How Blockchain Can Help Solve Ad Fraud

The solution will require radical transparency, enabled by blockchain technology, writes Hunter Gebron, Director of Strategic Initiatives, MetaX.

As long as intermediaries have little incentive to distinguish between human and bot impressions in their reporting, ad fraud will be a problem. The solution will require radical transparency, enabled by blockchain technology, writes Hunter Gebron, Director of Strategic Initiatives, MetaX.

With the permeation of “fake news” and “click-bait” seeping into the once sacrosanct world of high-quality journalism, it seems we are already in the late stages of an information war that is being waged all around us.

Professional journalists that write in-depth and unbiased news stories chocked full of intellectual integrity are pitted against antithetical and unscrupulous click-bait hucksters. Both are using different means to achieve the same goal, readership, which in turn leads to ad revenue. But the consequences of who wins in this fight may ripple across our society for generations to come.

If we were scoring this bout, there is no question the journalists are losing. Journalism jobs are steadily in decline and have been for some time. “In the decade from 2008 to 2017, newsroom employment nationwide declined by nearly one-fourth (from 114,000 workers to 88,000).”

While most of the press around fake news centers around the Russian hacking of the 2016 political election and Facebook. There is another more insidious reason why fake news articles are written – to collect advertising revenue.

Here is a synopsis of how our ‘Free Internet’ stays free. Digital publishers (the ones that don’t want to live behind a paywall) must monetize via ad revenue. Advertisers pay publishers based on the number of eyeballs and clicks their ads receive. Consumers who want free content must contend with the endless barrage of ads that have become a ubiquitous part of our online experience. It’s not quite a Faustian bargain, yet, but it’s getting closer to resembling one everyday.

Also Read: What Is Native Advertising and How to Craft Your 2019 Strategy for Maximum Success

The important thing to know about digital advertising is that it’s a numbers game.

The more traffic digital publishers can draw into their site, and the more ads they can display, the more money they are able to collect from advertisers.

One of my favorite quotes is “show me the incentive I’ll show you the outcome” by Charlie Munger.

So let’s take a look at some incentives and their outcomes.

Digital advertising in 2018 topped out at around $111.14 billion and by 2019 it will account for 55% of all media ad spend.

The goal, if you are a publisher or website hosting ads, is to get yourself as big a slice of that $111 billion pie as you can. The incentive is to get as many eyeballs and clicks to see the ads you host as humanly (or as we’ll come to find out ‘in-humanly’) possible.

Now for the outcome.

Of the $111.14 billion spent roughly, $15 billion went straight to fraud.

Yes, you read that right, 13% of all money spent on digital ads was vacuumed up by fraudulent websites and bots in 2018. By 2020, that estimate balloons to $44 billion.

The incentive to get clicks and eyeballs leads to an outcome in which fraudsters have figured out how to game the system. Fake news is just one tentacle in a multi-armed beast that represents all the various forms of ad fraud.

A common practice, known as domain spoofing, where bad actors trick advertisers into buying on a site that isn’t really that site, is exacerbated by the complex patchwork through which digital ads travel, and that makes following the flow of money incredibly difficult.

“Why would fraudsters spoof a domain?” Imagine for a second you are a fraudster. You know that many advertisers want to buy ad placements on CNN.com. So you create a fake website that for all intents and purposes looks like CNN.com, but it’s really just a blank page with a video player on it. You then sell that fake page to advertisers as CNN.com. If it’s done well neither CNN.com or the advertisers ever knows what happened. If it’s not then it gets exposed.

Whether it takes place on a street corner in NYC or in a complex patchwork of web connections that funnels ads from point A to point Z, fraudulent inventory is fraudulent inventory. The vendor ends up not being paid and the customer gets tricked into paying for something they did not want.

‘It is difficult to get a man to understand something, when his salary depends upon his not understanding it!’” – Upton Sinclaire

The relationship between advertisers and news publications goes back a long time, at least 300 years in the United States. However, programmatic advertising has only been around for a decade. Yet billions of dollars are stolen every year. How can we stop this?

An answer may lie in distributed ledger technology. The major selling point for blockchain technology is its native property of radical transparency. All financial activity on the blockchain is recorded and visible. This is the exact opposite of digital advertising which is often likened to a ‘black box’. Money goes in and what comes out is a ‘report’ from a centralized, for-profit company telling you all the wonderful places your money was spent. Want the raw data so you can check for yourself? Good luck with that! And it’s these kinds of conditions where an activity like domain spoofing is able to thrive.

Also Read: What Is Bladtech?

