A joint-study by marketing professors from the Kellogg School of Management, Columbia Business
School, Haas School of Business, Graduate School of Business at the Stanford University, Yale School of Management, and Rady School of Management, has hypothesised that there are trade-offs between consumer privacy, market transparency, and fraud detection.
“In particular, the more signals there are about human identity and activity, the more information is available to potentially distinguish humans from machines,” the authors say. “Therefore, it seems possible that increasing consumer privacy may also hinder detection of ad fraud and market transparency.”
The researchers believe that the application of blockchain technology is promising in digital advertising markets, adding that widespread adoption of new standards requires coordinated action. As an example, it was only when a significant number of publishers adopted Ads.txt did Google actively support the standard. The technology company may not have a vested interest in supporting blockchain or the removal of ad fraud, as studies found that privacy oriented measures such as GDPR boosted their monopoly.
While blockchain-first solutions such as the Brave Browser have been proposed for digital ad markets, there is little evidence to justify if any have achieved significant traction. The researcher state that for new standards to gain widespread adoption, its a chicken-and-egg problem to get ad purchasers, sellers and intermediaries on board.
In a bid to push advertisers into adopting blockchain oriented measures of detecting and preventing ad fraud, the researchers suggest that academia focus resources on considering the economic antecedents and consequences of digital ad fraud, such as money laundering and organised crime, tapping into the funds to commit crimes against humanity that attempt to topple democracies. This also ties into the debate on brand safety, asking marketers if their budgets are funding hate or misinformation, one way or the other.
“It would be interesting to model digital advertising as a credence good as many advertisers cannot reliably measure ad effects,” said the researchers. “Two open questions are how credence goods markets function when delivery of the service is only partially verifiable and how optimal contracting terms depend on the properties of the transaction. A related question is whether there are strategies buyers or market makers can adopt independently to improve market efficiency in such settings. Model-based predictions could help to identify opportunities to improve market regulations.”
Adoption of measures against ad fraud may not work due to economic incentives helping many parts of the media ecosystem profit from the complexity of the situation. On the supply side, publishers overreport or misrepresent audience metrics to increase ad revenues, advertisers employ bot companies to deplete a rival’s budget, media agencies may misrepresent the inventory or the bids they have available in an effort to alter ad prices, sales, or even commissions. It is not uncommon, even more so after studies by the ANA, to learn that media agencies manipulate ad auctions such as the recent bid caching scandal.
“Publishers or agencies may distribute advertisements surreptitiously or insert false information into advertisers’ conversion tracking systems to claim undue credit from advertisers who pay publishers per conversion achieved,” said the researchers. “Firms or individuals may create fraudulent profiles on social networks to falsify measures of influence, ad clicks, or seemingly organic discussions (astroturfing).”