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AdLedger report: OTT has a problem with ad fraud

It shouldn’t come as a surprise, but a new white paper from non-profit consortium AdLedger shows that the Over-the-Top (OTT) ecosystem is ripe with ad fraud.

The “Fraud in OTT Special Report” (registration required) analyzed a billion OTT ad requests by blockchain-based ad firm MadHive, and found that about 18% of open auction OTT inventory is fraudulent. The report notes that ad analytics firm Pixelate has found a nearly identical 19% fraud rate on OTT ads activity.

“A large portion of the industry was under the impression that fraud had not made its way to OTT yet,” AdLedger Executive Director Christiana Cacciapuoti said via email, “and this report not only debunks that myth once-and-for-all, but provides a playbook to help marketers proactively right fraud on the platform.”

Learn ‘from the mistakes’

MadHive CEO Adam Helfgott emailed ClickZ that “the predominant methods of fraud we are seeing on OTT are strikingly similar to the techniques plaguing desktop and mobile.” As OTT grows, he added, the OTT industry can learn “from the mistakes of digital [ads on web and mobile].”

OTT refers to TV programming that is delivered through an Internet-connected device rather than over satellite, cable, or over-the-air broadcast. While well-known OTT services like Netflix and Amazon Prime are ad-free and subscription-based, some OTT services – like Tubi, Crackle, Xumo and PlutoTV – are ad-based, and services like Hulu have lower-priced ad-based versions.

The most common kinds of OTT fraud

The AdLedger study noted that, like web and mobile ads, OTT ad inventory is generally sold first by sales teams to brands and agencies. After that, impressions are sold programmatically, which is where much of the fraud occurs.

The three most common kinds of OTT fraud, the report says, are misrepresentation, device-based fraud and app-based fraud.

In misrepresentation, a seller is selling ad impressions that they claim are shown to U.S.-based users, but the ad is actually shown on devices outside the U.S. In device-based fraud, a single device might show a very high number of ads during a given time period, such as 50 ads a minute. And, in app-based fraud, an ad-supported OTT app shows an unrealistically high rate of ad activity.

With some of its members – including Omnicom, MadHive and Salon Media – AdLedger is undertaking several proof-of-concept projects that seek to utilize blockchain and cryptography in the fight against ad fraud. The AdLedger consortium was originally founded by MadHive, Tegna and IBM to establish standards for integrating blockchain and cryptography into the digital ad system.

Blockchain for the ad industry

The white paper points to three main activities where blockchain/cryptographic systems would be “relatively easy” to employ: identification of illegitimate ad inventory supply, reconciliation of stats across the ecosystem, and data access/validation.

Several recent blockchain tests have indicated the infrastructure technology can help alleviate ad fraud in web sites and in mobile apps, but none have yet tackled the OTT market.

In May, for instance, the blockchain alliance Project Proton announced that its first major online ad test increased cost efficiency 28% for PepsiCo viewable ad impressions through smart contracts, which are blockchain-based software programs that make a payment or take other actions once a verifiable condition has been met.

In February, Lucidity showed it could track programmatic media buys, and track waste and ad fraud, via a blockchain-based system, and IAB Tech Labs launched a blockchain analysis pilot program last July. Kochava, NYIAX and IBM/Mediaocean are among the other companies that have launched blockchain-based efforts to verify and track digital ads on the web and in apps.

The post AdLedger report: OTT has a problem with ad fraud appeared first on ClickZ.

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