Why the Fetch and Uber lawsuits should be a wake-up call for the ad industry

It’s big news in the sense that Uber is a major multinational brand and it is seeking a very substantial $40m (minimum) in compensation.

But it’s not a story that shocks because the misrepresentation of mobile effectiveness and an inability to police ad fraud is now such an endemic industry problem that there should be frequent lawsuits of this size.

Clearly it’s up to the courts to decide whether Fetch Media has in fact misrepresented the effectiveness of its mobile ads or whether Uber actually has questions to answer about missed payments, in a possible counter-lawsuit.

From an industry perspective, that’s not really the important point. What this case does – or what it should do – is raise our industry’s collective consciousness when it comes to ad fraud and its consequences and encourage us to confront some tough but important truths.

For a start, let’s openly acknowledge that brands are currently wasting millions on ads that aren’t being viewed or that actively damage their brand because they are placed in unsafe environments.

Acknowledging this point means also accepting that our industry has been too tolerant of too low a standard for too long. Certainly, plenty of lip service has been paid to how the issue is being taken seriously, but it’s time this was converted into results.

Then, let’s consider what has caused this problem and what can be done to tackle it.

Tackling ad fraud

Perhaps the main reason why ad fraud continues to grow is a limited understanding of the problem. This partly relates to the insufficient response when the issue gained increased prominence a few years ago.

Rather than set up a thorough investigation, many agencies simply added an extra column to their reporting. Clients would receive a report detailing the results of the campaign, such as number of impressions, viewability, whether the ad was placed in a brand safe environment and, finally, whether fraud was suspected.

Given that there are more than 30 types of ad fraud, that’s nowhere near a sophisticated enough response to the problem. And often why there is confusion as to why paying for verification is not resulting in sales conversion. There is a missing link between the quality of impression buying and optimisation.

It won’t be huge consolation to brands wasting millions, but this suggests that agencies and their suppliers haven’t set out to deliberately mislead about the rate of fraud they are experiencing.

Instead, they simply don’t know what they should be looking for and are only superficially investigating the types of fraud they are policing.

We’ve seen agencies check whether or not ads have appeared on legitimate websites and use this information to tell brands they don’t have an ad fraud problem. The issue here is that offers no insight into whether the traffic is in fact fraudulent.

Click fraud doesn’t occur when a domain is fake but when there is fake traffic or machine learning-based click farms generating clicks on ads, which can happen on perfectly legitimate websites. Those clicks aren’t real, so will never generate any kind of sale or conversion.

The results of this incomplete policing of ad fraud are illustrated by research we conducted, which was commissioned by WPP agencies The&Partership.

We found that ad fraud was set to cost brands $16.4bn – more than double the amount suggested by a previous study, the ANA Bot Baseline Report. The reason for that huge discrepancy is that new, increasingly sophisticated types of ad fraud arise daily and there simply hasn’t been a commensurate rise in efforts to gain insight into the full spectrum or scale of fraud.

Without a concerted effort to adapt to the evolving nature of the problem, the rate of ad fraud being reported to clients will inevitably be hugely underestimated, just as our research suggests it has been when calculated at an industry level.

So let this trial be a watershed moment for our industry. The allegations against Fetch may well prove to be unfounded, but our research indicates that the ad industry as a whole should be in the dock.

A significant improvement in the technology and insight offered to the advertiser, their agency and their agency’s suppliers will be the only way for agencies to deliver real return on investment – and keep themselves out of the courtroom.

Marco Ricci is chief executive at Adloox. He tweets on @MMPRicci