MONDAY AUGUST 29th 2022

Advertising Fraud Detection Doesn't Work Anymore?

Advertising fraud is a big problem, and it's only getting bigger. Thanks to technology, we now have the ability to track how much of our ad budget is being stolen by fraudsters.

 And the numbers are staggering. 

In 2018, advertisers lost an estimated $19 billion to ad fraud, but in 2022, the estimated worldwide advertising fraud number will be almost $70 billion.

Yet there are hundreds of “fraud detection” companies left and right that claim they are the best solution for preventing fraud, making hundreds of millions from brands and networks that want at least the perception that they are doing something proactive about fraud.

However, let’s be honest with ourselves, if these companies were at least partially effective in what they claim to do, we wouldn’t be dealing with headlines that claim that as much as 10% of all programmatic advertising is on fraudulent sites, or that CTV Networks are purposely hiding where their inventory is being displayed.

For these solutions to be honestly effective, they need to work 99% of the time and have less than a 1/2% false positive rate. Nothing even comes close to this, and seemingly doing nothing works just as well as hiring a complex fraud detection company.
 

There are a few reasons why fraud detection does not work.

 One reason is that the technology is not sophisticated enough to catch all the fraudulent activity. 

Another reason is that the bad actors are getting smarter and finding ways to bypass the detection technology. As Kenneth Rona, PhD a well known data science with Chalice Custom Algorithms, told me “Fraud detection only looks at the things it has been told to look at. Analysis is more open ended. And the fraud people are clever and learn. Constantly changing, so tools will have a hard time staying up on the latest.”

Let’s be not beat around the bush here: some of the fraud is actually being perpetrated by the companies who are selling the detection technology themselves according to some experts. 

Ad Fraud Detection software is easy circumvented by those who know exactly how to hide, often working hand-in-hand with insiders in these companies who either are being paid off or helping fraudulent publishers to increase their commission. 

One of the main problems with fraud detection technology is that it relies on blacklists. 

These are lists of websites that are known to be associated with ad fraud or other types of malicious activity. However, the bad actors can easily get around these blacklists by using different domains or IP addresses. They can also use proxy servers to hide their true identity.

If you’ve ever looked at some of the programmatic exchange “traffic source” list, you’ll often be amazed that “unknown traffic” is often the #1 source. This makes no sense in a day and age when the technology exists to ensure that only quality, known sites display ads, not “long tail network” that end up showing ads on your dishwasher. These networks are refusing to remove these questionable sites from their traffic sources because it's often easy money.

While we are at it, accreditation seems to mean absolutely nothing. You might be surprised to learn that not all companies that claim to detect fraudulent activity are actually at all accurate in their detection. In fact, many of these companies are only MRC accredited, which simply means they paid a bill that said that they would measure what they said they would measure. This doesn't necessarily mean that the company can accurately detect all instances of fraud, or even any fraud at all. There is nothing in the MRC's requirements that actually requires companies to detect and prevent fraud. 

Oh, this sounds so scary, how can we create systems to prevent this? 

Surprise, we already have it, but most exchanges and agencies aren’t engaged enough to care and actually take proactive steps. 

The first step is creating whitelists instead of depending on blacklists.  Those who are blacklisted, just create new domains, new corporations and new scams --  using publisher IDs only to distribute ads to known sites will decrease fraud significantly, and prevent many of the fake distributions. 

As, Dr. Augustine Fou taught me: There are a lot of bad sites and apps out there. And blocking them all can be a huge pain. That's why more and more people are realizing that it's simply not worth the effort to try to add every bad site to their block list. After all, most of those sites don't even exist anymore as the fraudsters easily change domains and sites.

Let’s also assume we all have brains and use them occasionally. A Bot clicks ads even if they’re not interested in the product or service being advertised, causing inflated numbers that make it look like your ad is performing better than it actually is.. Check your click-through rate (CTR) and conversion rate to see if there’s a discrepancy. If your CTR is abnormally high but your conversion rate is low, it’s likely that you’re dealing with ad fraud. It’s not that hard to then take action to remove that network or site from all your media buys and ask for a refund. It's that easy.

