Ad fraud on CTV, how it works, and what you need to know

As hype around Connected TV (CTV) and the number of ad dollars spent continues to grow, so does the problem of ad fraud on the channel. Insider Intelligence predicts a 23% increase in ad spend on the platform in 2022, with 2023 looking to go up by another 27% in the U.S. alone. Alongside this, however, is the problem of money leaking through the cracks. In fact, the top three ad fraud cases in 2021 were, unfortunately, all related to CTV and an estimated US$140 million in ad spend was lost to fraud during the first year of the COVID-19 pandemic on the channel, making ad fraud is still a major concern for any advertisers running ads on CTV. This is large in part due to the channel’s structural issues, which can put fraudsters at an advantage.

It’s wrong, however, to think there’s no solution to fraud within CTV traffic. It is, after all, just another form of technical ad fraud. Once you understand the warning signs, it’s as simple as knowing how to identify discrepancies and how to troubleshoot them.

Let’s take a quick look at some of the key terms you should know.

• Served impression: An ad served on a CTV platform/any ad displayed to a user via a CTV device.
• Scanned QR code: A confirmation of engagement that is technically equal to a click.
• Install: The first app open.
• Fraudulent publishers: Fraudsters that claim to publish CTV ads while instead intentionally manipulating the attribution flow to steal ad budgets. They don’t display anything legitimate, they just manipulate the attribution technology to make it believe that they did display an ad.

Fraud on CTV is not fundamentally different to any other form of technical ad fraud and there are essentially two ways that fraudsters are able to manipulate attributions in this context.

1. Engagement fraud: Fraudsters manipulate an ad engagement, click/scanned QR code, or impression to steal an attribution from organic and other legitimate sources. It’s important to note that the end user, the device, and post-install activity are all real; the only fabricated thing is the engagement. When subjected to engagement fraud, campaigns may exhibit high levels of in-app activity and show positive ROI thanks to organic users that have been poached.
2. Spoofed users: Where everything—the engagement, the install, and any post-install activity—is fabricated. Unlike engagement fraud, spoofed users don’t represent any real users or user behavior. Fraud schemes under this umbrella focus on mimicking real user behavior by using real devices to proxy their fabricated traffic. In creating legitimate looking ‘spoofed’ activity, fraudsters can steal your CPM, CPI, and CPA campaign budgets with simple script automation if you’re not protected against SDK spoofing. Adjust offers free SDK protection to all our clients.

It’s vital to understand the differences and the peculiarities of each form of technical ad fraud because different trends will display different abnormalities. It’s via these abnormalities that you can identify that something isn’t adding up and proceed to troubleshoot. More on this below.

Despite its rapid growth, the CTV space is still emerging, meaning industry best practices, regulations, standards, and even expertise, simply aren’t fully developed. Let’s start by looking at the problems with inventory. CTV inventory falls into two categories:

• Native: Displayed on the homescreen of CTV operations systems. This is usually bought by marketers promoting streaming content from CTV platforms like Roku, Samsung, and Vizio.
• In-stream: Displayed within CTV apps, most of which are streaming services. This is what most other advertisers on CTV are looking for and it can be bought from CTV platforms as well as streaming services like Disney+, Hulu, and recently Netflix. Some of this inventory is sold directly by the platforms and streaming services, sometimes via their own DSPs (e.g. Roku’s OneView), and sometimes it’s sold by intermediaries. These intermediaries can be ‘traditional’ like The Trade Desk but can also be brand new offerings specialized in CTV inventory, making it challenging to extract consistent data from the landscape.

The complexities don’t stop at inventory, unfortunately. Unlike with mobile, where audiences are conveniently (and often religiously) divided by Android and iOS, users often combine a range of CTV brands. They might, for example, have a Samsung smart TV in the living room and a Roku set top box in the bedroom, or may connect different devices to consume content available on a Roku set top box via an LG smart TV. There are a myriad of use cases and tech mixes, and unlike with desktop and mobile devices, CTV content is often consumed by multiple people at once, complicating the process of targeting, frequency capping, and measurement.

All of this complexity leads to vulnerability and can cause accidents. Recently, GroupM and iSpot reported a $1B loss of ad money because the devices they were serving ads on were switched off. This was made possible because the inventory the advertisers bought was owned by apps functioning on streaming devices that people were connecting to their smart TVs. Neither the apps nor the streaming devices had the capacity to know whether the smart TVs were on or off, and the smart TV providers seemed unable to tell if the inventory was being displayed on their devices. Even in a case like this, where there’s likely no ill intent behind the scenario, advertisers pay a heavy price.

