Things that are currently plaguing the mobile ad industry

• Vaibhav Odhekar, Co-founder and COO, POKKT writes how fraudsters steal from advertising budgets in a variety of ways, requiring advertisers to pay for impressions that were never made.
• He further lists down some techniques fraudulent actors use and how brands can combat it.

South Asian economies are largely mobile first. Smartphone penetration is in hundreds of millions and the growth has been phenomenal. So internet / digital advertising has by and large meant mobile advertising in this part of the world.. In-app ads are a major part of the mobile ad story: It is estimated that in-app mobile ads were responsible for generating 30% of all mobile advertising revenue in 2014. In monetary terms, this meant $4.6bn in 2016 and over $6.8bn at the end of 2019.

Mobile media--from games to streaming video--is evolving rapidly, and advertisers have to adapt to stay relevant. At the same time, they have to deal with a number of issues plaguing the industry on a whole.

For years, the pay-per-click (PPC) advertising model dominated, where publishers are paid for every click on an advertisement put out by the advertiser. However, over the last decade, a growing number of individuals and automated software programs are driving false phone impressions and clicks, exploiting the PPC model. Fraudsters steal from advertising budgets in a variety of ways, requiring advertisers to pay for impressions that were never made. These are some of the techniques fraudulent actors use:

Ad viewability

Ad viewability refers to how readily a user can actually view an ad on a webpage. Viewability creates a challenge for website publishers and advertisers alike: owners naturally want minimal disruption to their native content on account of ads. Advertisers, however, prefer maximum possible visibility for a particular ad.

This creates a grey area leaving advertisers liable to abuse: ads might be placed in innocuous places like a reveal scroller. Publishers might also leverage colour schemes and other design elements to minimise ad visibility. A solution here is to clearly communicate visibility expectations to publishers beforehand. The IAB’s open measurement guidelines are an important development enabling clear communication and expectation-setting for ads.

The IAB’s OM (Open Measurement) SDK has provided much-needed simplicity to the ad measurement process for ad vendors and publishers. Previously, publishers would have to integrate different advertiser SDKs for each ad vendor. OM simplifies the process and reduces the pain of expanding a publisher’s in-app advertising presence. Through OM, advertisers have easy, standardized visibility into ad viewability, regardless of the ad vendor in question.

The IAB’s app-ads.txt and ads.txt functions are also important in building a standardized ad viewability framework. App-ads.txt provides an inventory of the advertisement vendors allowed to sell or resell ads in smartphone applications. This addresses a critical vulnerability where programmatic ad purchasers would buy in-app ad slots from fraudulent actors spoofing legitimate companies. App-ads.txt has seen rapid adoption, with over half of the top 1000 apps on Google Play utilizing it.

When talking about issues plaguing the mobile ad industry, it’s important to look at the root cause of so much pain: IVT, or invalid traffic. In a perfect world, all ad traffic-all views, clicks, and impressions, would be real, focused, engaged users gently being nudged towards a purchase decision. In practice, invalid traffic costs advertisers hundreds of millions of dollars every year. According to a Comscore study, nearly half of the top 100 UK websites have pages or sections registering over 5 percent invalid traffic. While five percent might not seem like much, the whole point of programmatic advertising is to maximize the value of ad spend: tacking on five percent defeats the purpose.

Not all IVT is malicious: GIVT, or general invalid traffic, is generated by search engine spiders, VPN connections and other activity that generates site traffic but without the aim of generating ad revenue. Because GIVT doesn’t try to conceal itself, it’s fairly easy for heuristic systems to identify and segregate from genuine, revenue-generating clicks and impressions. GIVT isn’t completely harmless, though: publishers who don’t separate GIVT in analytics can distort data, exaggerating click-through rate for example, which can hinder the effectiveness of their digital ad strategies.

On the other hand SIVT, or sophisticated invalid traffic, is an actual threat. SIVT is generated by threat actors running botnets, using process automation or other means to generate clicks and impressions that appear genuine and generate revenue, sapping ad publishers of their ad spend. Because SIVT is often purpose-built to emulate genuine traffic, it can be difficult to identify and handle. There are a number of SIVT approaches. We’ll now take a look at some of these:

Click Fraud

Click fraud is when site owners or automated programs repeatedly click on advertisements or refresh pages to exploit cost-per-click and cost-per-view payouts. Increasingly sophisticated click fraud actors may deploy RPA (robotic process automation), for human-like onscreen interactions. They will also leverage multiple IPs to give the impression of traffic coming in from different locations. Google's CFO George Reyes called click fraud the "biggest threat" to the Internet economy.

iFrame stuffing

Site owners seeking to benefit from false impressions may stuff advertisements into a single pixel, or deliberately align an advert out of view to generate views or impressions that never took place. iFrame stuffing allows real users to contribute impressions without actually seeing the ad.

