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‘Pulling out’ of Russia must mean getting tough on ad fraud

‘Pulling out’ of Russia must mean getting tough on ad fraud

Opinion

Ad fraudsters – many of whom operate in Russia – have been gaming weaknesses in the Open Web for too long and now advertisers need to ensure their media spend isn’t potentially violating sanctions.

Despite the horror of what has been happening in Ukraine for more than three weeks now, the many actions being taken by the media world’s biggest players may yet bring about a more ethical and cleaner industry.

This is not the stated aim of the “sanctions” imposed by the US, UK, and European Union on doing business with the Russian government or certain individuals, but it could be our silver lining across the darkest of clouds.

The word “sanction” is one of those odd words called ‘contranyms’ because it actually has two different meanings which are contradictory. To ‘sanction something’ can literally mean you are banning something or allowing something depending on the context.

However, what sanctions actually mean in practice will continue to be a key talking point. In a globalised media industry, in which online advertising moves across national boundaries at the speed of a nanosecond, is it actually possible to properly police where they money is going?

Just in the last week, we’ve seen Ofcom finally remove RT’s broadcast licence in the UK and a flurry of media and advertising agency groups announce plans to “pull out” of Russia.

Each of them – WPP, Omnicom, IPG, Publicis Groupe, and Dentsu – announced some version of “transferring ownership” to a local partner.

They key thing, however, is whether they are actually foregoing or refusing revenues received in Russia. I asked Dentsu (the only agency group that could respond before my publication deadline) how it could guarantee this.

A spokeswoman said: “The transferral of ownership will be fully compliant with current sanctions and our local partners are also not subject to sanctions.”

It is worth noting that Russia is hardly big business for international media-buying – while some amount of money will need to be written off by agency groups, it is generally between less than 1% and 2% of any of these companies’ annual revenue.

But then we have the recurrent – and much more financially substantive – problem of ad fraud. CHEQ and the University of Baltimore have found in 2020 that the direct costs associated with ad fraud would reach $35bn (about three times the market capitalisation of WPP).

Much of the world’s ad fraud is known to operate in Russia, either through state-backed disinformation activity or organised crime.

Take the case of the ad fraudsters Methbot which came to light last year. It was taking in up to £5m per day by essentially masking its true origin in Russia by using European and American computers as a fake domain. Over half a million bots were used to generate clicks on scam websites, which were used to create fake views on up to 300 million ads per day. Authentic publishers’ names were stolen to fool people into looking at fake sites, too.

It’s one thing for media buyers to forego traditional media billings in Russia for the sake of complying with sanctions. But if they are continuing to invest in online advertising inventory that effectively keeps money flowing to Russia, then there is a real risk that their clients – the brands who are not supposed to be spending media in Russia – will be exposed.

There is an argument that, much like being hooked on Russian gas and oil, it is too difficult or too costly to do what is necessary to tackle Russia-based ad fraud. As I wrote in my previous column, Vladimir Putin’s information war against the West began long ago and our media industry is in the frontline. Ad fraud is yet another chapter in this story.

Are all the media agencies missing the ‘oopsies’?

We were reminded with alarming clarity earlier this month that ad fraud can impact publishers, too. American news giant Gannett (whose UK subsidiary Newsquest has just gobbled up Archant), admitted to wrongly declaring  domains for nine months, in which online ad “bid requests” coming from their small local news sites like Detroit Free Press or Indystar were declared to be USA Today, its major national newsbrand.

The scary aspect of that story is that no one seemed to notice. The media agencies did not notice, their advertisers did not notice, and the companies behind the advertising exchanges did not notice. The only people who did notice were two researchers whose work was reported first by The Wall Street Journal.

Augustine Fou, the former Omnicom executive who is now a leading ad fraud researcher and cybersecurity expert, told me the networks’ failure to tackle ad fraud could be interpreted as a failure to comply with Russian sanctions.

Fou told The Media Leader: “If all the media agencies missed the “oopsies” by Gannett… are any of the media agencies actually keeping their clients’ programmatic ad spend away from sanctioned websites, disinformation sites, or fraudulent sites fuelled by 100% bot activity? Likely not.”

This was another question I asked the agency groups, with the only response again coming from Dentsu, whose spokeswoman said: “We have a dedicated responsible media team at Amplifi who is in constant contact with all global tech and media platforms to understand and assess their latest brand safety measures to make sure our clients are protected.”

Of course, this is not easy. Ad fraud is sophisticated and made difficult when there do not seem to be common standards between demand-side platforms and supply-side platforms, the two sides of the online ad booking process.

It is telling that it has taken nearly two years to create a “toolkit” to help advertisers and publishers try to get a handle on their accounting for online ads, after ISBA and PwC’s landmark study in 2020 warned that 15% of money in the supply chain appears to go missing. There are questions over whether the toolkit includes the sufficient data fields required to properly track where ads are (there is no requirement to give an ‘Auction ID’, for example), but at least it’s a start.

(Editor’s correction, 29 March: The AOP, IAB, IPA and ISBA jointly produced the toolkit, but not PwC as originally stated)

Crucially, the issue of Russian sanctions has made ad fraud and poor accounting standards a much bigger issue than media effectiveness or return on investment. We’re talking about major brand’s adspend potentially supporting the Kremlin at a time when Russia has outrageously invaded a sovereign European nation.

The stakes for the Open Web were high already – we need online media to be supported by advertising so it is open for all and not just those wealthy enough to subscribe to ad-free versions of all media.

Advertisers must ask the hard questions and do the hard work of holding publishers and agencies to account. If they do, and the industry can finally begin to disinfect the darkest recess of online media, then that is a silver lining worth fighting for.

omar.oakes@mediatel.co.uk

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