Originally published in PDMI on June 23, 2023
By: Matt Wasserlauf, Co-Founder and CEO of Blockboard
On Monday, June 19, the Association of National Advertisers (ANA) released results from its fraud study conducted during the past four years. What did they show? How about $13 billion to $20 billion of digital fraud from programmatic advertising? The study was conducted in partnership with PwC, and with little to no cooperation from the two biggest programmatic platforms in the world: Google and The Trade Desk.
This revelation should shock no one in the business. Fraud has been growing now for the past 15 years. When DoubleVerify entered the market in 2008, conventional wisdom was that if they were successful, the minimal amount of fraud then would be washed away. Rather, in the 15 years since, it has grown to the $20 billion it is today.
With that monumental growth, DoubleVerify has grown too. They and IAS are both multi-billion companies. They grow as the fraud grows!
With incentives aligned in this way, it is no surprise that we’re in this predicament. The bad actors are way ahead of the good actors — and that lead gets bigger and bigger with the enormous monies entering digital advertising. With government oversight nowhere to be found, these bad actors are not only making money hand over fist, but they also have no consequences.
Even the ANA’s findings likely will do little to stop this disturbing trend. As a pioneer in the industry and a man with a front row seat on all of this, I am highly upset. In the advertising business I have built and grown to love, I see a complacency and complicity that is sickening. At $20 billion, digital advertising is now the second largest fraud ring in the world behind illicit drugs and ahead of illicit guns.
This is very hard to take.
Four years ago, I started Blockboard to solve this problem, and I am proud to say that we are. For advertisers such as Planet Fitness, Chipotle, and Dexcom, we are
eliminating waste and driving powerful results. I don’t want this to be a sales piece, so suffice it to say, there is some momentum toward a better and cleaner way to do digital advertising. It helps me sleep at night knowing the industry has hope for a better future.
Still, I can point to two distinct things that I learned in the traditional TV business that foretold the predicament we’re in today. The first is a lack of the third-party auditing in digital advertising that was so rudimentary in television. The second was the advent of verification companies.
My 10-year run in the TV business was a blast and understanding the business and its landscape was simple compared to digital video. With the millions of websites online, TV had a comparably smaller number of broadcast and cable networks, so it was much easier to buy and manage. When my manager asked me to go home and log the spots we aired on TV, it was easy to watch a show and record the times those spots aired. Everything was transparent.
Online, it’s the opposite. No agency or client can find their spots online. In fact, the head of media at a major holding company told me that in the 20 years he ran his agency, he never once saw his clients’ ads online!
The dominant programmatic platforms prey on this and reveal little to nothing about how their advertisers’ ads run across their systems. These “black boxes” operate with no third-party auditing and their work has gone unchecked for more than 10 years. This is why the fraud problem has reached the heights it has — with no end in sight.
The second sign I read from my traditional TV experience was the arrival of the verification companies into the business. As soon as I learned of DoubleVerify, MOAT, and IAS, I was confused. Why, after all, did we need verification companies if we go about our business with integrity? TV never had verification companies!
But as I said earlier, these verification companies grow as the amount of fraud grows. The incentives are completely misaligned, and the method to which they do their work through consensus and buy-in from all sides of the transactions is a complete disaster. I have spoken with clients from Citibank to Merck who have openly complained to me about this process and the lack of integrity in their data.
The process is completely broken.
So, here we are. The ANA has given us our problem: $20 billion of waste across programmatic.
Now, what are you going to do?