Australia has the third highest rate of programmatic ad fraud in the world, according to a new report, which claims the rate of fraudulent programatic ads is 20 per cent.

Mobile app ads are the riskiest form of advertising and the problem is worst on Android devices, according to the research.

The report, from ad fraud intelligence firm Pixalate, follows claims that one of the leading apps on the Google Play store is a major source of fraudulent traffic and games install attribution.

The Australian arm of the Interactive Advertising Bureau (IAB), the industry body representing digital marketing has disputed the findings, claiming Pixalate failed to properly distinguish the invalid traffic as the basis for its fraud claims.

For its Q3 2018 Ad Fraud Report, Pixalate analysed billions of programmatic advertising impressions across over 80 million domains and over 1.5 million apps within the quarter to identify “invalid traffic”. Of the top 15 countries in terms of programmatic ad volume Australia had the third worst rate of invalid traffic which the report equates with ad fraud.

At a 20 per cent rate, Australia is better than only India and Indonesia in terms of ad fraud, 34 per cent and 30 per cent respectively. According to the report the fraud rate includes “all programmatic ads (both display and video) measured across desktops, mobile devices, and [connected TV/Over the top] devices”.

Source: Pixalate – Q3 2018 Ad Fraud Report

Findings challenged

But IAB Australia has challenged the findings. Jonas Jaanimagi, technical lead for IAB Australia told Which-50 there are significant differences in the types of invalid traffic and not all of it can be labeled fraud.

“The data reported by Pixalate doesn’t clearly distinguish between general invalid traffic (GIVT), which is benevolent non-human traffic such as bots, spiders and crawlers designed to make the internet more usable for everyone – and sophisticated invalid traffic (SIVT) which is illegal fake inventory designed by criminals to replicate human behavioural signals and trick buyers into unknowingly and unintentionally buying fraudulent ads,” Jaanimagi said.

While organisations like IAB continue to fight fraud with the development of adtech standards, fraud and invalid traffic remains a significant problem. One that is often unavoidable, for now at least, according to Jaanimagi.

“The reality is that like any industry or market, fake products are everywhere and buyers need to know what they are buying and be prepared to pay the right price particularly in programmatic open-market exchanges; whilst sellers need to educate buyers better on what quality media looks like and why there might be a premium.”

‘Follow the money’

As the digital ecosystem expands no channel is off limits as fraudsters “follow the money”, according to Amy King, VP of product marketing at Pixalate.

“There are both more ways for scammers to commit fraud as well as more financial incentive to do so [now],” King told Which-50.

“Even with advancements in widely available tools and technology, such as ads.txt, fraudsters still find a way to steal ad budgets… when you stamp out one of their profitable avenues, it won’t be long before they try again in a new area.”

The report breaks down fraud rates for device type and display type; finding desktop and smartphone are riskier than tablets; and in app video advertising on smartphones and tablets to be the riskiest.

22.1 per cent of smartphone app video advertising return invalid traffic, according to the report.

Amy King, VP of product marketing at Pixalate.

Seperate research by another ad fraud consultancy, Method Media Intelligence, has found invalid traffic rates as high as 80 per cent on some popular Google apps.

Awareness of the problem is growing, says King, particularly as more advertisers bring programatic in-house. That new oversight can reveal just how much wastage the ad-fraud problem creates.

“We see companies across the industry increasingly concerned not only about their loss of ad spend, but also of missed targeting goals, threats to brand reputation, and to security — all tied to ad fraud.

King says industry bodies like the IAB are continuing to promote awareness and develop the holistic approach needed to combat fraud, which includes standardising protocols for programmatic advertising.

Fighting fraud

The IAB has worked to promote the adoption of  ads.txt to protect against domain spoofing and the forthcoming ads.cert to authorise programmatic inventory in real-time-bidding.

“These are standards acting as solutions, but can only work effectively through widespread adoption and relentless industry collaboration – and when combined with buying best practices and best-in-class advertising technology we will significantly reduce the levels of unintentional fraudulent programmatic trading,” said Jaanimagi.

“It’s the fight against SIVT that is paramount for us all to focus upon – and buyers and the entire industry must remain vigilant in their day-to-day operational practices in order to reduce the flow of money to fraudsters.”

But others are skeptical. A Which-50 feature revealed ad-fraud researchers are concerned the lucrative nature of fraud, including for companies not directly involved in it but reaping rewards nonetheless, means there is little incentive to clean up the problem.

iOS vs Android

According to the Pixalate report, mobile in-app is the most hazardous channel for ad fraud with invalid traffic rates above 17 per cent. But Android also appears to have a considerably worse problem than iOS.

Google’s Android operating system devices have a 29 per cent higher invalid traffic rate than Apples iOS devices overall. iOS devices have less invalid traffic on smartphones, tablets and in app display advertising but actually had higher rates of IVT for programatic video.

The report includes a breakdown of ad fraud by category but the section is restricted to U.S data.

For iPhones, social apps — not including the walled gardens like Facebook — had the highest rates of invalid traffic. For Android phones productivity apps were slightly worse than social.C

iOS has a problem with app video advertising but overall Android is a riskier platform, according to the report.
Source: Pixalate – Q3 2018 Ad Fraud Report

Smartphone and tablet app video advertising have the highest rate of invalid traffic, according to the report. On iOS News apps are the worst offender in this regard, delivering a 31 per cent rate of invalid traffic. Android is worse still with nearly half (43 per cent) of the programatic video ads served to news and magazine apps being invalid.

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