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THE 2015 ADVERTISING
APRIL 2016 DATAXU.COM
PROGRAMMATICQUALITY SERIES
FRAUDREPORT
© DataXu, Inc.ii
TABLE OF CONTENTS
I. A Note from DataXu's CEO
II. Introduction to Ad Fraud
III. Fraud by the Numbers: DataXu’s 2015 Findings
IV. DataXu’s Fraud Defense-In-Depth
V. What to Look For in a Guarantee
VI. The Evolution of Fraud: DataXu Predictions for 2016
© DataXu, Inc.ii
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
iii
Trust… The trust of advertisers, that we always have their
best interest at heart. Trust from agencies that we are working
transparently and earnestly with them as true partners. The
trust of our ecosystem relationships in us and in our word.
Trust that the burgeoning investment in digital advertising,
and programmatic specifically, will live up to its promise to
transform the business of marketing. To us at DataXu, and to
me personally, this is the central issue we are working on
every day.
So when fraud becomes as pervasive and insidious as it has
become across the digital marketing ecosystem, it threatens
to undermine all that trust we work so hard to earn.
As a company focused solely on solving advertisers’ problems
using data science, we have no part in creating or catalyzing
fraud. To be clear, this is a media supply chain issue. But at
the same time, it affects how our entire ecosystem is perceived,
and impacts the central issue of whether a brand can even trust
their digital advertising investments, not to mention the loftier
goal of driving a better return on investment. So, we decided
someone had to step up.
When DataXu instituted its 97% Fraud-Free Guarantee at the
beginning of 2015, we began paying out credits to each and
every brand with whom we work when we find fraud above
a 3% level. As CEO, do I like paying money back out to
customers, particularly due to a problem we had nothing
to do with creating? Well… yes!
It has to do with building trust. By putting our dollars on the
line, it is not simply talk, or some program launched mostly
for PR benefit. We have real skin in the game and have
real economic incentive to proactively fix the root problem
throughout the supply chain. And I am proud to say that our
fraud and supply chain teams have been working tirelessly
these past 15 months to make this program an industry leader.
In this report, you'll see the massive strides we've made over
the course of a full year of our guarantee. We've saved our
customers more than $54 million over 12 months—dollars
that have real impact when not lining fraudsters' pockets.
The fact of the matter is that fraud is a thorny and ever-evolving
issue, and it’s not going to go away any time soon. Paying out
credits to clients is assurance to me that we’re doing our job
each and every day. We hope it earns that critical level of
trust from our brand and agency partners that we’re doing
the right thing.
In a marketplace that has often been accused of deception,
opacity and illicit behavior, I guess I look at it as brand
building. Or rather, trust building. And I’m happy to pay
for that.
Mike Baker
DataXu Co-Founder and CEO
I. A Note From DataXu's CEO
© DataXu, Inc.1
Much like any type of fraud, ad fraud is wrongful or criminal
deception intended to result in financial gain. In this case, the
target is the advertiser.
But why, precisely, is fraud so bad for advertisers? Ad fraud
causes a whole slew of undesirable issues and outcomes for
advertisers, agencies, publishers and technology partners
alike. Waste, distraction and noise are three of the most visible
industry challenges associated with fraud.
• Waste: Spend is occurring on ads that are not reaching
target consumers.
• Distraction: Advertisers have been forced to spend
more time on strategies to combat fraud than on
brand strategy.
• Noise: Fraudulent clicks and actions mean many
KPIs are misleading or even meaningless indications
of performance.
TYPES OF AD FRAUD
There are two varieties of fraud which appear frequently within
the marketing and advertising industry. Broadly speaking, ad
fraud can be categorized as either Bot Fraud or Site Fraud.
• Bot Fraud: Non-human traffic bots designed to generate
fake ad impressions. These impressions or ads have zero
chance of being seen by a human.
• Site Fraud: When the website owner or operator is
knowingly engaged in practices to create bogus ad
inventory or hide the true location of an ad. Site fraud
occurs when domain operators obtain inventory and
misrepresent it in the open markets to artificially
increase its value.
The breakdown of fraud between bot fraud and site fraud is
historically even. Once located, site fraud is typically easier
to eliminate. User-level bot fraud technology continues to
evolve rapidly and is therefore difficult to permanently block.