High bounce rates and short session durations are both warning signs that something is wrong with your campaign, you're seeing a high bounce rate, it means that people are coming to your site and then quickly leaving. you're seeing short session durations, it means that people are coming to your site and then quickly leaving.

One way to tell if you have an ad fraud problem is by looking at where the traffic on your site comes from. Fraud folks tend to use bots or click farms to generate clicks, which means that the traffic will often come from weird or unknown sources. I am bewildered that anyone takes traffic reports with the category of “other” or “unknown.” 

Similarly, keep an eye on is a very large number of long-tail site placements in your campaign reports. This can be an indication that your ads are being placed on low-quality websites instead of the main big websites they promised you.

Don’t trust them when they tell you about “Viewability.” If you bring up fraud to a network, they may come back and make some claims about the viewability of your campaign being very high and that is why the campaign should be working better. They will then pretend to be confused.

.Viewability, while interesting, is ultimately irrelevant. It’s a diversionary tactic. The network is trying to distract you from the fact that your campaign isn’t working by bringing up an unrelated issue.

Viewability is the percentage of your ad that is seen by users. It’s a metric that is often used to measure the effectiveness of digital advertising. However, viewability is not a perfect measure of ad effectiveness. There are many factors that affect how well an ad performs, and viewability is just one of them. For example, even if an ad is 100% viewable, it may still not be effective if users don’t actually engage with it.

The bottom line is that you shouldn’t be fooled by the networks’ red herrings. If your campaign isn’t performing well, it’s likely because of something else, such as poor targeting or low-quality creative. Viewability is always interesting to me, but if the source is fraudulent, they will likely spoof that also. It’s only valid if the campaign is valid, otherwise it’s useless information.

Ignore Vanity Metrics and Industry Jargon. Fraudsters know how to try to overwhelm you with a bunch of numbers, names, figures and claims – they will tell you that they were “accredited by the NRCCSA” and that they assure you that their “IVT and TTF DRG is within industry standards according to the BBC of AND.” None of what they will tell you will make up sense, but they will try to make you feel stupid for not knowing the “newest technology” that no one else has heard of. However, they will completely ignore the facts presented such as bad site lists, poor performance and weird traffic sources and point the finger back at you.

While we can deploy a number of measures to detect and prevent ad fraud, it is ultimately up to the industry as a whole to be proactive in our approach. This means training staff on what to look for, being vigilant against low-level fraudsters and knowing what to look for. We need to continue working together to find new ways of detecting ad fraud and protect our industry from financial losses. 

What else can be done?

 Q&A Inna Ushakova, CEO and Co-Founder at AI Fraud Prevention Firm: Scalarr

Inna Ushakova is the co-founder and CEO of Scalarr, a company focused on creating the most advanced, accurate and effective AI-powered suite of solutions that range from sophisticated anti-fraud detection, to edge cybersecurity, to automated playtesting.

How did you come up with the idea for the company?
The idea for Scalarr actually came from the misfortune of my first business, which was a mobile marketing agency. We ran into issues at one point after realising that 78% of traffic on a specific campaign we were running at the time was fraudulent. For a marketing agency of course this was a huge concern and resulted in money loss directly caused by mobile ad fraud. So, in 2016 I decided to develop my own anti-fraud solution to tackle the wider problem. It was initially developed for internal use, but I saw a gap in the market for a product with such capabilities and knew there would be many agencies out there in need of extra security against ad fraud.

What is a big problem in 2022?
With the increase in IoT and connected devices, the way advertisers reach their audience is becoming increasingly digital and so the risk of hacking and cybercrime increases along with it. That’s why measures must be taken to stop the fraudsters in their tracks.

How do you use Data in Fraud Prevention?

We have started the implementation of ML and Big Data technologies from the beginning. We now see the significant advantages of these technologies in terms of accuracy and completeness of fraud detection. Machine learning is self-learning and can consider the individual parameters of each app. In our solution, for the most accurate results, we use both unsupervised (UML) and semi-supervised (SSML) machine learning algorithms. These two algorithms are differently applicable but perfectly fit each other: UML algorithm showing good results in detecting new evolving types of fraud, while SSML interprets outcomes, coming from UML, explaining also the causes of fraud. By using different machine learning algorithms at once, Scalarr able to give a direct evaluation of traffic with accuracy up to 97%. 

