Internet Advertising Bureau – supplementary written evidence (ADV0033)

1. Advertising Fraud

What is it?

Ad fraud is the deliberate generation of fraudulent (often non-human) traffic (i.e. visits to an online site/page, etc.) in an attempt to extract money from the advertising ecosystem.  Several types of ad fraud exist[1] but they generally have one or more of the following characteristics:

• Illegitimate and non-human traffic (e.g. bots)
• Intentional misrepresentation
• No chance of the ads being seen by a legitimate human audience

Note: It is important to recognise the distinction between ad fraud and the separate issue of value and transparency in the digital advertising supply chain. Money spent by advertisers (or agencies on their behalf) on buying digital advertising is often distributed throughout the supply chain. The overall ‘cost’ of buying advertising space (inventory) includes both the value of the inventory itself, and the cost of any services provided by intermediary companies (that sit between buyers and sellers) aimed at improving the overall efficiency of the buying and selling. Our short video explains how this process works in practice and illustrates the function of those intermediaries. For this reason, the money ‘spent’ by buyers may not all be received by the publisher (the owner of the inventory). This is not ad fraud, however.

Why this is an industry concern:

Ad fraud puts a direct cost on advertisers as they are at risk of paying for advertising that reaches no one and therefore returns no value to their brand.  Legitimate publishers also lose out as the diverted revenue is not being used to support genuine content creators.  Advertising technology suppliers who are found to have had their systems taken advantage of by fraudulent actors can be liable for rebates or refunds to advertisers and their agencies and can incur commercial and reputational losses.

What is the public policy implication?

Those organising and conducting ad fraud may be generating revenue to fund organised crime and terrorism. This is not only a significant issue for brands and genuine content creators, diverting a significant amount of revenue[2], but a serious policy risk. In the UK, even if only a small percentage of the more than £10bn invested annually in the digital advertising is diverted through fraud the total amount diverted could be very significant.  The Government’s concern about cybercrime and the potential risk to terrorism makes this, we suggest, a significant priority for the Government to help tackle through the Digital Charter work programme. 

What the industry is doing:

A joint industry committee, JICWEBS, has developed initiatives to promote confidence by certifying to advertisers and media agencies that their digital campaigns are reaching the intended audience and minimizing non-human traffic in web analytics. To help tackle ad fraud and create a safer, more transparent supply chain, JICWEBS has developed:

• Industry guidance on risk reduction
• Ad fraud definitions that describe illegitimate, non-human traffic sources. The definitions help ensure that the industry has a common understanding of what constitutes fraud.
• Good practice principles for reducing the risk of exposure to fraud that businesses can sign up to. The principles cover fraud education and policies, setting correct campaign returns on investment targets (ROIs), ad inventory sources and anti-fraud technology and vendors.
• Independent certification processes with accompanying ‘seals’ for publishers, agencies and ad tech providers that apply the good practice principles and for anti-fraud vendors/ad verification suppliers who provide solutions that aim to detect and reduce fraud. Currently 16 companies have signed up to the good practice principles and 6 have so far been certified.[3]

In March this year, a new joint initiative was announced between JICWEBS and the U.S.-based Trustworthy Accountability Group (TAG)[4]. In the area of ad fraud, TAG has set up the Certified Against Fraud Program, involving anti-fraud guidelines, and a trust seal which means companies can publicly communicate their commitment to combatting fraudulent non-human traffic in the digital advertising supply chain.

JICWEBS and TAG are focused on transferring learnings between the respective initiatives to improve their effectiveness and create a united and consistent approach across markets to tackle criminal activity and clean up the digital ad supply chain.              
 

Separately, the IAB Tech Lab – an independent research and development consortium that develops global technical standards for the digital advertising industry – recently published the ads.txt initiative. This project is part of a broader effort to reduce the ability to profit from intentionally misrepresenting inventory (known as ‘domain spoofing’) by providing a simple solution for publishers to declare who is authorised to sell their advertising inventory, and is being rolled out in the UK.

How can the Government help?

Legitimate actors in the industry are committed to reducing the opportunities for fraud and detecting and combatting instances of fraud where they do occur. Industry self-regulatory initiatives aim to track and continually combat ad fraud through technical solutions. However, there is a need for Government intervention to target persistent and organised criminal activity.

The Government has a major role and responsibility to help address and deter criminal activity, including online. The scale of the problem in the UK is unclear, with different estimates existing.  We propose that tackling organised ad fraud is an important priority in the context of the Government’s objective of making the UK a beacon in online standards. Although ad fraud is a global issue, there is an important role for the UK in taking direct action and in giving leadership by supporting a drive towards international enforcement mechanisms. 

