Dive Brief:

• A new study by 16 programmatic publishers including Business Insider, The New York Times and The Washington Post done in conjunction with the platforms Google, Amobee and Quantcast found alarming figures around video and display advertising fraud, according to a press release. The groups examined ad inventory available across 26 domains and found video callouts — the messages programmatic platforms receive regarding what inventory is available from a publisher — are overstated by 57x compared to the available inventory, correlating to around 700 million counterfeit callouts per day.
• Display callouts were overstated by 4x the available inventory, representing billions of counterfeit callouts each day. Google put a financial figure behind some of the impact, suggesting publishers lose $3.5 million to fraud daily or $1.27 billion yearly based on a $5 video ad CPM valuation thanks to spoofed domains on ad exchanges, as reported by The Drum.
• In the release, representatives from Google, Business Insider, Amobee and others called for greater adoption of the IAB Tech Lab's ads.txt initiative, which promotes authorized inventory from publishers and combats criminal practices like domain spoofing. 

Dive Insight:

Fraud in online advertising has been a problem for a long time, but the new study puts a fine point on its widespread prevalence and the severity of the financial damage it can do publishers' businesses. The issue indeed impacts every player across the digital media supply chain, from the brands that buy ads that are never viewed and don't drive awareness or other KPIs, to the platforms and exchanges whose credibility is damaged by a failure to account for fraudulent activity. 

Fraud happens when a low-quality site spoofs a premium publisher's URL or fake impressions are labeled with a premium publisher's URL. This fake inventory is then sent to exchanges and SSPs. Ads.txt, which was rolled out in May, is being presented as a way to address the problem and stem the tide against bad actors online.

Earlier this month, The Wall Street Journal reported that the average price of digital ad inventory sold through Google's platform has risen since Nov. 8, right around when the tech giant started blocking purchases of unauthorized inventory that was identified by ads.txt. The signal appeared to be that the rising costs of that inventory were indicative that levels of fraud are going down. 

Still, ads.txt adoption has been sluggish among online publishers, according to an August study by MarTech Today. Heading into 2017, all players in the industry will likely need to become more vigilant and adaptable to these kinds of technology solutions in order to spur significant change. 

"If the industry is going to seriously take on counterfeit inventory, publishers need to immediately get behind ads.txt, otherwise this problem will linger and continue to hurt both brands and publishers." Jana Meron, VP of programmatic and data strategy at Business Insider, said in a statement. 

The mobile ad tech firm Kargo earlier this week became the first company to achieve 100% ads.txt compliance.