The Perfect Storm: Why we need to talk about privacy and ad-fraud

Cameron Thorn, Director of Data & Business Operations at Method Media Intelligence, on how innovative solutions can tackle ad fraud

The digital ecosystem is rapidly going through a privacy transformation that has huge ramifications for the advertising industry and the digital technology suppliers that serve it. Suppliers of verification and brand safety technology are not immune to this.

GDPR and CCPA have already had a tremendous impact on the utilisation of Personally Identifiable Information (PII), as well as policies on how organisations can both share and retain user data. This data has been used by traditional verification vendors, so its restriction - combined with the depletion of third-party cookies - is increasingly creating an environment whereby the industry is challenged when it comes to attempting to combat Non-Human Traffic (NHT). 

The background

As the world has increasingly moved online, consumers have clamored for a level of trust in the digital industry. Governments have responded, creating frameworks like GDPR and CCPA, which seek to regulate how businesses can utilise, share and store PII.

At the same time, the digital ecosystem has continued to grow. Prior to the full impact of COVID-19 being felt, forecasters estimated that by 2023, digital ad spend would eclipse $500 billion USD annually. This would make up a clear majority of total ad spend, but in tandem with the growth in spend comes the growth of opportunities for fraudsters to exploit.

The perfect storm

Traditional verification vendors have always utilised data, some of which is now increasingly being legislated against and seen as privacy unfriendly. The limitations being placed on their technologies have, and will continue to have, an undoubted impact on their capability to identify NHT.

When this factor is combined with the increase of digital spend, we can see how the opportunity for fraud grows. Current global estimates on ad fraud place wastage anywhere between $5 billion-$40 billion annually. That vast range in and of itself indicates the opaque nature of this problem. There have been industry initiatives, such as changes to User ID, which demonstrate movements in the right direction, however more needs to be done to address the root causes of this issue.

It begins with you

This industry is nothing if not innovative and that’s exactly what this problem calls for. It starts with advertisers. Brands need to think of this problem not as a box-ticking exercise, but as a dripping tap that could soon become a flood. As with most problems, the first step lies with identification. Advertisers will have to start examining this issue under a microscope – comparing log files across platforms to identify any inconsistencies and ask questions.

Verification vendors will also play a massive role. Methodologies will need to stay away from any data points that legislation may consider sensitive to user privacy. A key point may be to focus on machines rather than people. This approach would get around any PII concerns, while still being able to identify, measure and verify whether a device is capable of serving an ad to a human.

Sure, contextual-based advertising (as opposed to people-based retargeting) will, and is seeing a resurgence, but this can only be seen as a revamp of past tried and tested approaches to the problem. True innovation in this space will come from rejecting old ways of thinking about the problems at hand – and some solutions are already beginning to emerge.

Managing the quality of inventory supply is a challenge that is only going to increase alongside the digital ad industry’s continued growth. This issue is made more difficult by the overall shift towards privacy and the traditional verification suppliers’ reliance on PII. However, if advertisers and their verification partners work together and lean into the challenge, innovative solutions can be created.