Six leading exchanges sign transparency pact, but fraud concerns remain

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Six leading exchanges that provide digital-ad selling software to publishers signed a pact Tuesday that promises to make the programmatic buying experience more transparent and less fraudulent for marketers.

Exchange platforms Rubicon Project, OpenX, PubMatic, Sovrn, SpotX and Telaria all signed the letter, which outlines how the programmatic marketplace can improve transparency and auction dynamics through three guiding principles. The Trustworthy Accountability Group (TAG), an industry trade body focused on eliminating ad fraud and malware, will act as the neutral party in enforcing these guidelines.

The letter is significant, as marketers such as Procter & Gamble, the second largest ad spender in the U.S. according to Ad Age Datacenter, has said it will only buy ads through TAG-certified partners.

Issues at hand

Although improving transparency and reducing fraud to negligible levels is something any marketer can get behind on, not everyone is convinced the letter's proposals will address several core issues, and some may actually invite more bad actors to the table.

The letter states that all six outfits will provide a "fully auditable supply chain," adding that "requests, winning bids, impressions and click throughs" should all have the ability to be audited. While this makes sense given the outcry from marketers for increased transparency, critics of the letter pointed out how bad actors could take advantage of such tools.

For example: An unscrupulous "publisher" who provide ads that click on their own will now know which query they ran that on, which in turn will allow them to map and see whether a malicious ad was registered as valid.

"And when that happens they know where they should scale the malice," a top executive from a major ad tech company said, while asking to remain anonymous to protect industry relationships. "Transparency is a very, very good thing, but not if it helps the bad guys."

The person added that it's become commonplace for bad actors to bombard SSPs with fraudulent inventory to see whether or not they recognize them as being valid.

Rajeev Goel, CEO of PubMatic, one of the signers of Tuesday's letter, said with regard to such potential fraud issues: "This is the start of a process or goal or principle. The specific implementation of how we measure compliance has yet to be defined. Audibility doesn't mean we make this data available all the time."

The letter was also greeted with skepticism by TAG itself.

"How is that different than what they do today," Mike Zaneis, president and CEO of TAG, told Ad Age, in response to the suggestion that the letter's proposals potentially open the door to more fraud. "This is what criminals do. They seek vulnerabilities and they scale when they find out."

Zaneis acknowledged, however that whether full auditability "ends up being a requirement of the TAG program is yet to be determined."

Caught by surprise?

Notably missing from Tuesday's letter are large players such as Oath, Index Exchange, AppNexus, Sonobi and Google. One high-level executive, who asked to remain anonymous to protect industry relationships, says the letter leaves much to be desired, adding that they were also caught off guard following today's announcement.

"We thought we were still working on [the letter] and we were surprised it was just rushed out," the person said. "It's therefore not surprising to see whose signatures were also conspicuously absent."

Goel of PubMatic however said that "every major SSP or exchange was invited to participate" in joining. TAG's Zaneis also disputed the idea that the letter was rushed, and said that more companies will likely join in the future.

Without question, the letter itself is a step in the right direction, as many exchange platforms are eager to create a fair, transparent marketplace for advertisers. But worries remain that a company that undermines those values can profit tremendously, while at the same time preventing others that are playing by the rules from achieving their combined goals

"Standards that maintain quality and transparency are incredibly important to our industry," a third high-level ad tech executive said, but asked to remain anonymous to protect industry relationships. "The question this raises is what happens when someone doesn't comply. To date, when we have bad actors in the space they are rewarded with more market share on the supply side and greater share of voice from the demand side."

"A lot of energy is put into the identification of bad actors," the person adds. "What we need is to have an equal amount of energy in not rewarding them when they are discovered."

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