Living With Ad Fraud; Are You Seeing Red Or Green?

Originally published in AdExchanger, Feb 03, 2023

By AdExchanger

In Residence

Residential IP networks (Honeygain, EarnApp and Pawns.app, to name a few) are services that pay people for access to their IP, usually something like $25 to $75 per month, depending on how much data they share. It’s a useful service for some businesses with bandwidth to spare or people who could use a bit of “free” pocket money.

But, unsurprisingly, the category is also plagued by bad actors, according to an AdMonsters report.

There may be legit use cases, but the apparent supply of residential IP proxies far outpaces demand – and the main culprit is ad fraud. Home IP addresses cloak botnets and other forms of fraud.

The problem will get worse before it gets better, says Zach Edwards, an ad fraud and security researcher at HUMAN. Platforms are making privacy changes to remove IP addresses from analytics tools, and Apple has iCloud Private Relay, a cloud-based email program that iPhone and iPad owners can opt into that scrubs their email and IP data.

Consequently, Edwards warns, the digital ad tech industry should expect to see more residential proxies and pooled IP addresses in ad traffic in the future.

Machine Unlearning

Ever since Red Ventures, a private-equity-backed marketing firm, acquired CNET in 2020, the tech journalists there have faced mounting pressure to edit stories that cater to advertisers, The Verge reports.

Launched in 1994, CNET has been a major traffic aggregator in addition to producing tech news, gaming reporting and tech product reviews. But the affiliate marketing model favored by Red Ventures, which prioritizes SEO-laden content crammed with affiliate links, has run roughshod over former editorial guardrails.

CNET editorial employees have also had to field requests to work on sponsored content, including writing ads for products or appearing in video ads for companies in their beats.

Last month, CNET came under fire for widespread inaccuracies in its AI-written content. But despite the kerfuffle, the company’s quest to produce AI-drafted clickbait – literally made-for-search content autogenerated by software like ChatGPT – will proceed apace.

Red Ventures has also gobbled up other digital publishers that operate close to the point of purchase, including Bankrate, The Points Guy, Healthline and Lonely Planet.

The Custom In Customer

The programmatic custom algorithms category is an interesting new force in the market that’s quietly gained steam over the past few years, Adweek reports.

Chalice Custom Algorithms and Scibids, which specialize in creating bespoke buying systems for brands and DSPs, are the two main startups with mindshare. Programmatic Mechanics and Pontiac Intelligence, which are sister companies, take a similar approach but focus on smaller brands.

The impetus to develop custom algorithms is comparable to the early programmatic mindset, says Ana Milicevic of Sparrow Advisers. Back then, you’d select a DSP, and it was a kind of black-box scenario because you were relying on the tech and know-how of that DSP team to produce. “If you weren’t happy with the performance, you’d just change who you’re buying through,” Milicevic says.

One reason why the custom programmatic category has risen rather quietly is because the players mostly haven’t raised big VC rounds. Chalice has investments from Math Capital, a fund operated by Eric Franchi with a network of ad tech entrepreneurs, and from TD7, which is The Trade Desk’s investment arm. Scibids, a French company, raised a modest 2 million euros in 2018 and another 2 million euros last year.