By: Ray Philipose
Hundreds of millions of dollars of adspend is wasted each year on ad fraud, as Digiday piece on the state of global ad fraud points out. From our point of view at Olive Media, its helpful to draw parallels with olive oil fraud in seeking ways to counter this crisis.
Olive oil fraud is an age-old problem and is a side business of its own – fraudsters dilute pure product with rancid oil deodorized to remove colour and taste (and detection) – or other oils entirely – increasing their margin while decreasing quality.
A 2012 study by the University of California at Davis found that 69% of the extra virgin olive oil sold in California grocery stores did not meet the standards for extra virgin olive oil – they were instead a mix of other oils. Studies in European grocery stores have produced similar results.
Despite their obvious differences, fraud in the olive oil business has distinct similarities with digital fraud in our business. There are three key factors at play.
For one, buyers are trained to purchase based only on price. The price of extra virgin olive oil today is near historic lows as fraudsters drive down price by substituting with inferior oils. Similarly, in the advertising business, if we believe that one ad impression is the same as the other, price drives down purchase. Just as buyers can’t always trust the labels on olive oil bottles, they can’t always trust the names of the websites selling ads on ad exchanges – in both industries, there is no real consequence for lying.
Automated standards for evaluating quality are poor in both industries. While there are official standards for evaluating olive oil, bottlers themselves will admit these tests are imperfect, as fraudsters improve their techniques to evade detection. This happens in online advertising, too, despite technology-driven standards for quality.
Finally, the supply chain in both industries lacks transparency. In the olive oil industry there are many intermediaries between the growers and the distributors. And if one of the latter is caught selling fraudulent oil, they simply blame other people in the supply chain. Display media on ad exchanges is also often on purchased through multiple intermediaries, which makes it difficult to hold suppliers directly accountable.
How do we work around those realities in the world of online ad fraud? If we look back to the ancient world, the Roman Empire offers some rich lessons. During that time, olive oil was used as currency, and billions of liters of olive oil were consumed in Rome alone. Solving olive oil fraud was critical to financial success of the Roman Empire.
To tackle fraud within the supply chain, the Romans worked to create transparency. Each amphora of olive oil recorded the original producer and origin, who initially assessed the weight and quality of the oil, who imported the oil and who received the oil and confirmed the assessed weight and quality. Second, they created an accountability framework. Olive oil fraud was a punishable offence.
What are the takeaways from this for the world of digital ad fraud?
Buyer awareness and education is just the starting point. Also, while automated testing is helpful but may never be perfect. As a buyer, the safest tactic is to buy trusted inventory from trusted sellers and to demand accountability in what they sell. Finally, the definitive solution is full transparency and accountability in the supply chain.
I believe that as an industry, we need to introduce full transparency and accountability into our industry, and we we should self-regulate ourselves to do so. It worked in ancient Rome for olive, and it will work just as well today for digital ad fraud.
Ray Philipose is VP, product and trading at Olive Media