SUB-TYPES OF AD FRAUD
Additional sub-types of fraud exist within these two overarching
categories. Some of the most common fraud sub-types are:
• Fake Sites: Sites or pages that serve no value other
than creating bogus advertising inventory to be served
to bots/botnets.
• Retargeting Fraud: Bots which visit advertiser websites
to enter their retargeting pools, then visit fake sites to
generate higher retargeting CPMs. In other words, even
an advertiser’s own first-party data can be fraudulent.
• Site Laundering/Bait or Switch/URL Masking:
“Front sites” that appear to be legitimate content URLs,
but actually redirect the ads to low value URLs.
• Hidden or Stacked Ads: Stuffing an ad into a 1x1 pixel,
or placing multiple ads on top of each other.
• Multi-burns: A variant of ad stacking that simulates
completed views for video ads.
• Ad Injection: Leveraging malware to “inject” unapproved
ads onto any page a browser visits.
II. Introduction to Ad Fraud
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
2© DataXu, Inc. 2
© DataXu, Inc.3
CPACPA14%
DECLINE IN CPAs DUE TO DATAXU
FRAUD REMOVAL
RATE
AVERAGEINDUSTRYFRAUD
UP TO 30%
FRAUD
ANNUALRATE OFDATAXU
2.84%
$150K
AVERAGE FRAUD SAVINGS PER DAYACROSS
CUSTOMERS
ALL DATAXU
CPMCPM$0.57
FRAUD SPEND
REDUCTION IN CPMAFTER ACCOUNTING FOR
WASTED
0
$50M
$100M
DOLLARS SAVEDIN 2015 DUE TO
$54MDATAXU’S FRAUD-FREE
GUARANTEE
© DataXu, Inc.3
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
4
III. Fraud by the Numbers: DataXu’s 2015 FindingsFaced by what seems to be an unstoppable eruption of fraud,
marketers have begun questioning how they can be expected to
have confidence in the marketplace, its suppliers and the value
of digital advertising—and rightfully so.
According to independent, MRC-accredited third-party
DoubleVerify1, fraud rates vary depending on supplier,
but can reach up to 30% or higher on exchanges.
WHERE IS FRAUD BEING FOUND?
Analysis of DataXu customer campaigns has exposed some
of the nuances of fraud behavior and in doing so, has helped
improve the company’s fraud-fighting technology over time.
As inventory fraud rates and the types of fraud change
continuously, it can be difficult for advertisers alone to respond
to the fraud environment. Factors such as advancements in
fraud technology, seasonality and economic fluctuations are all
elements that impact fraud rates.
In order to generate real traffic and quality metrics for
advertisers, DataXu has found that one of the most effective
techniques is in filtering out bots from retargeting audiences.
Though the majority of fraud typically happens on the publisher
side, it is important to note that even a brand’s own retargeting
pools are not safe from fraud. In initial DataXu pre-fraud-
protection testing, some retargeting pools contained over
50% fraud. Fraud-laden audiences need to be pruned at the
source—meaning from first-party data—to ensure investments
are generating ROI.
DRAMATIC 2015 FRAUD SAVINGS
In January of 2015, DataXu began monitoring fraud rates as
measured by a layered mix of fraud-protection solutions. For
customers who experience a fraud rate greater than 3% across
their monthly investment, DataXu automatically provides that
customer with a billing credit to ensure they are not stuck
paying for what has become an industry-wide problem. DataXu
calls this commitment our “97% Fraud-Free Guarantee.”
In order to quantify the effectiveness of DataXu's Fraud-Free
Guarantee, we analyzed actual 2015 savings for customers.
• DataXu saved customers $54 million in 2015 by
protecting them from fraudulent inventory/impressions1.
• The Fraud-Free Guarantee saved advertisers an average of
$150,000 per day across all DataXu customers in 2015.
• DataXu successfully limited 2015 fraud to a rate of
2.84%, compared with an industry average of up to 30%.
• Customers experienced a $0.57 reduction in CPMs
due to the fraud-protection offered by DataXu.
Range of InventoryFound to be Fraudulent
Publishers
Networks
Exchanges
4% 17%
2% 7%
6% 30%
© DataXu, Inc.5
FRAUD LEVELS BY MONTH
Though DataXu’s average 2015 fraud rate of 2.84% was
within DataXu’s less-than-3% customer guarantee, fluctuations
occurred month-to-month. The chart below shows the levels
of fraud DataXu ultimately experienced each month in 2015.
October had the lowest rate of fraud in 2015, while September
had the highest rate of fraud in 2015.