Meanwhile, legitimate digital publishers are getting screwed. Money that should be going to them is being siphoned away to fraudsters.

Here is a novel concept. One that is partly inspired by the ads.txt initiative brought forth by the IAB Tech Lab. Ads.txt allows publishers to publicly declare who the authorized sellers of their inventory are.

We can apply the same principles using blockchain technology to allow digital publishers to publicly declare the authorized wallet addresses they control on the blockchain. The caveat is they will need to be comfortable accepting cryptocurrency as a form of payment from advertisers but the upside is it would completely eliminate the incentive for domain spoofing.

Remember, the main reason why domain spoofing is able to thrive is that fraudsters can collect the money to their bank accounts.

If everyone can publicly see the wallet addresses of everybody else (which is how public blockchains function) then money should never get sent to the wrong place. It would be pretty foolish to spoof a domain if you knew the money was going to be sent to the entity you were pretending to be regardless!

Getting an entire industry to get comfortable with the idea of accepting cryptocurrency is a tall order. But with $15 billion in fraud hanging over the digital advertising industry’s head, it may be time to start exploring alternative options.

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APAC mobile advertising market booming

This was the conclusion of the Global Trends in Mobile Advertising H2 2018 report by Smaato, which offers programmatic insights designed to help …

The Asia Pacific region is leading in mobile ad request with a growth of 44%. This is almost twice the average growth of the Americas and EMEA regions, both of which are pegged at 23%.

This was the conclusion of the Global Trends in Mobile Advertising H2 2018 report by Smaato, which offers programmatic insights designed to help publishers and advertisers with their decision-making on ads.

Among others, the report investigated in-app growth, advertising spending, mobile video and advertising fraud.

The mobile ad market is healthy, according to Smaato, with significant growth across all key advertising metrics, including ad request volume and eCPMs. Demand and supply both increased year-over-year, as advertisers direct more money into mobile advertising.

In the APAC, India stood out from the pack with a 425% growth in mobile ad requests. This was more than twice the growth rate of the fastest growing markets in EMEA and the Americas, which were led by Spain at 152% and the USA at 170% respectively.

Smaato says India’s meteoric ad request growth is characteristic of an emerging mobile market in which the number of mobile device owners, their time spent on mobile, and overall app downloads all rise quickly.

When it comes to the top countries for eCPM growth, Singapore (154%), Japan (125%), Australia (111%), Hong Kong (99%) and Indonesia (96%) topped the charts. As comparison, eCPMs increased in the United States by 79% and in Canada by 70%, while Switzerland (92%) and the United Kingdoms (66%) topped the chart in the EMEA.

“The impressive ad request and eCPM growth in APAC are driven by app developers finding new ways to better monetize their content even as consumers are spending more time on apps. Advertisers from all verticals are realizing that apps are where consumers are — and they are directing more funds into this channel,” Smaato APAC managing director Alex Khan said.

“With app usage increasing across the region, there will also be more monetization opportunities for mobile publishers.”

The full report can be downloaded here(free registration).

First published in CMO Innovation

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APAC region sees massive growth in mobile ad requests

The Asia Pacific region is leading in mobile ad request with a growth of 44 percent, says real-time advertising platform Smaato. This is almost twice the …

The Asia Pacific region is leading in mobile ad request with a growth of 44 percent, says real-time advertising platform Smaato. This is almost twice the average growth of the Americas and EMEA regions, both of which are pegged at 23 percent.

Programmatic insights

This was the conclusion of the Global Trends in Mobile Advertising H2 2018 report by Smaato, which offers programmatic insights designed to help publishers and advertisers with their decision-making on ads.

Among others, the report investigated in-app growth, advertising spending, mobile video and advertising fraud.

The mobile ad market is healthy, according to Smaato, with significant growth across all key advertising metrics, including ad request volume and eCPMs. Demand and supply both increased year-over-year, as advertisers direct more money into mobile advertising.

In the APAC, India stood out from the pack with a 425% growth in mobile ad requests. This was more than twice the growth rate of the fastest growing markets in EMEA and the Americas, which were led by Spain at 152% and the USA at 170% respectively.

Smaato says India’s meteoric ad request growth is characteristic of an emerging mobile market in which the number of mobile device owners, their time spent on mobile, and overall app downloads all rise quickly.

When it comes to the top countries for eCPM growth, Singapore (154%), Japan (125%), Australia (111%), Hong Kong (99%) and Indonesia (96%) topped the charts. As comparison, eCPMs increased in the United States by 79% and in Canada by 70%, while Switzerland (92%) and the United Kingdoms (66%) topped the chart in the EMEA.

