.
- We can tell if a site is fraudulent in many ways. We can see if a site is using one-pixel frames, or is showing hundreds of ads on the same page. Or is showing only part of a client's ad. Or is nesting i-frames inside i-frames. We can tell if there is no real content but the site has been built just for bots.
- We provide a comprehensive database and statistical analysis to identify the problem sites and our dashboard allows clients to pick only high-quality pages.
- There have been university studies showing that there is a high conversation rate for ads on high-quality pages.
- We can distinguish between real people viewing an ad and the use of automated systems.
- We build an overall risk score in real-time that clients use for deciding where to show their ads.
- Our database is updated in real-time because fraudsters are repetitive and the patterns identify the problems.
- We are also able to monitor for cookie stuffing which is important for affiliate payments. We can detect spoofing of addresses and identities. Clients include AOL, Lendingtree and Groupon.
- Our latest product is LeadiD which helps identify fake leads.
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It's clear that ad fraud can be stopped. However, it won't stop until ad buyers stop the widespread industry practice of buying bogus traffic which makes them look good but is at the expense of huge harm to the media industry.
Centro, the Chicago ad technology giant, is one of the smartest in this sector. It has put together a publisher advertising network that consists of hand-selected and invited publishers. The key requirement is that the publisher has to employ journalists and other media professionals. This guarantees there is no advertising fraud.
Centro will also manage the cookies deposited by advertisers and prevent data collection by unauthorized third parties, which becomes a secondary revenue stream for each publisher.