Shailin Dhar Exposes Systemic Fraud in Digital Advertising

The MetaX Q&A Series: Part 1

By Hunter Gebron

Shailin Dhar (a strategic advisor to MetaX) is helping to build the next generation of decentralized applications aimed to nullify ad fraud by using adChain. We were lucky enough to grab some time with him while he was away from his computer, so we could ask him some questions about his work uncovering digital ad fraud. Stay tuned for the results from our adChain fraud detection tests which we will be publishing soon!

Hunter Gebron: Who are you and what is your background?

Shailin Dhar: My name is Shailin Dhar. I am an Ad-Fraud consultant. I have been researching ad fraud and finding solutions against exposure to it for two years. My background comes from working at ad networks that arbitraged a lot of this so-called “cheap click traffic” but which is actually just fraudulent traffic. I then realized that the ad fraud problem is way bigger than just a few ad networks. It’s affecting people around the world. So, I started consulting against ad fraud. Now I’m an advocate for cleaning up supply chains in advertising. I run a consultancy that focuses on bringing ad transparency back to advertisers.

HG: Can you explain the different types of online advertising fraud?

SD: Sure, the most common and the most prevalent type of fraud is display banner fraud. Sites with banner advertisements, normal display banners, or video ads that have traffic running to them purchased from ad networks or traffic vendors in high volumes for cheap prices. It’s robots viewing advertisements that are supposed to be viewed by humans. Advertisers spend money thinking there is going to be some return on investment. But the thing about robotic traffic is that robots never buy anything.

Other types of fraud outside of display are: click fraud (advertisers buy clicks to landing pages), and conversion fraud (which mostly deals with people being paid to download an app while the ad network is collecting a fee from the advertiser.) Then there is attribution fraud (ad networks taking credit for organically happening installs and attributing that to their advertising efforts when that install would have happened anyways.)

HG: Who are the major players in online advertising?

SD: First and foremost there are the advertisers who fund the entire ecosystem. They fund the ad agencies, the technology companies, and the websites that host these ads. So the biggest players who control the spending are advertisers, marketing departments, and advertising agencies.

Then there are all of the technology companies, what we refer to as DSP’s (demand side platforms), SSP’s (supply side platforms), and exchanges. They are the ones that facilitate the transactions of online ad impressions. Next, we have the publishers who are the supply of the advertising industry. They create ad space by getting visitors to their sites.

Finally, because of the rising concerns about fraud, transparency, and viewability (things like brand safety), there are all the verification layers that sit on top of these transactions. They are verifying the quality of the traffic to the sites and the viewability of the specific ad impression and the brand safety of the content around which the ad is displayed.

HG: How is advertising inside of Facebook and Google different from advertising elsewhere online?

SD: Google and Facebook are what’s more and more commonly referred to as walled gardens because they are their own ecosystems and their own marketplaces. They don’t have the same visibility into the traffic quality and the ad impressions that are served in their marketplaces as we do outside of them.

HG: The CPM (cost per 1000 impressions) is the industry’s way of determining who gets paid what. It’s been criticized as being unfair to advertisers. What is your take on the CPM?

SD: The incentive that the CPM creates is that all you have to do is display the ad, which doesn’t take much effort when you’re factoring in robotic traffic. All any visitor has to do is load the page. There’s no guaranty to the advertiser that the ad was viewed, acknowledged or even engaged with. This has fueled the rise of fraud because any website can spin up some content, run traffic to it and get paid on a CPM basis just for loading the ad.

HG: It seems that the core issues around ad fraud have been well documented. Why doesn’t the industry mobilize to stop it?

SD: The thing about the ad ecosystem is that on every transaction that’s an impression, there is more than just the basic parties that make money from it. So in any intuitive model, you can say the agency is taking their piece for planning and executing, and then the publisher is getting paid for showing the ad. When in reality, and this is based on an IAB (Interactive Advertising Bureau) study, 55% and higher is taken by all of the technology layers in between the advertiser and the actual website. A lof of the money that gets transacted for displaying these ads online is taken by all of the technology companies, and the money is changing hands the same way for fraudulent impressions as they are for valid human impressions.

If you look at that 55% and you take a baseline estimate of global ad fraud at 10 billion dollars per year, that means that all of the technology companies between the advertiser and the publisher (referred to as the tech tax) earn 5.5 billion dollars in fraudulent revenue per year. That’s a lot of money! So there is not a lot of financial incentives within the industry to get rid of fraudulent traffic.

HG: Part of this “tech tax” you referred to includes safety vendors. Safety vendors are supposed to be a solution for catching ad fraud. Do you think safety vendors are actually doing their jobs?

