Verification stripping is the latest in a growing ad fraud crisis

The history of ad fraud is nearly as long as the history of digital advertising, and firms are finding themselves playing whack-a-mole with fraudsters. The latest fraud scheme is called verification stripping, a bot-driven phenomenon that enables fraudulent actors to strip the code used to verify impressions from assets in order to serve fake impressions or engage in domain spoofing.

Ad fraud has nearly always been present in digital advertising, but the problem is growing and so is concern as more brands shift more money into digital. Kristin Lemkau, JPMorgan Chase’s chief marketing officer, said at a marketing conference earlier this year that advertisers will lose $16.4 billion in ad fraud in 2017, double what advertisers lost in 2016.

The ad fraud problem is quickly turning into something of a crisis, as lack of transparency in the marketplace has allowed digital advertising insiders to engage in, and benefit from, ad fraud. Buzzfeed’s recent investigation into fraudulent ad network 301network, found that many of the Websites involved in the scheme were owned by ad network executives. The scheme generated as much as $20 million in 2017 alone, according to BuzzFeed – though the executives claimed complete ignorance of the fraudulent activity.

Video ad server SpotX said it discovered the new form of ad fraud when it noticed consistent discrepancies between the ad server’s impression numbers and DoubleVerify’s impression numbers. Verification stripping is performed by bots or malware that are able to interrupt communication between the ad server and the measurement provider. The bots are able to stop a measurement pixel from rendering an impression completely, and can alter the measurement.

SpotX and DoubleVerify were able to locate the fraud by inserting an additional impression tag into assets that wouldn’t be blocked by the fraudsters. The tactic worked, and according to data from DoubleVerify, verification stripping could be the culprit behind as much as 10% of recent ad fraud spikes that it’s measured. Most of the verification stripping has been focused on video ads, which often have higher CPMs.

SpotX responded by removing portions of its programmatic ad inventory where the verification stripping was occurring. SpotX and DoubleVerify have now teamed up to release a joint solution combating verification stripping. The companies claim the solution is able to identify inventory that has had its verification stripped. The solution is able to remove the fake supply sources and remove the domain spoofing from the supply chain.

“While we’re taking action to address the concern, buyers should be aware that this type of fraud is likely occurring on other platforms as well,” said SpotX’s VP of global supply operations, Josh Cariveau.

It looks as though SpotX and DoubleVerify were able to catch the fraud before it could wreak havoc on the upcoming holiday shopping season. The fourth quarter typically sees a surge in ad fraud as marketing campaigns ramp up for the holiday shopping season. According to cybersecurity firm White Ops, ad fraud increased 13.5% in the period between October and January in 2016. The firm predicts up to $3.5 billion could be lost to fraud this holiday season.
Surprisingly, ad fraud is more common in video than any other segment of digital advertising, and that’s particularly true for premium inventory.

Forrester estimates video, which accounts for 45% of total digital ad spend, now accounts for 64% of total digital ad fraud. And according to advertising fraud detection firm Pixalate, up to 20% of video ad traffic on over the top video sites is generated from ad fraud.