Google Issuing Refunds to Advertisers Over Fake Traffic, Plans New Safeguard
Google Issuing Refunds to Advertisers Over Fake Traffic,
Plans New Safeguard
Some advertisers question level of refunds, want more
details about fraudulent traffic
By Lara O’Reilly Updated Aug. 25, 2017 12:05 p.m. ET
Alphabet Inc.’s Google is issuing refunds to advertisers
for ads bought through its platform that ran on sites with fake traffic, people
familiar with the situation said, as the company develops a tool to give ad
buyers more transparency about their purchases.
In the past few weeks, Google has informed hundreds of
marketers and ad agency partners about the issue with invalid traffic, known in
the industry as “ad fraud.” The ads were bought using the company’s DoubleClick
Bid Manager over the course of a few months this year, primarily in the second
quarter.
Google’s refunds amount to only a fraction of the cost of
the ads served to invalid traffic, which has left some advertising executives
unsatisfied, the people familiar with the situation said. Google has offered to
reimburse its “platform fee,” which ad buyers said typically ranges from about
7% to 10% of their total purchase.
The company says this is appropriate, because it doesn’t
control the rest of the money spent. Typically, advertisers use DoubleClick Bid
Manager to target audiences across vast numbers of websites in seconds by connecting
to dozens of online ad exchanges, marketplaces that connect buyers and
publishers through real-time auctions.
The ad spending flows through to the exchanges. The
problems arise when ads run on publisher sites with fraudulent traffic,
including those where clicks are generated by software programs known as “bots”
instead of humans. This is an issue of growing concern to marketers. It is
difficult to recoup the money paid to those sites when the issue is discovered
too late.
Advertisers often receive small credits from Google and
their other ad-tech vendors when they detect discrepancies, but in this case,
for some buyers, the instance of fraud discovered was larger than usual.
Scott Spencer, director of product management for Google,
acknowledged that refunds have been paid, but he declined to provide a dollar
figure for the amount being returned. Some ad buyers said the refund amounts
range from “less money than you would spend on a sandwich” to hundreds of
thousands of dollars.
Some agencies and advertisers were affected more than
others, depending on their level of spending during the period and the types of
ads they bought.
“Today, we can’t disclose the information about third
parties,” Mr. Spencer said. “So when we aren’t able to catch invalid traffic
before it impacts our advertisers and we’re unable to refund their media spend,
it hurts us, even if we’re not responsible.”
Google is working on a fix it hopes will provide some
clarity over which technology providers in the ad-buying chain are responsible
for issuing refunds. It is also working on technology to ensure advertisers
automatically receive a full credit back from Google and its partners if
incidents occur.
The company said it is entering discussions with the
100-plus exchanges, ad networks and publishers that DoubleClick Bid Manager
plugs into, asking them to display to ad buyers whether they are willing to
refund the entire media spend if ad-fraud instances occur. Buyers could then
opt to filter out the sources of inventory that don’t have such a policy.
Mr. Spencer said Google expects “high rates of adoption”
among exchanges, and that the ones it had spoken to so far had been “very
supportive” of the effort.
Another point of contention among those receiving refunds
is that they haven’t been given details about where their ads ended up or
specific details about the exploits the fraudsters used, so that advertisers
and agencies can apply their own safeguards in the future.
“We need to be very careful about commenting on or
discussing specifics about bots or our detection,” Mr. Spencer said. “Often
fraudsters will change their approaches and strategies based on our public
comments.”
Of the billions of dollars of online advertising each
year, a percentage is inadvertently placed on sites with fake traffic, with
fraudsters siphoning off advertisers’ money.
The industry’s efforts to rein in fraud appear to have an
impact. Some $6.5 billion in ad spending will be wasted this year to fraud,
down 10% from 2016, according to a report released in May by the Association of
National Advertisers and ad-fraud detection firm WhiteOps.
The methods the fraudsters use are highly sophisticated.
Some infect unsuspecting consumers’ computers with malware to form a “botnet”
that clicks on ads on bogus sites.
Fraudsters are often adept at covering their tracks,
which can make their activity difficult to spot until after the event has occurred.
For years, Google has had teams dedicated to filtering
out fraud before an advertiser makes a bid on an ad. Those teams can also
prevent exchanges from being paid if an ad has already been bid on but invalid
traffic is quickly detected. The teams also work to discover historical
instances of fraud, which is what happened in this particular case.
In the recent cases Google discovered, the affected
traffic involved video ads, which carry higher ad rates than typical display
ads and are therefore an attractive target for fraudsters.
Google has also joined a number of industry initiatives,
such as the “Ads.txt” project launched in May by the Interactive Advertising
Bureau, an industry trade body. The tool lets premium publishers insert a text
file on their web servers to list all the ad tech vendors authorized to sell
their inventory so ad buyers can confirm which platforms are selling legitimate
ads.
“When people talk about [ad fraud], there’s a big specter
to it and a big concern about invalid traffic in digital,” said Mr. Spencer.
“It’s not that large in terms of a percentage of what people are buying, but it
can be a little bit scary to buyers, and our goal is to remove that to improve
the trust overall in the ecosystem.”
—Alexandra Bruell contributed to this article
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