When it comes to TV, one thing is clear: the OTT market is exploding. In 2018, OTT services raked in more than $28B in revenue, and that number is expected to nearly double by 2023. And with average completion rates for ads around 98%, Smart TVs are becoming an increasingly important platform for brands. In addition to rapid growth and incredible initial metrics, OTT also presents an opportunity for brands to take the laser-focused ad targeting capabilities of digital and apply them to traditional TV sets.
There is a catch. When it comes to ad-supported OTT, roughly 18% of inventory is fraudulent, according to a recent study from blockchain and cryptography advertising innovation company MadHive. This finding will make most network execs stop in their tracks, because for some reason many are blindly believing the myth that “there is no fraud on OTT.” But let’s make one thing clear; wherever there is advertising, there is fraud.
When it comes to OTT, three types of fraud are already emerging as the predominant types:
- Misrepresentation: this refers to the inventory being sold and the data associated with it. For example, a fraudulent arbitrager is selling ads they claim are being shown to users in the US, but the ad is actually shown to a device in non-US countries.
- Device based fraud: This is when a single device shows a high number of ads during a given time period. For example, a human user could not possibly watch 50 different 30 second video ads in a minute. This is caused by a bot living on a fraudulent device, and is similar to the Methbot operation that cost digital advertising ~$5mm a day.
- App-based fraud: This occurs when the same ad-supported OTT app shows a very high rate of activity around the clock. MadHive overlayed circadian data for different locations around the globe with app activity data for over 2 years and found that legitimate apps have different activity levels throughout the day, i.e. a dip in activity in EST at midday.
If these quick descriptions ring a bell, it’s because they should. All three types of fraud that are worming their way into OTT, are currently running rampant throughout traditional digital advertising.
For years, the many players that clogged up the convoluted supply-chain in the digital ecosystem turned a blind eye to the inefficiencies, each taking a piece of the pie which eventually equating to billions of lost dollars for brands. This negligence has resulted in a broken system, far beyond repair. But OTT still has a chance.
Revolutionary technologies like blockchain, cryptography and AI allow for targeting capabilities that mirror digital while maintaining consumer privacy, with unprecedented fraud detection that can weed out scammers world-wide, and the mathematical proof behind all these processes. Yes, blockchain caught a bad rap after the Bitcoin crash, but that doesn’t change the fact that the underlying technology has a valuable purpose. And when it comes to OTT, publicly traded companies like TEGNA – which owns four dozen broadcast properties in 39 U.S. markets – are already leveraging the technologies to power +125 premium local networks, and using MadHive’s fraud detection capabilities to weed out millions of fraudulent requests.
There are several great aspects of digital advertising that brands would like to apply to TV, but the industry needs to crawl before it walks. The industry needs to learn from the mistakes that have led to the destruction of digital. And most importantly, the industry needs to leverage new revolutionary technologies to proactively solve for problems, instead of turning a blind eye while Rome is clearly burning.
For more info check out our TV[R]EV OTT Special Report.
Header image via Pixabay.