Some proposals for Government action include:

1. Government engagement with industry initiatives such as JICWEBS and TAG to support the continued development of industry solutions to address ad fraud in the digital ecosystem.
2. Government working with industry better to assess the scale of ad fraud in the UK.
3. Allocating police resource to build understanding and expertise in criminal ad fraud through the National Cyber Crime Unit. Law enforcement and the industry could work together, using the industry’s existing fraud detection and prevention mechanisms, to help tackle ‘malvertising’ and other forms of ad fraud and to understand persistent and organised actors and their links to other crime.
4. Provide a mechanism for the ad ecosystem to engage with law enforcement where industry sanctions have not been sufficient to deter illegitimate actors. A range of enforcement tactics could be explored, as have been adopted by PIPCU in the fight against IP infringement online, such as disruption, blocking and criminal prosecution.
    

2. Ad Misplacement

What is it?

Ad misplacement is legitimate advertising being inadvertently placed next to content that is unsuitable for the brand (e.g. content that is inappropriate, harmful, or illegal). The automated way in which some online advertising is bought, which involves a complex supply chain, means that ads whose placement is determined by the audience that is being targeted (i.e. a set of people that match an advertiser’s criteria), not by context (i.e. site content), could potentially be placed on any number of sites that a person may visit. As it is not possible manually to vet the content of each webpage, there is a risk of ads being misplaced and appearing next to unsuitable content. These ads are then unintentionally generating revenue for those who produce or disseminate this content.

Why this is an industry concern:

Advertisers, agencies, and ad networks aim to place advertising to reach specific target audiences and to avoid inappropriate online environments.  Given the commercial implications there is significant investment in mechanisms to achieve this. Buyers (advertisers, and agencies buying on their behalf) need transparency in order to define clear policies for where they wish their ads to appear/not appear, and make informed decisions on a campaign-by-campaign basis. Where transparency cannot be provided, there is a risk of advertising being placed next to unsuitable content, some of which may be harmful and/or illegal (e.g. terror- or hate-related content, IP-infringing sites) and some of which may not be illegal but at odds with a brand’s policy (e.g. pornography).  This has direct reputational cost for the brand, and all those companies who have played a role in delivering the ad.

What is the public policy implication?

The Government has made it a priority to make the UK’s online environment as safe as possible, notably for vulnerable consumers.  It is important that online ads are being placed responsibly and are not inadvertently monetising illegal content online.

Legitimate advertising revenue may be funding illegal activity and be seen to be ‘endorsing’ such activity. The link to de-monetising terrorist content makes this particularly important for the Government’s wider anti-radicalisation strategy.

What the industry is doing:

• The industry has developed a cross-industry self-regulatory initiative, the Display Trading Standards Group (DTSG), that is overseen and governed by JICWEBS. The DTSG provides the tools to provide transparency and enable buyers to actively manage campaigns and minimise the risk of ad misplacement.
• The DTSG has published good practice principles for all business models involved in buying, selling and facilitating digital display advertising. There are currently over 60 signatories, covering a significant proportion of the market. To minimise the risk of advertising funding IP-infringing content, for example, the industry has worked with the City of London Police’s Intellectual Property Crime Unit (PIPCU) to develop and implement the ‘Infringing Website List’ (IWL)[5] that functions in effect as a ‘blacklist’ of sites that the Police have verified to be infringing copyright.  This list enables the industry then to disrupt the ad revenue such sites receive[6]. The DTSG provides a framework for the IWL to be used by the industry.
• Platforms that host user-generated content such as Google (YouTube) and Facebook have put in place measures to be able better to identify, take down (where appropriate) and/or restrict the monetisation of illegal content such as terror-related content.
• ISBA is holding discussions on brand safety guidelines with its members, as well as with the Cabinet Office (representing the Government as a major advertiser).  These guidelines aim to give guidance to companies on questions to ask their agency, and a series of tips and tools that brands can use to help protect their online reputation.
• Tightening up procedures and guidance has been a number one issue for the industry bodies and companies in recent months, in order to minimise, if not wholly eliminate the problem. The industry is exploring how to build on the DTSG framework, including though the partnership between JICWEBS and TAG.

As mentioned in the IAB’s written evidence, we have recently launched our Gold Standard initiative, with a public commitment from all 24 of our Board members – leading businesses in the digital advertising sector – aimed at driving up standards in the industry. Our Board members include ‘pureplay’ digital publishers and media owners, advertising technology companies and news media companies (DMG Media, ESI Media, The Guardian Media Group, News UK, Trinity Mirror, Telegraph Media Group).