Ad stacking

Ad stacking is often deployed in conjunction with iFrame stuffing. Multiple advertisements are “stacked” in place of a single ad, meaning that site owners benefit from multiple cost-per-impression payouts each time the page is viewed.

Pop-Up Frauds

Fraudulent pop-up ads can redirect you from your daily browsing to a trapped pop-up "notification" with nowhere to go. These fraudulent pop-ups may ask you to visit particular websites or install unwanted software. Fraudulent mobile pop-ups often integrate with mobile app stores, linking users to particular apps. This is especially problematic as less tech-savvy users are often driven to install unwanted software.

In an effort to help businesses assess the risk that SIVT and GIVT poses to their digital ad strategies, the mobile ratings council (MRC) recently released draft guidelines for IVT risk assessment. The MRC guidelines aim to help ad publishers orient their IVT strategies to control invalid traffic, minimize its impact on business, and prepare for risk scenarios.

The impact of mobile ad fraud

As opposed to desktop sites, mobile was once thought of as a risk-free platform for advertisers. Click fraud, iFrame stuffing, and related exploits have seriously affected both content publishers and advertisers.

For advertisers, their time, effort and money spent in increasing exposure and growing the user base is largely wasted as bots deprive advertisers of their connection to targeted users. Bots also cause rising inventory prices across the board, all while building distrust within the mobile advertising ecosystem. This has prevented mobile publishers from effectively monetizing their applications as advertisers become increasingly wary to partner with them. Recent studies show that 11% of display ad views and 23% of video ads stem from bot activity.

It was estimated that bots are responsible for anywhere between 3% and 31% of programmatically-bought ad impressions, with the median statistic being 17%. Even “Premium” programmatic campaigns on private advertising exchanges are not safe from fraudulent activity, with approximately 10% of ad impressions coming from bots.

Content publishers are particularly vulnerable because they rely on third-party ad networks for revenue. As a result, they find themselves at the mercy of the ad network, forced to accept lower CPC and CPV rates. This hurts the user experience as well: lower advertising rates may force webmasters to administer intrusive ad policies that harm the user experience.

Advertisers are migrating to in-app ads to mitigate the risk

There is a silver lining, though. Because mobile browsers are just as much at risk from ad fraud, an increasing number of publishers are looking to monetize through in-app advertisements. Top-rated mobile apps have billions of downloads. Studies indicate that users spend as much as three hours a day in top apps. This means that in-app advertisements in top-rated apps actually have higher visibility than ads on mobile websites. In-app environments give developers and advertisers much more control over how their content is viewed, mitigating the risk of ad fraud and ensuring a high number of genuine ad views.

What’s being done to address these problems?

Advertisers are becoming increasingly savvy about how to protect themselves against fraudulent traffic. Major advertisers increasingly give priority to premium greater priority to programmatic buying and adherence to guidelines including support for App-ads.txt, following RTB guidelines, viewability support, IVT support etc, standardization is becoming conditional for ad buys: sellers.json

DSPs, SSPs and other stakeholders are all developing platforms that protect advertisers through artificial intelligence and machine learning solutions that automatically root out fraud. Furthermore, they investigate traffic to detect patterns that can be attributed to bots. Through the verification of app processes, it is now possible to ensure the legitimacy of apps, mobile websites, and impressions. Widespread adoption of these techniques is expected to have a dramatic impact on the industry: Advertisers will be able to get higher ROI for every dollar they spend and reach larger audiences. They'll also have access to better data about who is clicking on their ads, which will enable them to gain more insight and improve faster.

Increasing standardization spurs in-app ad adoption rates

However, the greater level of insight alternative ad platforms deliver come with their own set of issues. As with any emerging technology, there’s an urgent need for guidelines and standardization to ensure that advertiser and publisher needs are met without compromising usability and privacy.

Standards developed by the Interactive Advertising Bureau (the IAB) are an important step forward on this front. When it comes to in-app advertising, the IAB’s App-ads.txt is a particularly useful standard. As mobile platforms onboard millions of new users every year, mobile advertising is set to play an increasingly greater role in the years to come. A cleaner ad ecosystem will open up the market, increase publisher compensation, and benefit users, publishers, and advertisers.