How many of these hidden costs were you aware of? Without even talking about digital ad fraud, there are other costs in the digital ad supply path that eat up most of every dollar that advertisers spend in digital. There are known costs of 60 - 70% extracted by adtech middlemen.

1. March 2019 / Page 0marketing.scienceconsulting group, inc.
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Hidden Costs in Digital
Media Supply Path
March 2019
Augustine Fou, PhD.
acfou [at] mktsci.com
212. 203 .7239

2. March 2019 / Page 1marketing.scienceconsulting group, inc.
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Previously …
Advertisers Publishers
Bad Guys
1/3
2/3
Ads are not shown
to humans, wasted
ad dollars
Ad revenue declines
because dollars are
stolen by bad guys.
Steal money using fake
ads; siphon dollars out
of ecosystem.

3. March 2019 / Page 2marketing.scienceconsulting group, inc.
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Ad revenue
diverted by
domain spoofing
Pay on bids won
vs ads served
Hidden Supply Path Costs
Advertisers think they bought…
Unspent media
dollars go missing
Random or
replayed deviceID
Faked valid traffic,
viewable ads
Analytics and
measurement
manipulation
Attribution
scamming
Residential proxies
to disguise traffic
Media
dollars to
agency
Set up
campaign
in DSP
Buy
white list
domains
Buy
valid,
viewable
Buy
Real
devices
Buy
“fraud
free”
Buy
“verified”
Did it
arrive?
#marketers who think that having bot detection in place is enough clearly
don’t know about these other things – these aren’t fraud, right?
Catching the 1%
IVT, missing rest

4. March 2019 / Page 3marketing.scienceconsulting group, inc.
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Missing/Wasted Media Dollars
Waste due to fraud, and unspent dollars go missing
Display Campaign 1
$3,300,000 (+10%)
(agency invoice to advertiser)
$3,000,000
DSP invoice to agency (paid by
advertiser)
$1,800,000 (-40%)
DSP log total (bids won)
On average, 24% of advertisers’ media spend was wasted/missing
Mobile Campaign 2
$950,000
(campaign spend)
$330,000 (35%)
(invalid devices/fraud)
Display Campaign 3
$7,900,000
(campaign spend)
$1,500,000 (19%)
(invalid devices/fraud)
Display Campaign 3
$3,900,000
(campaign spend)
$550,000 (14%)
(invalid devices/fraud)
Display Campaign 4
$7,000,000
(campaign spend)
$1,700,000 (24%)
(invalid devices/fraud)
Source: Method Media Intelligence
DSP logs show only $1.8 million of bids
won, compared to the $3.0 million paid;
$1.2 million went “missing” (not
returned/credited to advertiser)

5. March 2019 / Page 4marketing.scienceconsulting group, inc.
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Paid for Bids Won, vs Ads served
Hidden cost: marketers pay for bids won; ads served is
less, sometimes by a lot, than what they paid for
Campaign 1
• For every bid won, there should be an ad
served – a 1:1 relationship
• Comparing DSP data vs ad server data
shows that for certain domains the
discrepancy is large
• Marketers pay on bids won; the discrepancy
is the hidden cost of ads not being served
Low CPM
Campaign 2

6. March 2019 / Page 5marketing.scienceconsulting group, inc.
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Paid for domains spoofing real ones
publisherA.com
… but, PublisherA
does NOT sell ads
on open exchanges!
“Dark Revenue” is ad revenue diverted away from
publishers, so they don’t even see it’s missing.
• Large pubs – “dark” is 1-2X ad revenue
• Medium pubs - “dark” is 5-10X ad revenue
• Small pubs - “dark” is 20-100X ad revenue

7. March 2019 / Page 6marketing.scienceconsulting group, inc.
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(2018) Code to alter viewability
“the [malicious] code used by
NMG is designed to interfere
with the ability of third-party
measurement systems to
determine how much of a
digital ad was viewable during
a browsing session.
This code manipulated
data to ensure that
otherwise unviewable
ads showed up in
measurement systems as
valid impressions, which
resulted in payment being
made for the ad.”
Buzzfeed, March 2018

8. March 2019 / Page 7marketing.scienceconsulting group, inc.
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Traffic sellers’ “high quality traffic”
Many sources to buy “traffic,” tune “quality” level, host bots
Google
“buy real human traffic”
Select vendor and
“traffic quality level”
Host your own bots
(cost $3.99/mo)