The Standard commits signatories (initially our Board members, but shortly available to all IAB member companies) to, among other things, increasing brand safety by working with JICWEBS with a view to becoming certified or maintaining DTSG certification. The DTSG principles are currently being evolved to reflect the needs of media owners and publishers, as well as advertising technology companies.

How can the Government help?

1. Develop an information sharing mechanism with industry to ensure that Government continues to be aware of industry efforts to minimize advertising misplacement, both domestically and globally.
2. Support the continued development and adoption of the best self-regulatory solutions to managing ad misplacement by all parties in the advertising ecosystem.  For example, the Brand Safety Principles published by DTSG (the Display Trading Standards Group), which is the preferred mechanism of the advertisers represented by ISBA, the agencies represented by the IPA, the advertising technology companies represented by the IAB and the Association of Online Publishers.
3. Work at the international level to encourage other key markets to strengthen measures to address ad misplacement, notably on foreign language content sites which may be accessed by UK citizens. 
    

3. Ad Blocking

What is it?

Ad blocking usually involves people downloading software (‘ad blockers’) onto their computers or mobile devices to prevent ads from appearing when they are online. People choose to block ads for a variety of reasons: because they do not like the advertising (e.g. because it’s annoying or interferes with what they’re trying to do); because they want to optimise the speed and efficiency of their online activity; because they want to minimise the usage of their data allowance.

At present, most ad-blocking tools are relatively blunt in nature. They generally block all display advertising on all sites, unless sites are manually whitelisted by ad blocking operators or individual users. Some operators (e.g. Ad Block Plus) allow certain types of ‘acceptable ads’ to be delivered, though they levy fees on the biggest advertising operators to serve ads through this system. 

Why this is an industry concern:

Ad blocking is disrupting the digital ecosystem.  Disruption in and of itself is not necessarily a bad thing, and the industry recognises that the overall digital ad experience needed improving.  However, the current deployment of blunt ad blockers is having a particularly negative impact on publishers today, undermining their ability to monetise their content through advertising. Longer-term, if publishers and content-creators are forced to limit access or charge (or charge more) for access to their content, this restricts their potential audience to people who are able or willing to pay for access, and may mean that some publishers’ business models are no longer sustainable.

What is the public policy implication?

Advertising is the primary tool to monetise content online and is therefore essential to a sustainable digital advertising industry, a free and open web and viable ad-funded business models (e.g. news). Ad-blocking threatens these business models and the value exchange of content and services paid for by advertising. Ad blocking levels in the UK have stabilised but remain a concern.[7] It is important to ensure that wherever possible content can be free at the point of consumption to ensure access to a plural media for all elements of society.

What the industry is doing:

• The Coalition for Better Ads (CBA) – a global consortium of brands, advertising technology companies, publishers, and trade bodies – is the industry’s collective response, focused on improving ad experiences online.
• Under the ‘DEAL’ approach[8], publishers have adopted a number of tactics to address ad-blocking and persuade people not to use ad blockers (e.g. identifying when a visitor to their site is using an ad-blocker and restricting their access to free content; explaining the advertising value exchange; implementing paywalls and offering ad-free or low-ad subscriptions). Some have also used technical solutions to prevent ads on their sites being blocked.
• The industry has adopted the ‘LEAN’ principles[9] designed to improve the online ad experience.
• The CBA has published initial ‘Better Ads Standards’, based on consumer research, that identify 12 ‘bad’ ad formats that should be avoided – the aim being for the industry to stop paying for, producing, or hosting negative ad formats (e.g. pop up ads) that lead people to block ads. Implementing these standards is actively encouraged by CBA members, including participating trade bodies, which cover a large proportion of the overall digital advertising market

How can the Government help?

Whilst the industry’s approach to improving the online advertising experience is based on consumer evidence, it remains unclear whether this will lead to positive results in practice. A continuing technological back and forth between ad blockers and publishers is possible and there are limited competition law and other legal remedies for publishers whose business model is undermined by ad blocking. The Government could support the digital advertising industry in its efforts to tackle ad blocking:

1. Maintain equivalence, when the UK exits the EU, with EU ‘net neutrality’ rules that require internet service providers to "treat all traffic equally" as it is directed over their networks. Net neutrality is an important principle that protects against network-level ad blocking (such as at mobile network operator level) and existing guidelines, based on the EU ‘Universal Service Directive’, state that all internet users should have equal access to content and advertising online to ensure telecoms operators cannot block content.[10]
2. Publicly recognise the value of the ad-funded business model which supports the development and provision of digital services, content, and apps. 
3. Support publisher efforts to clarify legal avenues to challenge the lawfulness of disrupting legitimate business models through non-user led ad blocking mechanisms.
4. Support industry efforts to improve the user experience through the Coalition for Better Ads.

December 2017