FRAUD RATES BY CHANNEL
It’s no surprise that fraud “follows the money.” As of early
2016, the highest rates of fraudulent activity continue to occur
within display and video1.
Though still relatively untapped by fraudsters, mobile’s growing
share of market will begin to attract waves of fraudulent activity
in the coming months. Video, which remains one step ahead
of mobile in terms of adoption by marketers, continues to be
difficult to control when it comes to fraud. The prevalence of
fraudulent video has grown in recent months, and may soon
near that of display.
FRAUD BY EXCHANGE
All exchanges experience fraud. There are some exchanges
that are more fraud-laden than others, but the reality is that
fraud does not discriminate. Not even the largest exchanges
are spared.
However, the fact that exchanges have fraud problems does
not mean that advertisers have to. DataXu’s fraud protection
technology identified sources of fraud within all of the industry’s
best-known exchanges. Without DataXu’s fraud protection
technology, these exchanges had up to 65% fraudulent
inventory, although the amount varied significantly by exchange;
some exchanges had only between 3-9% fraudulent inventory.
The Fraud by Exchange graph on page 6 shows the fraud per
exchange after applying DataXu’s fraud protection technology.
The numbers are significantly lower post-protection.
FRAUD-FREE PERFORMANCE
By removing fraudulent variables from the ad tech value
chain, true performance increases. Every dollar spent serving
ads to bots or buying fraudulent placements only increases
the advertising spend required to drive conversions from real
people. For DataXu customers, the removal of fraud led to a
14% decline in overall CPAs.
In 2015, a peer set of exchanges
including AppNexus, Google,
Index Exchange, PubMatic,
OpenX, PulsePoint and Rubicon
exhibited pre-protection fraud
rates of between 3%-65%.
0
1
2
3
4
5
6
Frau
d Ra
te (%
)
Jan
Feb
Mar Apr
May Jun Jul
Aug
Sep
Oct
Nov
Dec
2.84% Annual 2015 Rate
0
5
10
15
20
25
30
3531%
Display Mobile
Without DataXu Fraud Protection
Video Overall
2% 1%
12%
24%
2.84%3%0%
With DataXu Fraud Protection
Rates of Bot and Site Fraud by Channel
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
6
01020304050607080
50%
65%
41%
2%
13%9%
1%5%
2% 3% 2%1%1% 4%
EXCH 2EXCH 1 EXCH 3 EXCH 4 EXCH 5 EXCH 6 EXCH 7
Without DataXu Fraud Protection With DataXu Fraud Protection
Fraud by Exchange
In 2015, a peer set of exchanges including AppNexus, Google, Index Exchange, OpenX, PubMatic, PulsePoint and
Rubicon exhibited pre-protection fraud rates of between 3%-65%.
© DataXu, Inc. 6
© DataXu, Inc.7
“DataXu has been extremely transparent and has provided us with the tools to help combat fraud. Brand Safety and Viewability are top of mind for our customers but none of that matters unless you're reaching real people on real sites. We can rest assured that DataXu’s fraud guarantee is protecting our investment and is making sure our budget is going towards achieving our customers’ goals.”
Elliott Wilkerson, Director of Digital Media Buying, Russ Reid
© DataXu, Inc.7
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
8
As 2015 numbers indicate, DataXu has invested heavily in
its fraud prevention technology. DataXu employs a defense-
in-depth approach combining our proprietary technology and
third-party solutions to ensure customer investments are
managed in the safest, most productive way possible. DataXu’s
fraud prevention technology pre-screens all inventory across all
channels with five pre-bid fraud protection filters:
• Bot Fraud Filter
• Site Fraud Filter
• Suspicious Activity Prevention
• Malware Scan
• Content Blocking
WHY DEFENSE-IN-DEPTH?
There is no silver bullet to identify and protect against 100%
of ad fraud yet. This is why DataXu deploys five unique filters to
ensure investments are being spent on brand-safe sites and
are delivering genuine engagement.
In addition to DataXu’s own filtering technology, DataXu actively
works with suppliers to improve the overall quality of inventory
supply. DataXu monitors and assesses inventory suppliers for
unusual activity and works with them to identify and shut down
fraudulent sources. In February 2016 alone, DataXu manually
shut off 384 publishers for poor quality. This was in addition to
automatic fraud and/or brand safety filtering.