What was your biggest challenge?

When we were testing for solutions we found companies attempted to detect fraud using a “rules based approach”, creating a list of behaviours that suggested fraudulent activity. The challenge was that no matter how fast these rules were created, fraudsters were already onto the next method, making it impossible to keep up with them. So, we created a solution that’s one step ahead of the game, equipped with tools that can detect abnormalities that haven’t already been classified as potentially fraudulent, as well as the ability to predict upcoming fraud patterns. 

TheRundown
At least 10 News Stories you Must Know
(but don't have time to read!)

1. NFTs are all the rage these days, and it's no surprise that Tryangle42 is jumping on the bandwagon with its own collection. CHNOPS Greenhouse is the first of what will hopefully be many NFTs from the company, and it's clear that they're putting their own unique spin on things. The collection is powered by utility tokens, which means that it has real-world applications and can be used to perform certain tasks or access certain services. In this case, the tokens can be used to fertilize virtual plants in the CHNOPS Greenhouse, with the goal of ultimately growing real-world plants. It's an interesting concept, and it'll be interesting to see how Tryangle42 develops it further in the future. For now, though, CHNOPS Greenhouse is a fun and unique way to explore the world of NFTs.

2. With Google now delaying its replacement plan until 2024, the lid on the third-party-cookie jar remains open. But the threat of its closure looms, and has caused marketers to start thinking about (and testing) ways to reach customers without third-party tracking. "I think for the longest [time], we've just relied on this third-party cookie, and it was laziness," Ricardo Diaz, chief digital officer at performance agency Merkle, told Digiday. But with the end of third-party cookies in sight, marketers are starting to get more creative with their targeting and measurement strategies. Some are turning to first-party data, while others are experimenting with alternative technologies such as server-side tagging and people-based marketing. The key is to start testing now so that you're prepared when the inevitable happens and the third-party cookie crumbles.

3.This last week, Elon Musk and his team appeared to score a victory in their legal battle with Twitter. The tech entrepreneur is seeking to exit his $44 billion Twitter takeover bid, on the grounds that Twitter has lied about the presence of bots and spam on its app. In the latest development, Twitter's former Security chief has come forward with evidence that appears to support Musk's claims

4. It's a cautionary story about how two shady producers partnered with a popular rights management company to steal YouTube royalties from unsuspecting musicians. But who's really to blame here? YouTube *could* more widely open up its ContentID system so more creators can protect themselves, but according to Rian R. Bosak, CEO of rights management company AdRev, "it would be an arms race" and "YouTube is not in the business of making it easy for rightsholders to police their content." So, until YouTube makes it easier for creators to protect their content, it looks like rip-offs like this will continue to happen.

5. For years, Twitch's creator partners were forbidden from dabbling with competitive platforms. But now, they're finally loosening the bonds. Creators can now stream to YouTube and Facebook, but are still barred from multicasting to those platforms and Twitch simultaneously (although you can simulcast to TikTok and Instagram Live). Their rationale is flimsy — "We want to make sure that our community has the best experience possible" — but it's good news for creators who want to broaden their reach. And it's especially good news for those of us who like to watch people play games on multiple platforms. Now we can watch our favorite streamers on Twitch, YouTube, and Facebook, all at the same time. It's a win-win for everyone.

6. iHeartMedia, the media conglomerate behind iHeartRadio, has launched iHeartLand, an always-on metaverse space built in Fortnite using the game’s creative tools. The main draw is a State Farm-sponsored concert arena designed to emulate large-scale outdoor venues. State Farm Park plans to host 20 events over the next year, starting with a two-part performance from Charlie Puth on Sept. 9.The move is part of a larger trend of brands and businesses moving into the world of video games, as the lines between gaming and reality continue to blur. iHeartMedia isn’t the only one getting in on the action – Pepsi recently launched a virtual concert series in the popular game Roblox, and McDonald’s has also been running ads inside of Fortnite. As video games become more and more realistic, it’s no surprise that companies are looking to capitalize on their popularity. With iHeartLand, iHeartMedia is hoping to create an immersive experience that will bring fans closer to their favorite artists. Only time will tell whether this experiment will be a success, but one thing is for sure – the world of video games is only getting more popular, and companies are taking notice.

