'The stakes have gotten higher': MediaMath is trying to block ad fraud before it happens and will offer vetting tools for free to advertisers

'The stakes have gotten higher': MediaMath is trying to block ad fraud before it happens and will offer vetting tools for free to advertisers

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Reuters / Fabrizio Bensch

Ad fraud will cost advertisers $5.8 billion this year, according to the Association of National Advertisers and WhiteOps.

  • Ad-tech company MediaMath is working with anti-fraud firm WhiteOps to block ad fraud before advertisers run campaigns.
  • MediaMath says that it will offer the tools to advertisers for free across all of its ad formats including mobile app, display, video and connected TV.
  • The tactic is becoming increasingly common among ad-tech companies, including MediaMath's competitors The Trade Desk and AppNexus. However, advertisers cited added costs, scale and the inability to wipe out 100% of ad fraud as challenges with anti-fraud technology.
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Marketers continue to battle scammers that rip off millions of dollars in digital ad spend, and ad-tech firm MediaMath is doubling down on its fraud-fighting efforts by claiming it can wipe out bogus traffic before advertisers buy it.

The New York-based firm is working with anti-fraud company White Ops to analyze and block fraudulent impressions served on MediaMath's platform before advertisers bid to buy it. In theory, the method will wipe out scammers before they can thwart web traffic. The method will be baked into MediaMath's demand-side platform - or DSP - that helps advertisers buy online ads programmatically.

According to MediaMath's CEO Joe Zawadzki, the firm has been working with WhiteOps over the past 18 months and is a result of last year's round of $225 million in funding from private equity firm Searchlight Capital Partners. Since then, he said MediaMath's goal has been to make a "10X leap forward in the accountable and addressable supply chain in digital."

"The stakes have gotten higher and [it] felt like there was a market-wide outcry for enterprise, mature, reengineered approach to digital," he said. "It's critically important to do this right."

While advertisers have been fighting fraud for years, marketers typically try to reconcile with ad fraud in the form of rebates or credits from publishers and ad-tech companies after campaigns run. Such methods punish publishers and ad-tech companies instead of stamping out fraudsters, he said.

"This allows you to starve the bad actor," Zawadzki said.

Read more: Oracle discovered a mobile fraud operation plaguing 10 million app downloads, and it shows how pervasive scammers still are for advertisers

WhiteOps' technology will vet all of MediaMath's ad formats including display, mobile app, video and connected TV, said Tamer Hassan, CEO of WhiteOps. The service will initially roll out to a small group of advertisers with the goal of making it available for free to all of MediaMath's advertisers.

To vet ad impressions before they're purchased, WhiteOps's software is implemented into MediaMath's local data centers around the world to help vet fraud in milliseconds, MediaMath's Zawadzki said.

WhiteOps has done similar work with AppNexus and The Trade Desk in the past couple years.

Fraud continues to plague marketers

According to a recent study by the Association of National Advertisers and WhiteOps, ad fraud will account for $5.8 billion globally this year, down from $6.5 billion in 2017.

Still, advertisers say that ad fraud remains to be a challenge as fraudsters find new tactics to siphon away money, particularly in app and video ad formats that are hard to detect and have high CPMs.

"Pre-bid filtering is beneficial and goes a long way as it can reduce cost and infrastructure strain on upstream providers," said Michael Zacharski, CEO of EMX, the programmatic exchange of the agency Engine. "Like a speed trap, fraud detection is a great preventative measure and also definitely catches many lawbreakers, but we're not at a place where there is a solution that works 100% of the time."

There's also growing competition for anti-fraud firms like DoubleVerify and Moat to provide tech that's similar to what WhiteOps offers, said Eric Kirtcheff, SVP of global ad operations at Essence. A challenge with using fraud tools is that tech companies often charge advertisers extra for it. The cost is equivalent to adding 20 cents or less to CPMs (cost per 1,000 impressions), he said.

Removing pre-bid fraud also creates a Catch 22 for advertisers that run programmatic campaigns to reach a wide audience.

"The downside is that it reduces scale quite a bit," he said. "It will potentially flag things that aren't fraud as fraud or maybe a site has a lot of bot traffic."

Jay Friedman, president of ad agency Goodway Group, added that advertisers will continue to pay for third parties to monitor ad fraud while campaigns run.

"I don't think this is much of a game-changer since it's been active in the independent market for a while with The Trade Desk," he said. "Walled gardens don't believe they let any fraud through in the first place, and most advertisers will still apply a separate third party to validate."