It’s the best of times/worst of times to be programmatic. In the plus column, programmatic is growing like crazy. On the downside, concerns about ad fraud are growing just as fast.
Case in point: Rocket Fuel was recently slammed when an ad fraud investigator found that 57% of Rocket Fuel impressions were bot driven over a three-week period for Mercedes. That’s even greater than the 36% found in a recent comScore study, highlighted by the IAB’s Vivek Shah, who said, “the ability to buy cheap ‘bot’ traffic and arbitrage it via ad exchanges has created an enormous financial incentive for bad actors to engage in a deception that threatens the very integrity of our business.”
But is the problem with programmatic, or something else?
Pricing models, arbitrage and the perversion of incentives
Broadly speaking, there are two ways to price in digital. You can charge a fixed CPX and profit off the arbitrage of buying media for less. Or you can charge a transparent tech fee on top of the media.
The arb business model, especially when combined with last view attribution, incents the demand side to buy a $%^&ton of cheap media. Bot media doesn’t do anything for the client, but it sure is cheap.
So how do you protect yourself?
Shah is right that fraud is a real problem in digital. But demanding transparency from your vendors can help reduce the likelihood that you’ll end up with one whose business model isn’t fully aligned with your own.
What does that mean in practice? For us, transparency breaks down into four types:
- Price: Outside of your upfront contracts, refuse to work with vendors who insist on fixed CPM pricing models
- Media: Demand domain lists with impression volume. This will prevent you from buying a ad network plan that charges premium media pricing but delivers most of the volume on the long tail
- Tactic: You can avoid partners who cookie bomb the retargeting pool by requiring tactic-level tagging from your ad server
- Management: If frequency caps or audience exclusions are important to you, if it matters that an “omni-channel” platform white labels someone else’s channel, then demand to see the actual campaign set up. Screen share while they walk you through it
In politics, they say that sunlight is the best disinfectant. The same is true in ad tech. Put these four pieces of advice into practice and you’ll help yourself and your investment.
You can explore these in more detail by downloading our short white paper, What we talk about when we talk about transparency.