Blockchain proving key weapon against digital ad fraud

Amrita Nair-Ghaswalla Even as the digital advertising industry is grappling with “ad fraud”, blockchain technology is seen to hold potential to curb it.

Ad fraud is typically carried out by creating fake ad traffic using content-scraping websites, getting bots to click on the ads, launching ads outside of a user’s view, or creating other fictitious mechanisms to deliver ads that are not seen by consumers.

The topic of ad fraud has has again taken centre stage given the rise in fake news, said advertisers and marketers who had congregated at the Kyoorius Zee Melt event here recently.

Manish Tewari, co-founder and CTO of Pokkt, a mobile video advertising and app monetisation platform, said ad fraud is a growing challenge that does not just impact companies financially, but also tarnishes their brand reputation. “In the advertising industry, trading securely with complete transparency in the budget is absolutely essential. However, lack of clarity has affected the ad industry,” he said.

Juniper Research estimates that global advertisers will lose $19 billion this year in ad fraud.

With the introduction of the EU’s General Data Protection Regulation (GDPR), the ad industry is already been walking the thin line between leveraging consumer data to place targeted ads and infringing on consumers’ privacy.

Advertisers at the Melt event, speaking on the condition of anonymity, emphasised that the current level of ad fraud is unsustainable and could end up destroying the entire industry if left unchecked.

Programmatic technology

Programmatic technology, intended to streamline the process of ad buying globally for advertisers, has also been leading to ad fraud, the executives noted. The term refers to the use of automation to buy and sell ads, as opposed to using human negotiations and manual insertion orders.

Marketers point out that the openness of the programmatic advertising marketplace allows fraudsters to take advantage, especially on the supply-side. “The increase in the number of middle layers across programmatic advertising has led to a huge increase of fraudulent activities,” said Pokkt’s Tewari.

When ads are served that do not even have the potential to be viewed by a human user, it is the advertiser who loses out. Blockchain could be the answer.

Blockchain is an ever growing series of records, called blocks, linked by encryption, with a globally distributed database. “Blockchain is like a ledger of records that’s open and distributed,” explained Tewari. “As new transactions are added to the list, they are verified algorithmically across the network maintaining the blockchain.”

The technology can increase transparency over ad spends since it can publicly store data to create a path with an unchangeable record of all the transactions occurring within the marketplace. “This also ensures that only appropriate charges are levied throughout the bidding and selling process, which reduces hidden costs from multiple intermediaries within the programmatic marketplace,” Tewari told BusinessLine .

Rising deployment

Two recent events have bolstered the technology. At the end of 2017, WPP-owned agency Mindshare announced a partnership with blockchain protocol Zilliqa to address privacy and fake news issues in advertising.

Brands are also taking note. Recently, Kodak released the KodakOne platform, which uses a blockchain to create a digital ledger of rights ownership for photographers.

However, Tewari insists there are some issues. “One big problem is its processing speed, which is currently only 15 transactions per second for bitcoin or ethereum. It will be difficult to use blockchain in the current programmatic scenario where 100 millisecond is the average time taken for one complete cycle of buying and selling,” he observed.

Despite this flaw, he said, blockchain will play a big part in increasing transparency in digital advertising “by implementing a decentralised and secure way to record every transaction”. “While it will not help in everything, it will reduce ad fraud, effectively saving billions in lost revenues,” he added.