Thursday, May 29, 2014

Fraud Alert: Online Video Ads Scrutinized

LOS ANGELES — As online video ads become increasingly important components of today’s advertising ecosystem for both adult and mainstream companies, a growing number of criminal scam artists seek to steal countless Dollars, Euros and Yen flowing through ad networks and exchanges — using automation, deception and fraud to carry out their crimes.

It is a digital version of the classic “shell game,” where you pay your money and hope to guess which of three walnut shells has a pea hiding under it — while a huckster uses sleight of hand to hide the truth. Except in this case, the pea is a targeted website visitor and the shell is the website that you are paying to run your advertising on. The huckster of course is the advertising network that you contracted with and the empty shells are just that — bogus websites that do not contain real visitors but which you pay good money for in hopes that you will find the desired pea lurking under that specific shell. In both the real and virtual versions of this “game,” not paying close attention is a fast way to lose all your money.

According to a report from comScore, fraud is the elephant in the digital room, forming an undeniably large and growing problem for online advertising, with an average of 0.16 percent of impressions across all campaigns delivered to non-human agents. While this percentage seems negligible, the report covers only basic forms of inappropriate delivery — and with nearly $50 billion in yearly digital ad sales in the U.S. alone, it means that fraudulent online ads cost U.S. businesses around $800 million in annual losses.

When including sophisticated types of fraud, these numbers grow quickly, making fraud an important concern for all advertisers. In fact, the comScore study shows little to no correlation between the cost per thousand visitors (CPM — a common metric for ad buys), and the value delivered to the advertiser.

“For example, ad placements with strong in-view rates are not getting higher CPMs than placements with low in-view rates. Similarly, ads that are doing well at delivering to a primary demographic target are not receiving more value than those that are not,” the comScore report notes. “In other words, neither ad visibility nor the quality of the audience reached is currently reflected in the economics of digital advertising.”

To make it simpler, when buying ads you are often not getting what you hope or think you are.

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