Connected TVs and devices such as Roku, Amazon Fire and Apple TV have seen an explosion in frequency of use for watching ad-supported streaming video since the pandemic began, with the total AVOD market forecast to be worth $19 billion in the U.S. this year.
As in any successful medium, with that success come scams and fraudulent schemes designed to pirate legitimate revenue. CTV has seen an increasing number of these within the last two years, as the fledgling industry is yet to have a standardized format for buying inventory.
MadHive, a software platform powering modern media buying, confirmed to VIP that it first noticed an influx of fraudulent CTV ad requests in 2019. The company subsequently analyzed billions of impressions and found that 18% of ad inventory on CTV and devices was suspicious, with this increasing to 20% in 2020.
Three major schemes have been uncovered since September 2020 alone. This may spook some advertisers considering making CTV part of their media plans, as it gives the impression that CTV is some sort of lawless ad platform rife with pirates. The truth is that using legitimate sources to buy inventory removes the risk, but those who go outside the established firms are risking their ads being scammed.
Most free AVOD platforms operate on a revenue-split basis for FAST channel operators and on-demand content licensees. Buying direct through a service — i.e., Hulu, Roku, Amazon or Xumo — avoids these pitfalls, but they only control a portion of the ad inventory, with the rest falling to the independent content providers.
Given there are many independent channel operators and content licensors in AVOD, they have to turn to intermediaries in order to maximize ad revenues. Using a legitimate stitcher service such as Wurl’s AdSpring also avoids fraud, but some buyers are looking to save money, opening the door to trouble.
Before getting too into the weeds, here’s a brief explanation of how ad fraud on CTV is possible. Let’s assume you are streaming the Unsolved Mysteries Channel on one of the many FASTs airing it. When it’s time for an ad break, the channel has some ads inserted via an ad stitcher service like Future Today or Wurl, unless it is a service like Pluto that stitches in-house.
These ads have been bought by an ad agency on an ad exchange market, typically looking to reach incremental audiences no longer watching traditional TV. Exchanges exist because unless an advertiser buys inventory for the share of commercial time CTV platforms have, there is no direct connection between the advertiser and the content owner.
The CTV fraud has often come from scammers implementing a trick known as “spoofing”, where apps, most recently downloaded to Android phones, broadcast an altered metadata that makes the phone appear to be a smart TV watching an AVOD app by changing the IP address.
The scammers then utilize thousands of servers to mimic being an ad stitcher service to attract the ads they will then serve to the imaginary connected TVs.
The ad exchange can’t tell the difference between a legitimate user and the fake signal and thus sells impressions to both. The scammer then makes off with the illegitimate revenue.
The only way to fix this problem will be for the ad industry as a whole to create universal identifiers, such as cryptographic fingerprinting, which can flag if a “call” signal for an ad and the viewer, is legitimate.
While it’s reassuring that these scams are being caught, the worry will be that, as this is still a growing industry, more reports of fraud will put off advertisers from buying on CTV platforms, instead opting to put their money into other digital platforms like YouTube.