“The impressive ad request and eCPM growth in APAC are driven by app developers finding new ways to better monetize their content even as consumers are spending more time on apps. Advertisers from all verticals are realizing that apps are where consumers are — and they are directing more funds into this channel,” said Alex Khan, the APAC managing director at Smaato.

“With app usage increasing across the region, there will also be more monetization opportunities for mobile publishers,” said Khan.

The full report can be downloaded here(free registration).

Further reading:

Top 10 YouTube ads in Singapore in 2H 2018

Are advertisements losing relevance?

The future of ads is linked to mobiles

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New Smaato Research: The Trends Fueling Mobile’s Latest Growth

According to Smaato’s recent research, mobile advertising has grown in several significant ways. Not only have eCPMs and volume both increased, …

According to Smaato’s recent research, mobile advertising has grown in several significant ways. Not only have eCPMs and volume both increased, retail brands have surpassed mobile gaming and media brands as the largest mobile spending category. Smaato also reports that eCPMs have rebounded in Europe after GDPR, another sign that mobile growth is healthy worldwide, writes, Gareth Noonan, General Manager, Americas, Smaato.

Mobile advertising’s growth has been a constant theme within our industry for years now, but the dynamics of this growth continue to evolve in fascinating ways. Here at Smaato, we monitor such growth closely and seek to uncover the market forces driving it at every stage. In our latest report, Global Trends in Mobile Advertising H2 2018, we found that rising ad requests and eCPMs are intimately tied to larger trends in post-GDPR pricing, mobile video, holiday spending, advertising fraud and more.

Also Read: The Trends That Will Define Mobile Advertising in 2019

Here are some of our key findings based on analysis of ad requests, bids, and impressions on the Smaato platform in the second half of 2018:

Growth Seen Globally

Without a doubt, advertisers have followed consumers into in-app environments. Between 2016 and 2018, consumer time spent in-app grew by 50 percent globally, with app store downloads increasing by 35 percent in the same time frame. Meanwhile, on the Smaato platform, mobile ad requests increased 27 percent from the second half of 2017 to the second half of 2018, with eCPMs growing 32 percent overall. The ad request growth rate in India (425 percent) led the global pack. In the U.S., impressive growth in ad requests (170 percent) was accompanied by an equally impressive 79 percent growth in eCPMs.

Based on our H2 analysis, we’re also seeing that in-app publishers that have taken the needed steps to achieve compliance with the GDPR have benefited greatly in the post-regulation landscape. The volume of European Economic Area (EEA) traffic with valid consent grew throughout H2 2018. Ad spending on compliant inventory rose more than 20-fold from June to December, and eCPMs increased 1.8-fold as advertisers became increasingly willing to pay more per impression for compliant inventory throughout the months following the GDPR.

Of course, the GDPR is just the beginning. With new data laws such as the ePrivacy Regulation and the California Consumer Privacy Act (CCPA) looming, transparency and privacy will continue to factor heavily into traffic and eCPMs in the years to come.

Retail Rules

Going beyond geography, we also observed some notable trends when it came to spending by category. In the second half of 2018, retail advertisers accounted for nearly half of all mobile ad spending, up 14 share points over the first half of the year. Within the vast retail category, retail marketplaces (which include e-commerce websites and retail chains with an online presence, such as Amazon, Wish and Walmart) accounted for the largest share of retail and an overall 28 percent share of total mobile ad spending.

In particular, mobile spending skyrocketed around major retail holidays like Singles’ Day and Cyber Monday. Ad investment soared 51 percent above the monthly average on Singles’ Day and 26 percent above the average on Cyber Monday, clearly demonstrating that retail advertisers understand the importance of investing in these important annual sales drivers.

Video Gets Rewarded

From a format perspective, video—much like mobile itself—is seeing growth across the board. In the second half of 2018, mobile spending on video interstitials was up 47 percent, instream pre-roll was up 43 percent, and outstream rose 42 percent. But rewarded video was the unquestionable winner, with 139 percent growth over the year-ago period. And this makes sense given demonstrated consumer preferences. Research has repeatedly found rewarded video to be the preferred ad format among users, with one study reporting that nearly 70 percent of users regard rewarded video positively.

One growth driver for rewarded video has been its rapidly expanding adoption beyond gaming apps, which embraced rewarded video ads early on. On the Smaato platform, media and retail brands are also now leveraging this format to drive campaign success. It’s time for other categories to follow suit.