SD: I do believe that ad fraud would be much worse without safety vendors. But safety vendors are just one line of defense against ad fraud. The easiest parallel for people to understand this is looking at viruses on our PC’s. Just because you have anti-virus software does not mean that you are bulletproof from viruses. You still need to follow certain behaviors to prevent malware from ending up on your machine. Anti-virus systems get security updates weekly or bi-weekly.

This is because every time the virus creators come up with something new the anti-virus systems play catch up and may improve their filtering and detection, the same thing is true for ad fraud. Fraudulent traffic creators are constantly coming up with new ways to bypass detection platforms. But if we didn’t have the detection platforms in the first place they could run essentially whatever type of traffic they want with little to no scrutiny.

HG: With all of this, I have to ask: Who is regulating online advertising?

SD: Right now there are several different trade organizations that are trying to regulate online advertising and just bring some type of transparency but fraud is a complex subject, and right now a lot of the trade org’s are missing the factor of the “tech tax.”

You have to acknowledge that there is not a financial incentive for all of the ad technology companies to facilitate the serving of online ads to get rid of that extra volume. I think advertising needs to be regulated by the advertisers. They are the only ones who have a financial interest for themselves in removing the fraud.

HG: How might blockchain technology offer a solution for the digital advertising industry?

SD: Blockchain inherently brings trust to a system; it is an open ledger, and advertising right now does not have any open ledger. There hasn’t been any motivation for different marketplaces to open up their information to the rest of the industry. If you look at blockchain being implemented across digital advertising, what you do is force everyone to be open about what transactions are happening in their marketplace and how money is changing hands.

So if you look at bringing blockchain to digital advertising it’s got to involve getting the right forces aligned on the advertising side to push adoption. If that happens, you are going to see a whole new level of transparency brought to digital advertising. It will help all of us know who is making money on what impression and we can gauge and evaluate the impressions to see who is making money and what should be removed from the supply chain. But unless there is that transparency we are never going to be able to hold other people accountable.

HG: In your e-book Uncommon Sense you wrote, “the day we stop learning is the day we become obsolete.” I found that line particularly poignant because when trying to describe blockchain to those who’ve never heard of it before it can feel daunting, especially when it’s met with resistance to change. What would you say to someone in the digital advertising industry who feels intimidated by blockchain technology and the learning curve that’s associated with understanding what it does or how it works?

SD: I think it would be misguided for someone to say that this is an obstacle or has any negative effect without having that baseline of knowing what blockchain is and how it will be used. Unless you understand what the potential implications are I think it’s pretty irresponsible to say this wouldn’t work or would be too difficult to use for the industry.

Anybody that I’ve spoken to sees bringing blockchain into advertising as a great idea as long as you get the right adoption. That adoption is only going to happen if advertisers push it because their dollars fund every different sector of the industry.

I know it’s tough for people to wrap their head around learning something entirely new that maybe they feel isn’t relevant to advertising, at least right now, but if you understand the implications on transparency from the adoption, I think it’s a no-brainer. But unless they’ve spent time learning what it is to begin with, I don’t understand how anybody can say that it’s not a good idea or that they wouldn’t want to do it.

HG: Another statement that I like from your e-book was, “We all must start approaching these problems with a different mindset. We cannot fight technology with technology exclusively, people armed with both technology and knowledge will prevail.” When you wrote this, did you have blockchain in mind? If so, how might we arm ourselves with the knowledge of this new technology to fight digital ad fraud?

SD: When I wrote that I was not aware of any conversations around bringing blockchain to advertising, but it’s a pretty universal statement where if you look at any debate the person that has more information and has done more research is always going to be better equipped for handling that debate.

Rhetoric only goes so far and unless you can back it up with facts and real information you’re going to be on the losing end of that argument. So going back to that example of the anti-virus software, there are sites that we know have more malware infestations than others. Just because you have anti-virus software does not mean you are impervious to getting viruses on your computer. Knowing what sites to visit, what sites not to visit, what types of emails to open, knowing for signs of phishing scams is very important. That is using technology in conjunction with good informed human behavior. Applying this to advertising, somebody that it is spending money on online advertising and looks at programmatic and says, “OK I am going to spend on whatever I can and target my potential users based on cookies, and I don’t have to worry about anything because I have a detection technology.”

Unless there is also that human oversight of looking at who is in my supply chain even after the fact of looking at, “what did I buy?” For example in a 10 million impression campaign, 7 million impressions are going to sites you recognize, and 3 million are going to sites that you’ve never heard of with incredibly low Alexa rankings and looks like content that’s been recycled from other places, you might want to look into what networks are bringing that into your supply chain. But just using a detection technology by itself is not going to keep you safe.

That concludes our first Q&A. We hope you enjoyed it! To read or learn more about Shailin Dhar and his extensive work in uncovering Ad Fraud you can visit his website: https://www.methodmi.com