Seven months ago, Procter & Gamble Chief Brand Officer Marc Pritchard--arguably the world's most influential marketer--pronounced that "the days of giving digital a pass are over. It's time to grow up. It's time for action," during a talk at the Interactive Advertising Bureau's Annual Leadership Summit in Florida.
The Trade Desk, which primarily provides software that acts as a one-stop shop for agencies to buy digital ads, and whose roster of clients includes P&G, announced Thursday that it has struck a "game-changing" deal with cyber-security outfit White Ops that, in theory, should effectively thwart bad actors from siphoning ad dollars from marketers for impressions never seen by humans.
It's a well-timed shot at rival Google and its DoubleClick Bid Manager, as the news comes just three days after The Wall Street Journal reported that Google was issuing refunds to advertisers whose ads were shown to bots and not humans. But Google only reimbursed them a "platform fee" of 7% to 10%, leaving many marketers disgruntled.
"What we're doing versus the way Google has responded, is Google is giving credits for fraud after the fact," Jeff Green, CEO at The Trade Desk, tells Ad Age. "We're preventing it from ever being bought because we're scanning everything in advance."
Most marketers might not know that demand-side platforms check random batches of served impressions for fraud after the fact, as checking every single impression is costly. They do know, however, is when they fall victim to ad fraud, they're reimbursed for a portion of their ad spend after the damage has been done.
The Trade Desk's deal with White Ops signals a major shift as White Ops will scan every impression, in real time, before marketers even have a chance to bid, which means clients won't pay for impressions deemed fraudulent by White Ops.
"Other companies will talk about fighting fraud, but they don't," says Green. "They sell fear."
Back in May, P&G ditched its now-defunct demand-side platform AudienceScience to move its North American programmatic buying operations to The Trade Desk. P&G's Pritchard has been very vocal about how the programmatic supply chain needs to be operated, essentially saying the digital ad industry won't get its ad dollars unless it gets its act together.
Although The Trade Desk doesn't see all of P&G's business, its recent move--should it prove effective--could help it win more of it. P&G spent more than $4.3 billion in U.S. advertising last year.
Green says it was challenging trying to figure out how to implement White Ops' security measures on its demand-side platform. "Fraud exists on sell-side platforms and in some cases, they are complicit," Green says. "We're vetting the bidding from the demand-side."
"The cyber criminals themselves are in an arms race--they are heavily funded and face no consequences if they're caught," White Ops CEO Sandeep Swadia tells Ad Age. "The sophistication we've seen in the last nine months has been crazy, as it's getting harder for someone without cyber security and a game-theory background to catch fraud before it happens."
White Ops and The Trade Desk will co-locate servers and data centers in North America, Europe and Asia to scan every biddable ad impression in real-time, a practice common with high-frequency trading in the financial markets.
Ad fraud costly
As it stands today, fighting fraud is costly. One dollar spent on digital advertising, for example, gets taxed by sell-side platforms, demand-side platforms, exchanges and, eventually, advertisers. "We can, in one place, prevent fraud for all those entities to the point that it's economically irrational for them not to use our protection," Green says.
Nobody knows how much is lost to ad fraud each year, but many agree that the number is in the billions. Adloox, an audit verification company, claims $12.5 billion was siphoned from marketers in 2016. White Ops pegs the number at $7.2 billion, but in May said it will actually go down to $6.5 billion in 2017. (Adloox, meanwhile, says it will go up to $16.4 billion the same year).
Premium publishers likely to embrace Trade Desk's move
Meanwhile, Index Exchange, a sell-side platform that works with The Trade Desk as well as publishers like Conde Nast, Time Inc. and the Washington Post, says premium publishers will embrace today's news.
"There's a sense that, up until this partnership, that the ad industry has been measuring fraud, but not trying to get rid of it," says Will Doherty, VP of business development at Index Exchange. "The fear of fraud is holding the industry back, and we have to ensure marketers that the supply chain is secure."
It's simple, he adds: "Premium publishers do not have the same level of exposure to ad fraud. It's a long tail problem. ... Putting in a more rigid protocol is not going to affect our premium publishers, it's only going to help them."