Fraud and it’s impact on programmatic advertising

There is a lot of talk in the marketing world at the moment concerning the potential risk click fraud represents to programmatic advertising.

In essence, programmatic technologies allow brands to bid on users one at a time based on anonymised data about those users.  Brands with a thorough understanding of their ‘best-fit’ customers can pick and choose the type of potential customer that will be shown their adverts.  In addition, when using 1st party data, brands can deliver relevant retention messaging to existing customers or stop those existing customers from receiving prospecting messages.

Read this introduction to programmatic post for more.

Clearly, programmatic has the potential to have a massive business impact because it delivers on the Holy Grail of marketing – conveying the right message to the right person on the right device at the right time.

However, since the rise of Pay Per Click (PPC) and Cost Per Click (CPC) advertising, click fraud has emerged as a real burden for both advertisers and advertising networks – and programmatic advertising faces the same level of threat. Fraudulent clicks have resulted in advertisers’ campaign results being skewed at the expense of actual conversions.

So what do we do about it? It’s important not to overact as there is absolutely no need to avoid programmatic simply due to ad fraud – that’s the equivalent of a bank shutting down its online banking due to the existence of phishing emails. The key is to be aware of the risks and to make sure you’re taking steps to minimise and eventually eliminate them.

The problem is that when an advertiser buys traffic on a fraudulent site, it usually comes very cheap (impressions for 1-5p CPM) and has good click through rates (CTRs above 1%). So if you have fraud in your advertising mix, what you see as an advertiser is that for a small amount of money you get a good number of clicks. When you remove all fraudulent clicks, the marketing KPIs – such as reach and traffic – go down. Essentially, it looks like you’re buying traffic on more expensive sites with worse click through rates.

The solution is …

The industry has been responding to the click fraud threat through the adoption of various detection and prevention technologies. These can include things like blacklists (which sites to avoid) or white lists (which sites to accept) or more elaborate forms of real-time bot detection.

Additionally, using viewability technology to measure how many have been in view will become a good way to verify legitimate clicks – if the ad wasn’t in view then how can there have been a click?  Not all impressions are available with viewability however, but this is of growing value to media buyers and advertisers.  Ads that you can engage with, and expand, are also welcome additions that reduce reliance on the click, and introduce performance level metrics to brand campaigns.

However, in addition to these measures, part of the solution relies on partnering with organisations you trust (large and accountable parties are advised), ensuring your data is good enough and that those internally responsible for programmatic are fully up to speed.

Internally, it needs to be understood that taking steps to remove fraudulent clicks will seem to have a negative, albeit notional, effect on some of the standard marketing KPIs. Volume will go down and cost will go up. However the quality of that traffic and conversion will increase. You’ll find bots don’t spend that much money.

How to limit programmatic click fraud and keep your brand safe

  • Enrich and validate your data frequently
  • Only use trusted and reputable partners
  • Build a white list of sites using ad verification tools and human audits if the advertiser knows exactly which properties it wants to serve ads on
  • Use online and offline conversions rates to get a holistic view of performance, in combination with  the volume of impressions served (if the key metric is reach) and CTR (to track engagement) with campaigns that have a call to action –  Conversions are much harder to fake than clicks
  • Be wary of very high CTRs –  click rates of more than 1% are not uncommon with the right targeting to the right audience – but it’s good practice to cross-check this against conversion rates
  • Check what level of ad verification technology your DSP, SSP and Ad Exchange is using.  Most Ad-Exchanges will have ‘audited’ inventory and you can run campaigns on this basis only.  You will need to make a business decision whether the risk/reward of lower impressions improves performance overall
  • Build a blacklist of sites and cross-check it regularly, refining it during each campaign.

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