Navigating Ad Fraud and Waste: How Marketers Can Drive Change

As bad actors become bolder about ad fraud and as the factors contributing to ad waste evolve, marketers are suffering the consequences, with one of the biggest effects being a negative impact on campaign ROI.

 

Recently, Angel Pizano-Hernandez, a senior OMI digital marketing specialist, gave our team an inside look into the fraud/ad waste issues he has observed first-hand in our industry, inspiring me to address the need for marketers to drive change. Here are three insights Angel shared, along with our thoughts on how to navigate the challenges:

 

1. Lack of transparency in the programmatic digital ad industry. 

While programmatic advertising offers many benefits, such as efficiency, scalability, and targeting capabilities, it has also been criticized for its lack of transparency. Advertisers rely on algorithms and data to make decisions about where their ads will appear, trusting that the tools will make the best decisions. 

 

A recent article from MediaPost highlights research from the Association of National Advertisers, indicating that 23% of the $88 billion their members spent on programmatic advertising over the past year was wasted. Much of that waste went to "made-for-advertising" web properties without organic content or audiences. Additionally, MediaPost shared Adalytics' research into Google YouTube campaigns that found 80% of 1,100 analyzed campaigns between 2020 and 2023 were delivered on "non-conforming third-party sites, typically with sound off and not visible." 

 

Even when an ad is placed on an actual website (and not one created for the sole purpose of advertising), advertisers have limited visibility into the specifics and contexts around where ads are displayed. This can be cause for concern about brand safety, for example, if an ad appears alongside inappropriate or low-quality content.

 

Whether it's straight-up fraud or ad waste from not reaching the right audience, the opacity of programmatic is shielding some concerning results. Organizations investing in programmatic need to know that their ads are reaching real people, ideally people interested in what's being offered. 

 

Intent data provides a powerful way to overcome this challenge, allowing marketers to dramatically elevate display ad targeting accuracy – check out our recent blog to learn more. The blog covers how deterministic intent data methodologies allow for greater targeting of the individual, whereas probabilistic approaches, which are primarily driven by IP address identification, target at the household level. Deterministic data makes sure your ad isn’t targeting the wrong prospect using a shared device in a household.

 

2. Bot activity is increasing. 

Fraudulent bot traffic distorts campaign metrics and wastes ad spend on clicks and views that are truly meaningless. I've written about this before when I shared research from Dr. Fou, an independent ad fraud researcher who estimates that many digital marketing campaigns are experiencing upwards of 30-35% fake bot activity. 

 

This is an increasing challenge with display and social advertising. People-based identity solutions, including identity graphs and third-party acquisition data, offer an alternative by connecting your ads with a validated, targeted audience. For example, OMI offers a 95% validity guarantee for email data associated with programmatic campaigns, ensuring your message is sent or displayed to a real person, not a bot, to maximize the impact of your advertising investment.

 

3. Budget allocation towards media activation.

Lastly, Angel drew attention to an often-overlooked challenge: the allocation of budgets toward media activation. Media activation is the process of executing and implementing a campaign across channels to reach the target audience effectively. A marketing team may run the first part of the race in building a campaign, but someone has to handle the tactical and operational aspects, metaphorically crossing the finish line.

 

Selecting channels and then placing the display ads, posting on social media, running CTV, sending an email campaign, and using a programmatic platform for retargeting—all of these actions are part of media activation, as is tracking and analyzing the various ad. It takes specialized expertise to know which strategies deliver the best results for a campaign – such as the use of deterministic vs. probabilistic methodologies for targeting an individual (not a company or a household).

 

As marketers invest substantial resources in campaigns, it's crucial to understand where exactly the money is being used. Typically, agencies get anywhere between 10-15% off the top of the total budget, but recently we have heard that more is kept in addition to that. So how exactly is the budget being used? 

 

Agencies need to be transparent with their clients, and marketers need media activators they can trust to ensure the right channels are selected and the audiences are accurately targeted. Transparency in the media buying process also includes reliable performance measurement and reporting, which enables marketers to make data-driven decisions and optimize their campaigns for maximum ROI. Trust and expertise must be part of the media activation process, whether handled in-house or through a partner, especially in light of all the challenges (transparency, fraud, and more).

 

To drive change, marketers need to demand transparency while refusing to accept the status quo. If your partners and processes aren't transparent about where and how your budget is used, that may be why your ROI isn't where you want it to be. 

 

OMI is a trusted digital marketing and B2B data partner for Fortune 1000 firms and startups alike. Contact my team with any questions on minimizing ad waste and ad fraud and optimizing your digital advertising.