Beyond pre-bid fraud filters, DataXu partners with best-of-breed
industry solutions to monitor investments through its platform.
THE DATAXU 97% FRAUD-FREE GUARANTEE
DataXu believes that the most efficient way to prevent fraud
from entering our ecosystem is to take a proactive approach.
Neither marketers nor advertising tech providers can afford to
wait for the supply side (i.e. publishers, ad networks and data
providers) to act. That’s why DataXu guarantees that at least
97% of customer investments will be spent on real people, on
real publishers. If a customer experiences a fraud rate greater
than 3% across their monthly investment in DataXu’s exchange
media offerings, DataXu automatically provides that customer
with a billing credit.
The goal is to make combating fraud simple: the guarantee
applies worldwide, to all media types. Customers do not have
to do anything to qualify. And the protection is provided at no
additional cost.
WHY 97%?
The industry is locked in an arms race with fraudsters, and it
is not realistic to expect 100% fraud-free digital media, even
when running on a custom white-list of premium sites, or when
simply retargeting an advertiser’s own website visitors.
IV. DataXu’s Fraud Defense-In-Depth
Content Blocking
Malware Scan
Suspicious Activity Prevention
Site Fraud Filter
Bot Fraud Filter
© DataXu, Inc.9
V. What to Look For in a GuaranteeThe rapid growth of digital and programmatic has captured
the attention of fraudsters worldwide. Rampant ad fraud is an
unfortunate indicator of the success of our industry. But with
new quality offerings popping up every day from a range of
technology and publisher partners, it is important to note that
not all guarantees are created equal.
WHAT TO LOOK FOR IN AN ADVERTISING FRAUD GUARANTEE
ComprehensiveA guarantee should cover an advertiser’s entire programmatic
investment across all devices, channels and types of fraud
(i.e. both site and bot fraud). If a guarantee fully protects
advertisers against bot fraud, but does not account for site
fraud, advertisers remain at risk. Make sure to ask what types of
fraud are covered within any guarantee.
Independent The guarantee should be measured by an independent
third-party accredited by the Media Ratings Council.
ExperiencedChoosing a partner with relevant, long-standing experience
in combating fraud is essential in the race to keep up
with fraudsters.
Advertiser-AlignedBe wary of self-policing programmatic partners that represent
the sell-side as well as the demand-side. Conflicts of interest
in this business model make it hard for advertisers to know if
they are the number-one priority for some of their advertising
partners. Simply stated, go with an independent demand-side
platform (DSP) technology partnered with a third-party vendor.
Players shouldn’t referee their own games.
ADDITIONAL QUALITY MEASURES
While sometimes related, fraud, viewability and brand safety
are three distinct drivers of impression quality. Customized
solutions to combat and address all three of these issues are
imperative. Ask technology partners about their other quality
offerings beyond fraud protection.
Key Questions to Ask• What is included in the quality offering portfolio?
• What solutions are available when it comes to Fraud,
Viewability and Brand Safety?
• Do quality offerings run in conjunction with each other?
• What additional costs/add-ons will I need to pay for each
quality measure?
• Is measurement and verification validated by an
accredited, independent third-party?
• Do quality measures cover all inventory and
channel types?
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
10
“The DataXu and DoubleVerify partnership has proven that by effectively managing digital ad fraud, campaign performance benefits greatly. By applying the DoubleVerify deterministic fraud solution as part of DataXu’s pre-bid avoidance filter, and accompanying this with a rigorous end-to-end inventory quality management process, DataXu has shown how combining technology with human insight can defeat fraudsters.”
Mark Pearlstein, Chief Revenue Officer, DoubleVerify
© DataXu, Inc. 10
© DataXu, Inc.11
The industry has wised up considerably in the past year
when it comes to ad fraud and non-viewable impressions.
However, even senior brand and agency marketers find it
difficult to stay up-to-date on what has become a persistent
and agile antagonist.
DataXu’s inventory and quality experts are responsible for
securing many of the ad exchange and publisher partnerships
that enable DataXu to optimize quality media on behalf of its
clients. In 2016, the DataXu team sees fraud evolving in the
five primary ways outlined below.
TOP 5 2016 FRAUD PREDICTIONS
1. Fraud will become more pervasive in Mobile in 2016 and
will require marketers and their partners to adopt new
techniques to sufficiently prevent attacks.
2. Topics like fraud and viewability will be discussed
together from now on rather than separately—enabling
deeper discussions on the overall quality of media and the
actual efficiency of digital advertising.
