Dstillery CEO: ‘Dirty Data’ in Mobile Ads as Serious as Click Fraud

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FraudAs marketplaces go, the online advertising industry is at once remarkably efficient and inextricably flawed. Advertisers can buy billions of impressions in a millisecond, and still there’s little assurance as to whether many of those ads are ever seen by a human.

The digital advertising industry has started to confront its fraud problem, with industry organizations setting standards, and media buyers starting to demand transparency. But as marketers shift spending from desktop to mobile, the ad industry again faces a threat to a critical currency in digital advertising: data.

As Street Fight has reported, some mobile publishers have started to create user location data with estimates that they then pass on to advertisers. A publisher, without access to a user’s precise location, might transform the zip code on the registration form or even a country code into the far more granular latitude-longitude data for which marketers are willing to pay a hefty premium.

Reports suggest that more than half of the the available mobile inventory that includes location data is incorrect. Tom Phillips, chief executive at Dstillery and an early whistleblower of online advertising fraud, says this false data in the mobile advertising industry poses as great a threat to marketers as fraudulent traffic on the web.

“The data quality problem in mobile advertising is probably as serious [as traffic fraud problem on desktop],” says Phillips. “A lot of that location data we find is useless. It’s a big number — somewhere in the 30% range. If a third of the information you’re getting is not useful, than as you blend that together into a location strategy, you have a lot of noise. That’s problematic.”

The marketing technology company launched in 2008 with a tool to help marketers extract consumer insights from the huge amount of behavioral data collected from cookies online. In 2011, the company patented its own fraud-proof buying methodology capable of sniffing out fraudulent traffic.

Phillips says the company started to unearth the ad problem in 2009, when his team came across seemingly incongruous websites that shared large amounts of the same users. Those users turned out to be bots, which spent the day bouncing between IP addresses to run up the bill and effectively run up the bill for online marketers advertising on those sites.

Earlier this month, the company raised an additional $25 million dollars to set its sights on mobile. Over the past year, Phillips and his team have built out a new intelligence product developed last year to bring some of the sophisticated data mining and analytics lessons to the vast pool of information now being skimmed from consumers’ mobile devices.

Phillips stops short of calling the mobile data problem fraud. “To call the [data problem on mobile] fraud is not ideal — it’s app developers saying: ‘I know I get paid more if I send a signal in the bit stream with the a specific location,’” he said. It’s a distinction that many in the industry continue to make.  And yet, the unwillingness to call the problem fraud besets the finding of a solution.

For one, the delineation between embellishment and fabrication is a false distinction. Passing a zip code off as a latitude-longitude data point is comparable to having a phone number with only the area code correct. For all intents and purposes, that information is useless.

What’s more, the role of data is changing in the advertising industry As marketers adopt a more programmatic approach to media buying online and in mobile, data shifts from a signal in a ad placement process to the very thing that marketers are buying. The currency of digital marketing — and subsequently, the face of fraud — has evolved from fake traffic, generated by bots, to fabricated data, passed on by publishers.

“The infrastructure of programmatic advertising allows you to harness data in real-time, and that’s why it’s so important across all media that we solve the data problem,” said Phillips. “Buying programmatically is not just an efficiency play anymore; its opens up the possibility of all sorts of new tools and strategies to do it better.”

Steven Jacobs is Street Fight’s deputy editor.