Brief:

• A video fraud scheme targeting mobile app advertising ran video ads behind legitimate banners, generating at least 2 million ad calls per day, or at least 60 million ad calls per month, according to a report by DoubleVerify's Fraud Lab that was provided to Mobile Marketer.
• Fraud-detection firm Protected Media also identified the fraudulent activity, per BuzzFeed News. Along with its effect on the mobile ad ecosystem, the scheme drained the battery life of Android phones and used up cellular data.​
• Aniview, an Israeli company that runs a video ad technology platform, was implicated in the scheme, sources told BuzzFeed News. The company denied the claims, saying the banner ads and code created by a subsidiary called OutStream Media were exploited by an unnamed third party.

Insight:

Mobile advertising has the power to reach target markets at a massive scale, while giving brands a more transparent view of how their ad dollars are being spent. Unfortunately, fraudulent activity diminishes the marketing effectiveness of mobile ads and diverts money from content platforms that depend on sponsorship. The latest ad-fraud scheme also harms consumers whose data plans are squandered and whose mobile devices waste battery power on hidden video feeds. The fraudsters are likely to invite an FBI investigation and class action lawsuits from consumers who have suffered damages from the nefarious activity.

DoubleVerify found that banner ad slots were being re-sold as premium video ad inventory almost exclusively on mobile apps. The practice is often contrary to marketplace policy and is deceptive to the buyer, the firm said, as ad inventory is being represented as in-stream versus in-banner. Bad actors are stuffing multiple ads into the same slot, intentionally using incorrectly sized video players or hidden players to generate fraudulent streaming activity.

The scheme indicates that fraudsters continue to exploit technical weaknesses in the mobile ad marketplace, despite industry efforts to crack down on such activity. Mobile fraud remained persistent in the second half of last year at 30% worldwide as rates of app install fraud affected ad networks' rankings and threatened marketers' budgets and decision-making, per AppsFlyer, a provider of mobile attribution and marketing analytics. Juniper Research estimated digital ad fraud will cost at least $19 billion this year, but others said the figure could be three times that, according to a separate BuzzFeed report.

It's not clear whether the IAB Tech Lab's efforts to combat mobile ad fraud would have helped to prevent video ad-stuffing activity that DoubleVerify discovered. IAB Tech Lab last week released the final version of its app-ads.txt specification for implementation among mobile ad platforms. The app-ads.txt file has the name and identification code for authorized sellers of the app's available ad inventory, and helps to ensure that advertisers only bid on slots from authorized sellers.