Success in Fighting Fraud

It’s worth noting that all of the above growth comes within a sometimes-challenging mobile environment in which fraudsters are constantly looking to get in on the action. However, despite the prevalence of fraud within today’s industry headlines, not all inventory is equally affected. For example, in partnership with Smaato, an analysis by Protected Media found that apps had 25 percent less fraudulent attempts compared to mobile web in the second half of 2018. As compared to other DSPs and exchanges analyzed by Protected Media, in-app ad fraud attempts also occurred 40 percent less often on the Smaato platform.

Also Read: Why Apple’s ITP2 Won’t Stifle Mobile Advertising’s Growth

As an industry, we’re all looking forward to continued success in the war against mobile fraud. With the IAB’s app-ads.txt specification moving closer to its full roll-out, we’re hoping to see further reductions in counterfeit inventory in apps. In web advertising, ads.txt had a huge impact in this regard. And a similar impact within the in-app advertising industry would be a major boon to the mobile ecosystem.

Mobile, and especially in-app, opportunities for advertisers and publishers alike continue to proliferate. As the industry prioritizes efforts to clean up ad fraud and fight emerging schemes, the outlook for the long-term health of the mobile and in-app advertising ecosystem is only improving. Because of this, Smaato is anticipating many more growth-focused spending reports in the years to come.

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How Blockchain Can Solve Ad Fraud

Criminal activity flourishes in the dark and fraud in digital advertising is no different. If there is one industry that can benefit from blockchain technology …

Nikao Yang, COO of Lucidity

Criminal activity flourishes in the dark and fraud in digital advertising is no different. If there is one industry that can benefit from blockchain technology in the near-term, it’s digital advertising

Consumers flocked to the Internet for access to nearly unlimited content. Advertisers flocked to the Internet for access to all of those consumers and their trail of data. The hope was that advertisers would be able to not only reach consumers at a massive scale, but also be able to finally measure how well they did it.

Impressions, clicks, and conversions create a consumer’s digital footprint. These metrics, tracked by technology, are the standards by which advertisers assess the effectiveness of their spend.

The problem facing advertisers today is that a lot of these metrics are misleading. Digital advertising is powered by a labyrinth of technologies, most of which are siloed and have their own way of doing things. Inconsistencies in measuring impressions, clicks, and more are common, creating confusion and inaccuracies. Often, it’s up to the marketer to try to piece things together from the tangled array of black boxes.

It’s in this opaque, confusing landscape that fraud thrives. According to eMarketer, marketers around the world estimate that about 26% of their marketing budgets are wasted. According to Juniper Research, $19 billion in fraud was estimated for 2018, with that figure expected to grow to $44 billion by 2022.

Blockchain has been praised as a technology that brings transparency. So how can it help fix the ad fraud problem?

When a supply chain like digital advertising is siloed and opaque, it’s easy for self-serving practices to manifest behind the scenes at the expense of the buyer, seller, and everyone else. It’s also easy for outright fraudulent actors to gain a place in the supply chain without the knowledge of the true, honest actors.

At a high level, through its shared ledger, blockchain exposes any manipulation and enforces agreed-upon-standards. Through consensus protocols, blockchain can expose discrepancies, allowing marketers to move spend away from wasteful ad placements that are in the best case ineffective and in the worst case fraudulent. This allows marketers to optimize campaigns in real-time with full 360-degree optics into what’s actually going on.

More specifically, this is done by “codifying” and enforcing standards so everyone along the supply chain is measuring things in the same way. Blockchain does this by using automated computer programs called smart contracts, which can be programmed to enforce the way different technologies measure different marketing metrics.

Based on an agreed-upon standard, signals from different supply chain members can be judged as either valid or invalid automatically. That’s how we know the numbers reported by every member of the supply chain are accurate.

Specific examples of types of ad fraud that can be detected as a result of enforcing standards across multiple parties include bot traffic, domain spoofing, and programmatic auction games like bid caching. At the end of the day, any kind of discrepancy is an indicator of waste.

Putting Blockchain to Work for Advertisers

Blockchain provides digital advertising with a clear view into an agreed-upon set of data that is unavailable in today’s ecosystem. This level of clarity gives us an understanding at the event or log level about what impressions or clicks are potentially fraudulent or where there are breakages in the supply chain.

So, instead of trying to reconcile one month’s worth of data from a publisher with the same month’s data from an agency, all parties are now able to look at one set of unified data that is confirmed at an event level on the blockchain in real time.

More reliable data means more informed decisions, better performance, and an increased return on investment.

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