Fraud in the programmatic ad business is a systemic problem that's robbing the legitimate marketplace of hundreds of millions of dollars, but to date we've seen no concrete steps to address the core of the issue.
It starts with reimagining the programmatic supply chain and ushering in a new era of transparency and trust.
Bad actors thrive on the sell side, primarily because today they all too easily can hide their identities. Two common strains are the creation of generic websites that generate high-volume bot traffic, and the act of spoofing domain names that clear buyers' whitelists because they look like they belong to reputable publishers. The only punishment leveed is blacklisting, which merely resets the process again. Bad actors are not exposed and are often paid out until they are caught.
Right now the domain is the underlying criterion in a programmatic transaction. It's what the demand-side platform targets; it's what whitelists are based on; and it's what blacklists aim to protect. But domains are easy to exploit (they are both easy to set up and spoof, and they proliferate quickly). It's easy for a piracy site to go undetected by using a domain that is similar to a reputable media outlet, and it's hard for the market to keep up.
There's a second problem in how programmatic continues to enable blind selling, which hides the seller's name from the buyer. This made sense years ago for publishers that wanted to cautiously "dip a toe" into the real-time bidding pool, but were skeptical about the implications for their direct sales teams. Without transparency and full disclosure into the actual company on the supply side behind any given transaction, publishers are losing potential revenue and allowing fraudulent players to hide in a forest of fake domains.
For most major publishers today, there's no real deterrent to being so transparent. What follows is a reimagining of the protocol within the supply chain to promote that transparency. We need to trace the problem of fraud directly to the end seller. The exchange should be required to expose not just the domain name connected to it, but also the name that's actually going to be on the seller's paycheck. This would curtail fraud before the buy -- not after. Revealing sellers to buyers will authenticate transactions and build more trust into the supply chain.
In the end, change can only come if both the buy side and the sell side come together. Marketers must be forceful in refusing to be implicated in fraudulent buys, wasting their brands' spending. Marketers hold the purse strings, but they need to communicate to their downstream vendor partners that they need more certification and more trust in the supply chain. Publishers also need to be transparent and tell downstream vendors they're willing to pass the test of certification. After all, they only stand to gain revenue from being transparent.
Just recently, the 4A's and ANA agreed to join forces with the IAB in a new cross-industry compliance organization to help combat ad fraud, malware and other challenges that hold our industry back. Representing different stakeholders across the purchase funnel, these trade groups will come together to ensure that there is transparency in terms of who is getting paid and who is doing the paying. Right now there are no hoops and no barriers to entry. Some sort of certification program will be inevitable, but what form it takes and how it will be manifested has yet to be determined.
Realistically, in a mature marketplace, a publisher that wants to do business with the Fortune 100 should be certified. Going a step further, sellers could then be bonded, so that a marketer could be refunded for buying ads on fraudulent sites. The digital advertising industry often compares itself to the financial industry when explaining programmatic buying. When it comes to fraud, the two industries couldn't be more different. It's very hard to counterfeit a stock and easy to counterfeit a domain. The financial industry is regulated, and frankly programmatic is far too grown up to continue on its current path.
Hundreds of millions of dollars are at stake, as the programmatic supply chain remains unchanged from its youth. We can't keep rooting out cases of fraud after the fact. Programmatic needs to overhaul its supply chain and establish an audit trail that is sorely lacking today. We can do that by demanding transparency upon entry, so we know the players sitting at the table are those who have earned the legitimacy to be there.