TubeMogul, the public ad tech company that specializes in video advertising, announced a bold new anti-ad fraud effort on Monday.
The company is promising to issue automatic refunds to any advertiser whose ads were served to non-human traffic, also known as bots.
TubeMogul has partnered with ad fraud detection company White Ops, which in April will issue its verification technology across every video ad bought through TubeMogul's OpenRTB platform. The service is available to all clients who have a "masters service agreement" with TubeMogul.
Ad fraud is a huge problem for the online advertising market. White Ops estimates online ad fraud is placing $7.2 billion of advertising spend each year into the pockets of criminals, which take over armies of computers using sophisticated malware to impersonate highly-lucrative internet users that marketers pay good money to reach with online ads.
Botnet eradication
Speaking to Business Insider, TubeMogul CEO and cofounder Brett Wilson said: "This announcement is really about giving clients total protection as a matter of policy. We heard a lot of companies talking about how big this was, talking about what they were trying to do, but everybody was still putting the onus back on advertisers and we didn’t think that was right. We wanted to make it clear that the clients that use our software to buy their brand advertising — we have eradicated botnet fraud for them."
TubeMogul doesn't envisage the refund program will generate any significant financial obligation because it has been investing in technology to eradicate fraudulent traffic from its network for some time. Back in 2011, for example, it coined the term "fake pre-roll" and publicly called out rivals for stuffing video ads into areas outside of video players but still clocking the views. In 2012 it rolled out its brand safety protection suite. It then made public the identity of three video ad fraud botnets that were generating millions of fake views each day. TubeMogul is also a founding member of the internet ad industry's Open Video Viewability group. This latest announcement is more about TubeMogul putting its money where its mouth is, Wilson explained.
The only cost it is taking on is the cost of White Ops' third-party measurement, but overall Wilson believes this program will serve to increase the cost of ads running through TubeMogul because advertisers will see better results if fraudulent traffic is taken out of the system.
Wilson said he hopes "this is a call to the rest of the industry to follow our lead" and that bot refunds will become standard in the ad tech industry.
"I think advertisers upon hearing this announcement are going to demand that they get the same treatment from other players in the industry," he added. "Big picture, you've got this space that's being automated and cleaned up like never before. If you're an advertiser, you actually have the ability to be much more accountable for your media spend than was possible in the past because there's so many companies out there to automate and measure media buys. That being said, botnet fraud is a challenge and I think there are companies that are not ready for it."
Like e-commerce in the 1990s
The analogy Wilson uses internally is with e-commerce in the mid-90s, when consumers were often nervous about putting their credit card details online due to the risk of fraud. But the companies in the space banded together to stifle out the fraud and now e-commerce is thriving. Wilson wants the online ad industry to get to the same place.
TubeMogul reports its fourth-quarter earnings after the market close on Monday.
Ad tech companies have increasingly been making announcements about the work they do to protect their customers from ad fraud. Earlier this month, AppNexus said the average ad rates on its platform rose sharply during the second half of 2015 as it began to reject invalid traffic, AdExchanger reported.
Meanwhile, Google earlier this month announced it had introduced a new system that automatically filters out traffic from three of the top ad fraud botnets, AdAge reported.
It followed The Financial Times reporting in September that Google was charging for YouTube ads viewed by bots, according to a study. At the time Google said it would contact the researchers to discuss the findings, adding that it took "invalid traffic very seriously."
SEE ALSO: TubeMogul CEO on $83 million raise: The ad tech market may be hurting, but we're not
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