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Originally published by MediaPost on April 10, 2014.

The most potent opportunity of digital marketing is the ability to access and leverage data about nearly everything.  Data-driven or “programmatic” marketing isn’t just about RTB, exchanges, DSPs, or trading desks – those are means, not results.  It’s about the ability for marketers to understand and make intelligent decisions about where their messages are being placed, to whom they’re being targeted, and with what specific outcomes.  This is an incredible economic opportunity for both marketers and publishers if the two sides come together and get it right.

It’s a false or at best incomplete notion that fraudulent traffic is supply-specific.  It’s equally false to conveniently say that this is a “long-tail” problem.  Proper network hygiene falls into four main categories: 1: content or copyright theft; 2: non-human actions; 3: low or no viewability; 4: laundering / obfuscating URLs.

If we are to really tamp fraud out of the ecosystem then we (meaning: all legitimate players in the market) must come together as a group and address each issue above, consistently and universally.  The buy side (DSPs, trading desks, brands themselves and ad agencies) must stop relying on easily gamed or spoofed metrics.  Major sources of supply (SSPs/Exchanges, ad networks and publishers) must collaborate on stopping the money flowing to bad traffic (money that often flows intentionally, to game the same metrics and KPIs that make buyers’ agents look good).  And just as importantly, the browser companies have to finally join the fight and act like the utilities that they are.

Ad fraud and poor network hygiene is not isolated to the supply side; it’s an industry problem that has to get resolved or else we’re collectively recreating the tragedy of the commons where individual self-interests will eventually destroy the ecosystem we all depend on.  Punchline: when we collectively address ad fraud in online marketing there will be fewer pageviews, fewer uniques and, of course, fewer ads.

Here’s why that’s a good thing:

First, marketers will spend more.  There is no doubt that the economics are built into the current system.  At a macro level, marketers spend and get positive returns on that spend; otherwise they wouldn’t spend and that spend wouldn’t be growing as dramatically as it is. In fact, the return of placing more good impressions to more real people, where they can view the message, and on a page where it makes sense, will only increase return on the marketer’s investment.

Second, good publishers thrive.  Publishers create the content that attracts the audience.   Good publishers are under extreme economic pressure as they get less and less of the money when it leaks to bad or fraudulent placements.  Unfortunately for the good guys, too many of them respond by adding to the glut of supply by putting more ads in more places all to maintain an RPM that keeps them in business for a while longer.  This is a race to the bottom, and it has to reverse course.  Fewer ads on better pages that earn higher values are the way out.

We need less noise and more signal.  The adtech and programmatic ecosystem is a constant chest-thumping of “speeds and feeds” that makes sense for a super scale business, but it’s the nature of that scale that really matters.  Higher CPMs and better fill rates on good traffic will mean higher RPMs and more revenue for publishers.  Ultimately it also gets a better ROI for marketing campaigns.  It starts with more good and less bad.

–Walter Knapp, CEO, Sovrn Holdings, Inc.

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