3. Advertisers and media buyers will become even more
discerning when it comes to quality. They will move
beyond blatant fraud perpetrated in the form of bots or
hidden ads. Media buyers will expand their focus to publisher
techniques that water down the value of inventory, such as
impression arbitrage, rapid refresh rates, and below-the-fold
auto-play inventory.
4. With continued leadership from the IAB, the industry will
push forward with self-policing efforts against all forms
of fraud, continuing to build on the TAG registry and ongoing
efforts into the Payment ID system. At the same time, more
demand-side platforms (DSPs) will emerge with fraud
guarantees of their own in order to address the immediate
concerns of brand advertisers.
5. Fraudsters will be forced to find new places to monetize
their activities, as exchanges such as Yahoo!, OpenX and
LiveRail continue to crack down on fraud and clean up their
inventory pools. Fraudsters will soon need to get creative and
find new hunting grounds.
REFERENCES
1 All numbers based on DoubleVerify Benchmarks for
unprotected fraud rates in 2015.
VI. The Evolution of Fraud: DataXu Predictions for 2016
© DataXu, Inc.
2015 ADVERTISING FRAUD REPORT
12
About the AuthorsCynthia Clevenger, Director of Product Marketing & Industry Solutions, DataXu
Cynthia is an advertising professional who has built a well-rounded career working within multiple functions of the
digital marketing landscape, all the way from agency to ad tech. As a leader in DataXu’s Go-To-Market organization,
Cynthia is responsible for developing solutions that help DataXu’s customers leverage the most advanced and
innovative programmatic technologies. Prior to DataXu, Cynthia held roles in digital media buying, account
management and marketing working with a number of notable brands including: Clorox, Adobe, Sunpower, Autodesk
and Charles Schwab. Cynthia is an active member of the San Francisco Bay Area advertising community and holds a
B.A. from Oregon State University.
Tal Baron, Product Manager, DataXu
Tal brings nearly ten years of marketing experience and a customer-centric approach to his role as Product Manager
at DataXu. He is focused on developing innovative products and solutions to maintain media quality within DataXu’s
ecosystem. Prior to joining DataXu, Tal held several positions within Client Services organizations gaining expertise
in fraud prevention, viewability, brand safety, social advertising, client strategy and campaign optimization. Tal’s
experience in Social Media Advertising, Event Marketing, and Sponsorship Marketing had provided him with well-
rounded and insightful perspectives on the digital marketing landscape.
Aaron Ledwith, Business Development Specialist, DataXu
Aaron is an inventory quality specialist and holds the key responsibility of curating all of DataXu’s inventory to
ensure it is of the highest standard. With a background in cultivating client relationships and building out
programmatic strategy, Aaron has transitioned his role at DataXu to focus on one of the key pillars of DataXu’s
offering. Aaron holds a B.A. in Communication Studies from Emerson College in Boston and focused his senior
thesis on Location-Based Advertising.
Merrily McGugan, Director of Corporate Marketing, DataXu
Merrily McGugan is Director of Corporate Marketing at DataXu. Prior to joining DataXu, Merrily held the role of
head of content at Pixability. Merrily previously held positions at Omnicom’s Communispace; Accenture – Sydney,
Australia; and Havas’ Arnold Worldwide on the award-winning truth™ and Jack Daniel’s Tennessee Whiskey accounts.
Merrily holds an A.B. with honors from Harvard University and is a recipient of the High Distinction Academic
Excellence Medal from The University of Sydney, Australia. Merrily is a MarketingLand.com columnist, is the author
of six highly acclaimed industry white papers and is the co-author of travel guidebooks Let’s Go Western Europe
2007 and Let’s Go Ireland 2007.
© DataXu, Inc. 12
DX-WP-AFR2015-002
DataXu, Inc. • dataxu.com • 281 Summer Street, 4th Floor, Boston, MA 02210 • 1.857.244.6200 • @DataXu
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About DataXu
DataXu’s mission is to make marketing better using data science. The world’s top brands and agencies use DataXu to better understand
and engage customers across all devices and media formats.
Our solution provides marketers with unparalleled Media Activation, Marketing Analytics and Data Management capabilities. With sixteen
offices in eleven countries, DataXu’s full-stack solution is powering the digital transformation of the world’s most valuable brands.
For more information about DataXu, visit www.dataxu.com.