7. Instacart, the grocery-delivery platform, has partnered with music star Lizzo for its largest campaign to date. The campaign, called “The World is Your Cart,” debuts with a full-page spread in The New York Times Sunday edition on Aug. 28 and a 60-second commercial starring Lizzo that will run during the MTV Video Music Awards on Aug. 30. The campaign is meant to flex Instacart’s plethora of shopping possibilities and show how the service can make grocery shopping easier for busy people. Lizzo is the perfect spokesperson for the campaign because she is a busy person who understands the value of convenience and simplicity. In the commercial, she uses Instacart to shop for groceries while she is on the go, and she extols the virtues of the service in a fun and relatable way. The campaign is sure to resonated with busy people who are looking for a easier way to shop for groceries.

8. As the pandemic has pushed mobile gaming further into the mainstream, the trend could be due for a resurgence on apps like TikTok and Facebook’s Instagram. TikTok recently launched a gaming pilot with partners Vodoo, Nitro Games, FRVR, Aim Lab and Lotum. According to TechCrunch, which confirmed the pilot, the new mini-games are found inside the TikTok app while creating a video. When a link to play the game appears in the editing interface, users can challenge friends to beat their high score. The games will also appear on users’ profiles as permanent clips. It’s not clear how long the pilot will run or if TikTok plans to make the games available to all users. But given the popularity of Instagram’s similar “IG Stories” feature, it wouldn’t be surprising to see TikTok eventually roll out mini-games more broadly. Facebook is also reportedly working on a “secret” project that would add gaming features to Instagram. The social networking giant has been on a hiring spree for its “playable ads team,” which is responsible for developing ad formats that let users “play” a game without downloading it first. According to Business Insider, Facebook is also testing a new “gamification” feature for Pages that would let businesses add quizzes, polls and other interactive elements to their posts. With more people spending time on their phones than ever before, it’s no surprise that apps are looking for ways to keep users engaged. And given the success of past efforts like Snapchat’s Lenses and Facebook’s filters, it seems likely that mini-games could be the next big thing in mobile gaming.

9. Just nine months ago, Instagram was getting nearly 100 times more downloads than BeReal. But BeReal got 6.5M new downloads between July and August—nearly 2M more downloads than Instagram! Pics or it didn’t happen: Not surprisingly, Instagram is prototyping its own version of a feature that asks users to take candid photos at specific times… you know, like BeReal. Why we care: While BeReal hasn’t fully caught up to Instagram just yet, it’s well on its way to becoming the next big thing in social media. 

10. Pinduoduo, a Chinese e-commerce company, is reportedly planning to launch in the U.S. The company has been incredibly successful in China, despite launching years after established rivals like Alibaba and JD.com.

Pinduoduo differentiates itself with a unique business model that combines social media and e-commerce. The company encourages its users to form groups to purchase discounted products. This approach has been highly successful in China, as it tap into the country's love of bargain hunting and social media.

11. Ziwe Fumudoh, host of the late-night talk show and comedian, has partnered with Loyal 9 Cocktails for its first national campaign. The line of canned vodka and lemonade beverages is putting its lack of fizz front-and-center, and Ziwe uses her well-known questioning style to ask beachgoers if they're "feeling flat." The new campaign is set to air across digital and social media platforms, and it's sure to be a hit with viewers. In addition to the commercials, Loyal 9 Cocktails will also be running ads on Ziwe's show, which will further increase the visibility of the brand. With its humorous take on a familiar product, Loyal 9 Cocktails is sure to make a splash with consumers.

The Watercooler
Impress your Co-Workers with these useless facts about marketing

5 Tips for a More Productive Morning
 

Start at 5:00—yesterday. 

One thing some people like to recommend is to come into the office and write a to-do list, to get yourself organized before you start your day. 

Establish a routine. 

Plan your day wisely. 

Go outside. 

Try not to rely on caffeine.

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