Programmatic advertising—how marketers and publishers buy and sell digital ad space—has been around for 30 years. What started as a banner display ad in 1994 has snowballed into a multi-billion dollar ad-buying industry, projected to reach $747 billion by 2028. As the industry has grown, so has programmatic ad fraud, which is projected to exceed $170 billion in the same year.
Marketers devote as much as 90% of their digital ad budgets to programmatic advertising, and with up to 50% of programmatic ad spend lost to fraud, it’s imperative to understand what’s at stake. Ad fraud not only robs companies of advertising dollars, but it also wastes time, skews the data used to make further advertising decisions, and can damage the business’s reputation.

With so much fraud, why is programmatic advertising so popular? What are the links in the programmatic advertising chain? What leads to much of the ad fraud? Is there an effective way to detect and stop ad fraud? And what are the hidden dangers of some of the ad fraud solutions out there? Hint, if you’re relying solely on a pre-bid filter, i.e., a General Invalid Traffic (GIVT) filter, you’re barely scratching the surface to solve the problem.

Why Is Programmatic Advertising So Popular?

Programmatic simplifies the way ads are bought and sold. Prior to this automated process, an advertiser would identify media outlets that attracted their target buyers, request a media kit or an advertising proposal, negotiate the terms of the proposal with a human media rep, finalize the terms, then create and place the ads. It was a tedious and time-consuming process, and often there was little, if any, reporting for marketers to know how their campaign performed.

With millions of websites and mobile apps—not to mention video, connected TV (CTV), audio, and digital out-of-home—for marketers to choose from, it’s impossible for marketers to know what’s available and what channels are best to reach their target audience. Programmatic advertising offers a convenient, cost-effective way to do just that, creating brand awareness and generating demand that can lead to sales.

What Are the Links in the Programmatic Advertising Chain?

While programmatic enables advertisers to streamline the ad-placement process, it also involves more players to bring together advertisers, who have campaigns to run, and publishers, who have inventory to sell. Those players include:

Demand-Side Platforms (DSPs). Advertisers use DSPs as a one-stop shop to buy ads across several websites or channels in real time, using data to make sure their ads reach their target audience. Advertisers usually choose between paying for clicks or impressions based on their objectives.

Supply-Side Platforms (SSPs). SSPs, also known as sell-side platforms, aggregate high-end traffic sources to monetize them through DSPs. Publishers use SSPs and dynamic pricing models to sell ad space to the highest bidding advertisers in real time.

Ad Exchanges. An ad exchange like AdRoll is a digital marketplace that brings advertisers (buyers) and publishers (sellers) together. The ad exchange instantly compares advertisers’ criteria and budget to publishers’ available ad inventory to sell and place ads.

What Leads to Programmatic Ad Fraud?

The leading cause of programmatic ad fraud is invalid traffic (IVT), including bots and human traffic with no intent to convert. There are two types of invalid traffic: general (GIVT) and sophisticated (SIVT).

GIVT is your basic bot traffic. Most of it is harmless, and some of it is even necessary to rank your site on search engines.

SIVT is harder to detect and identify. It includes advanced bots that closely mimic human traffic and behavior, capable of outperforming humans on CAPTCHA or reCAPTCHA. It also includes hijacked devices, invalid proxy traffic, and human fraud farms.

To stop ad fraud, you need to detect and stop more than GIVT, you have to focus on stopping SIVT. This is where a significant link in the programmatic chain falls short.

What Efforts Are Being Made to Stop IVT and Why Isn’t It Working?

Programmatic advertising requires multiple actions to take place in virtually no time at all: a request is made, the response is validated, the highest bidder wins a particular display ad space, and the ad is served up. This must happen instantly so there is no delay in loading the content or ads; there is no time for a real-time human review.

Most DSPs will assure advertisers that they have fraud detection in place to protect them during this process. That may be true, but what they aren’t saying is that “protection” is a GIVT filter, also known as a pre-bid filter, which lives inside the real-time bidding environment. This process uses a couple of data points, such as the IP address and user agent, but it catches only 1-3% of the invalid traffic that leads to ad fraud! (It has a high false-positive rate, inaccurately identifying approximately 15% of your valid traffic, blocking visitors who are true potential customers.)

Fraudsters know about this vulnerability, and they know how to get around it by deploying advanced bots or hiring human fraud farms. These techniques slip through the pre-bid/GIVT filter. DSPs likely know that their filters are vulnerable, but they’re certainly not going to disclose this to their advertisers. In the meantime, fraudsters easily steal billions of dollars from advertisers who thought they were safe.

DSPs, SSPs, and media agencies don’t always understand the distinctions in traffic types, and they’re certainly not experts in ad fraud, so they don’t talk to advertisers or publishers about the challenges they present and the long-term effect it can have if more proactive measures aren’t incorporated.

Can Advertisers and Publishers Be Protected From SIVT?

Programmatic is one of, if not the largest marketing channels. It is also the biggest area of ad fraud. Anura has found as much as 50% of traffic from programmatic advertising is fraudulent.

Invalid traffic that isn’t detected and stopped creates false clicks and ad impressions which lead to lost initial budgets for advertisers. It can also provide inaccurate data that’s used to create and place future campaigns, leading to even greater losses. Publishers are risking a loss of revenue if the issue of invalid traffic and ad fraud aren’t addressed to advertisers’ satisfaction.

If the solutions offered by DSPs aren’t working, what will? Many advertisers have found that the best way to detect and stop SIVT is by adding an even more sophisticated ad fraud solution that significantly reduces ad fraud, saves ad budgets, and increases marketing ROI. At Anura, we catch significantly more fraud by diving deeper into the data and using multiple data points, combined with our human expertise and years of experience, to detect sophisticated invalid traffic with no false positives.

If you’re ready to put the best solution to programmatic ad fraud in place, contact us today. We’ll let you know how much fraud you’re experiencing today and set you up on a free, fully functional 15-day trial so you can see the results for yourself.