What this means, however, is that an environment that fraudsters can take advantage of exists. One of the most common ways fraud is committed in this space is by impersonating CTV devices with mobile or other digital devices, which allows fraudsters to take profit from the comparably higher CPMs paid for CTV inventory. But this is just scratching the surface. Fraudsters leverage fake impressions, steal QR-code scans, and spoof users in order to get their hands on CTV ad budgets.

There are actually a lot of measures that CTV advertisers can take to protect their ad dollars. Once you understand the types of technical ad fraud that exist and what you can expect, you can more easily set yourself up for success. Keep the following in mind when building and executing your CTV strategy:

1. Choose your inventory vendors wisely: One tactic is to buy directly from vendors who hold ownership of their own inventory, including streaming services like Tubi, Hulu, and Peacock. You can also go to device suppliers like Roku, Samsung, and Amazon Fire. Working with partners like these means you stay close to the source and maintain control over when, in which formats, and in what context your ads appear, while profiting from the rich first-party data these companies offer. The downside of this approach is that your reach will be limited, which is particularly impactful when you’re first starting out with CTV advertising and are testing to determine what works and what doesn’t. The best thing to do in this case is to reach out to vendors who are specialized in the CTV space while avoiding re-brokers and third-party ad networks that don’t provide viability over your funnel and when your ads are being served. Vendors we recommend include tvScientific, Vibe, Smadex, mediasmart, and The Trade Desk. They will provide you with significant reach while allowing you to stay in control of the context in which your ads appear, along with the data you need to monitor whether they’re being served correctly.
2. Know your audience, know your creatives, and apply common sense: If you understand when your users are most active and when you want to display your ad to that it’s relevant to the target audience/markt, you’ll be able to recognize when things aren’t adding up or meeting expectations. Think about a football app, for example. In the U.S., football matches happen on Wednesdays, Fridays, and Saturdays at 7pm PST, meaning this is the time you’ll likely want your ads to be displayed and you’ll expect peaks in ad engagement to match. If instead, you see no uptick but are receiving traffic at midnight, you’ll know something is not adding up. Similarly, if you’re running a CTV campaign on a streaming platform targeting millennials in the U.S. but are instead receiving traffic from people aged 65+ in Europe, it’s likely something isn’t right. Understand the kinds of users and typical user behaviors for each platform, decide the times you want your ads to be served, and be clear on your expectations.
3. Stay in the loop on CTV industry standards and measure performance: There’s ongoing debate around industry standards for CTV measurement, attribution, and overall campaign performance strategizing. As an industry, we’re still working out whether measuring the impact of CTV advertising using the traditional ‘currency’ involving ratings and ‘alternative ratings’ is adequate, or whether applying measurement concepts habitualized in the digital industry is more impactful. Applying the concepts from digital is the predominant thread at the moment, but it does not come without challenges. The last-touch attribution logic used for mobile and desktop, for example, does not work adequately for CTV because of different viewing habits, styles, and the nature of the devices. At this level, there’s no coherent solution yet. This is why it’s essential to have an independent measurement provider (MMP) because despite these challenges, unlike linear, performance is measurable, and only a third-party, independent MMP can provide you unbiased results and the context needed to understand how CTV interacts with and provides incremental value to your existing campaigns. Moreover, most measurement providers also have solutions to prevent ad fraud. See Adjust’s Fraud Prevention Suite.

For more on the topic, check out my guest article on AdExchanger: Advertisers, Here’s How To Stop Losing Money On CTV.

CTV is a new space but it’s already driving huge results while remaining full of ongoing promise and potential as we move into 2023. There are, however, undeniable structural flaws that can cost advertisers a lot of money, even in the absence of fraudulent intent. The good news is that with the right partners, emerging industry standards, a solid measurement partner, and a good dose of common sense, you can avoid most of the harm and experience the CTV space as the exciting space that it is. Just as with any form of technical ad fraud, the most important thing is to be aware of the risks and to take action when the numbers are not adding up.

To learn more about technical ad fraud, you can download The Adjust guide to mobile fraud, learn about the Fraud Prevention Suite, or get in touch with our team of fraud specialists at fraudsquad@adjust.com  For detailed information and consultancy on Connected TV campaigns, our CTV team is also available to answer your questions and queries. You can get in touch with them at connectedtv@adjust.com.