A series of extensive, often highly-sophisticated ad fraud operations were uncovered and further rattled faith in an already embattled digital marketing space in 2017, leading marketers to ask, "How does this keep happening?" Despite the widespread prevalence of these bad actors and what's tallying up to be a massive amount of ad dollars lost to cybercrime, a growing unity among the trade groups, vendors and agencies, coupled with increased vigilance from marketers, could make a difference in combating a formidable challenge that has, to date, been underestimated.

It won't be an obstacle easily overcome: Since October alone, separate scams including a network of around 40 "zombie sites," a "Sports Bot" operation and a "Hyphbot" were all sussed out by ad tech firms and other industry watchdogs, but only after months of working under the radar, stealing potentially hundreds of millions of ad dollars with little notice. While these cases raised alarms, a handful of technology solutions — some born of a greater collaboration between the trade groups, vendors and agencies — are starting to excise fraud from the digital media supply chain at rates far higher than industry averages. As the bottom-line benefits of implementing these tools become more apparent, more brands might start to wise up and crack down on the problem next year in ways that could lead to significant change.   

"There is a variety of organizations that recognize that there are business opportunities here: it's not all for altruism, it's an opportunity," Bob Liodice, chief executive at the Association of National Advertisers (ANA), told Marketing Dive. "You don't have to be a rocket scientist to know that if I can save you $1 million by investing $25,000 [fighting fraud], it's a win-win for everybody. I think that's where the marketplace is galvanizing around." 

A growing toolbox

The financial impact of cybercriminal activity on marketers' business is massive but has sometimes been brushed off by organizations as a "rounding error," Liodice said. Around one-fifth, or $16 billion, of digital ad spending is forecast to be lost to ad scammers this year, per estimates from the firm Adloox. A joint study between 16 programmatic publishers including The New York Times, The Washington Post and Business Insider and done in conjunction with the DSP platforms Google, Amobee and Quantcast released last week estimated publishers lose $3.5 million to fraud daily, or $1.27 billion yearly, based on a $5 video ad CPM valuation. 

But where marketers used to typically point fingers and demand clawbacks in the wake of this type of online robbery, the industry is pushing toward a more shared understanding of the issue and a focus on building up mutual defenses, according to Piyush Shah, chief product officer at InMobi.

"The good news is that the ad tech industry is finally moving towards fraud prevention rather than simply fraud detection," he said in an emailed statement.

"In the past, anti-fraud measures have been very reactive, where advertisers and networks would deal with fraudulent activities after a campaign was completed," he added. "Fast-forward to today, and the industry is dealing with fraud in a much more proactive and transparent manner."

Ads.txt, introduced by the IAB Tech Lab in May, was one example Shah cited. The tool aims to cut out fraud and unauthorized impressions in programmatic marketplaces by acting as an index of authorized sellers that publishers can post to their domains. This specifically works against popular bad practices like domain spoofing, where a fake media space masks itself as premium publisher inventory to trick ad exchanges.  

In their study, representatives from Google, Business Insider, Amobee and others roundly endorsed ads.txt and emphasized its potential in ensuring brand campaigns only run on authorized inventory. 

"Results like these reaffirm our decision to filter unauthorized inventory across our advertising systems," Pooja Kapoor, head of global strategy, programmatic and ecosystem health at Google, said in a statement. "But until ads.txt is adopted across the industry, domain spoofing will continue to divert advertiser spend away from legitimate publishers."

Gaps and vulnerabilities

TAG Certified channels, much like ads.txt, are quickly being championed as a silver bullet by a number of trade groups and agencies as well. An analysis from the consultancy The 614 Group published earlier in December found such channels have a level of invalid traffic 83% lower than the industry average. TAG was jointly formed by the ANA, the 4A's and the IAB to combat fraud and boost transparency.

Despite the group starting to deliver tangible results, Mike Zaneis, president and CEO of TAG, cautioned that a general lack of vigilance around fraud remains "the biggest gap" harming the brands affected by it.

"Just because [a successful program] exists doesn't mean marketers will always avail themselves of it," he told reporters on a conference call. "It certainly doesn't mean we've solved the fraud problem.”

The demand for more third-party verification and careful implementation of fraud-prevention tools will likely rise as it becomes clearer that bad actors aren't always nebulous entities. Investigations by BuzzFeed News and Social Puncher and the fraud prevention and detection firm Pixalate from October found that the so-called zombie websites appeared to spawn from 301network, a since-shuttered part of the Nashville-based digital marketing agency 301 Media. 

Marketers must not only be more vigilant for these types of players but also more agile as fraudsters target emerging channels that are commanding a larger share of the market. Mobile, in particular, might be particularly vulnerable, as mobile ads are forecast by ZenithOptimedia to account for half of all internet advertising by 2018.

"Mobile advertising spend eclipsed desktop in 2017 during the recent Black Friday," InMobi's Shah said. "The rise of mobile usage across the world is not slowing, so next year mobile will become even bigger and thus even more appealing to people trying to commit fraud."

Keeping pace — and perspective

Looking back, 2017 felt like a year of reckoning for digital marketing overall, between issues around brand safety, transparency, measurement and, tied to all of that, ad fraud. Some of the world's largest advertisers responded by considerably peeling back their spend on digital media channels and demanding a significant clean-up of the supply chain. But, in fighting fraud and its associated ills, it's important for marketing professionals to keep in mind that truly systematic change achieved through accessible solutions is likely the most comprehensive way to address the problem. 

"You'll have some marketers out there like the Unilever's and the P&G's that will be very vocal and very energetic and enthusiastic in pursuing these alternatives to counterbalance the threats of fraud and blocking and transparency and measurement," ANA's Liodice said.

"But what you have to remember is that the marketing universe isn't just defined by the P&G's and the Unilever's," he said. "There's quite a very long tail of substantial marketers that don't have the level of resources or the strategic options to do what L'Oréal did, for example, which was take half of its programmatic in-house."

Regardless, 2017 might've been the turning point in what Liodice's frequently referred to as the "war on fraud" — a war he earlier this year declared winnable following a study the ANA jointly conducted with White Ops. As marketers make progress, it will be essential for them to remain aware and adaptable in order to sustain momentum. 

"Until this year [...] I think everybody felt good that it was moving in the right direction but couldn't bring the quantification necessary to demonstrate that it, in fact, could work — that we could push back effectively," Liodice said. "Whether that has enduring characteristics as the fraudsters become more sophisticated? We'll have to see."