9. March 2019 / Page 8marketing.scienceconsulting group, inc.
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tOLKnMEzcnARvLTvChnt
tOLKnMEzcnARvLTvChnt
tOLKnMEzcnARvLTvChnt
tOLKnMEzcnARvLTvChnt
tOLKnMEzcnARvLTvChnt
tOLKnMEzcnARvLTvChnt
tOLKnMEzcnARvLTvChnt
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Random vs Replayed DeviceIDs
Use: to defeat fraud detection and frequency caps
RANDOM deviceIDs
lXvBEeRXPURtcKILYFYE
IdUkQeWgqshMmfMdzlAx
INIjBzHJHywhgRsMdQPe
tiAnxwuKBNCjoMetZaPN
UjtRbuUTvYUwmABhmPGH
MDSUUgkENQkQDztavzfl
iljoJEXUcLCEFwSdrwZn
APbLSRUvlrIoofIchhLg
NZXVVKCbymRYBSStNRYz
UiSBmuDpYLkNvsHBKcri
tOLKnMEzcnARvLTvChnt
LZyhgblHtMIMaAliHWYB
vKFknsnhGouIucYgxmdu
• If fraud detection hasn’t seen a device
before, the default action is to let the ad
serve
• Frequency caps based on deviceIDs are
defeated, each device appears as new
• Valid deviceIDs are harvested from real
devices and sent to fake devices or apps to
replay
• Replayed deviceIDs are used by fraudulent
apps to defeat fraud detection
REPLAYED deviceIDs
tOLKnMEzcnARvLTvChnt
validated deviceID harvested

10. March 2019 / Page 9marketing.scienceconsulting group, inc.
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Luminati[.]io Oxylabs[.]io Smartproxy[.]com
Residential Proxies
Use: to disguise data center bots to appear to come from
residential IP addresses, avoid detection
40 million
IP addresses
10 million
IP addresses
30 million
IP addresses

11. March 2019 / Page 10marketing.scienceconsulting group, inc.
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IVT Detection vs Other Fraud
Sites and apps that cheat may look fine in bot detection reports
1.3% + 57% = 58%
bot fraud site/app fraud overall fraud
bot detection sees this
bot detection misses this

12. March 2019 / Page 11marketing.scienceconsulting group, inc.
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Attribution Scamming
Directly loading attribution urls and SDKs are to show fake clicks
Source: Method Media Intelligence

13. March 2019 / Page 12marketing.scienceconsulting group, inc.
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Faking Analytics, Measurement
Google Analytics and other measurement are blocked or faked
demo of mouse moving around on screen demo of faked Google Analytics traffic
demo of code to scroll pages, edit elements

14. March 2019 / Page 13marketing.scienceconsulting group, inc.
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Subprime Digital Crisis
An entire ecosystem and economy (digital ads) built on fraud volume

15. March 2019 / Page 14marketing.scienceconsulting group, inc.
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Fraud, waste eats most budgets
$1 spent by Marketer
blocked
see slide 1
site/app fraud
see slides 2-4
ad/user fraud
see
https://www.slideshare.net/augustinefou/presentations
not viewable
see slides 5-7
10% 30% 40% 20%
• fake sites, spoofing
• auto-reload/refresh
• ad stacking
• tag manipulation
• redirect/sourced traffic
• pop-ups/unders
• naked/invisible ads
• bots/fake users
• fake devices
• background load
• fake apps
• deviceID rotation
• random deviceID
• retargeting fraud
• fake profiles/data
• malware/adware
• fake analytics
• fake attribution
• click injection
• incentivized views
• residential proxy
• app is not in use
• tab is not active
• browser minimized
• 50% ad in viewport
• misrepresented
• (1s display, 2s
video)
10% 70% 20%
blocked fraud useless
productive digital ads for Marketer
1% ?

16. March 2019 / Page 15marketing.scienceconsulting group, inc.
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“Now when I tell you less
than 1 cent of every digital
dollar is ‘productive’ what
do you think?”

17. March 2019 / Page 16marketing.scienceconsulting group, inc.
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About the Author
Augustine Fou, PhD.
acfou [@] mktsci.com
212. 203 .7239

18. March 2019 / Page 17marketing.scienceconsulting group, inc.
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Dr. Augustine Fou – Researcher
2013
2014
Published slide decks and posts:
http://www.slideshare.net/augustinefou/presentations
https://www.linkedin.com/today/author/augustinefou
2016
2015
2017
20192018