Advertisers are flocking to streaming TV, pursuing viewers who are spending more time watching programming on ad-supported services. But fraudsters seeking to steal some of those new ad dollars are moving in, too.
Fraud in internet-connected TV is surging, according to ad measurement and verification firm DoubleVerify Inc. The company said it detected 780 fake streaming-TV apps this year that it believes were set up by bad actors to lure spending by unsuspecting advertisers—just one of the scams in play.
A separate analysis by ad tech firm MadHive Inc. at the end of 2019 deemed 20% of connected-TV inventory to be suspicious or fraudulent.
Streaming-TV advertisers must be vigilant to ensure their ads appear in the right contexts and in front of actual viewers, said Heather Stewart, general director of global media and marketing services for General Motors Co. “We have to stay on our toes and think about what the next mousetrap is to make sure it doesn’t happen,” she said.
The stakes are getting higher as streaming TV becomes a more important advertising channel for marketers. Ad spending on internet-connected TV sets, where a vast majority of streaming TV happens, will reach almost $8 billion in the U.S. this year and is likely to total $15.6 billion in 2023, according to research firm eMarketer.
Some advertisers said they are already actively monitoring for fraud in streaming TV, and have sought to eradicate or mitigate such activity by focusing on fixes such as direct deals with platform and app owners. But as more advertisers move into the medium, so do the opportunities for bad actors.
Fraud in connected TV can occur in multiple ways.
In a practice known as device spoofing, for example, scammers can trick the systems that stitch ads into programming by sending ad requests from smartphones with metadata reconfigured to make them look like they are legitimate streaming TV devices.
DoubleVerify detects more than 500,000 devices masquerading as connected-TV devices every day, according to the firm’s chief executive, Mark Zagorski.
Scammers also create their own connected-TV apps, releasing them in TV app stores and receiving few downloads but luring ad money with simulated ad impressions. Another scheme involves creating “CTV farms” to fabricate traffic using bots instead of real humans.
It is harder to track and stop ad fraud in streaming TV than in other kinds of digital media because the ad technology infrastructure is still nascent and less transparent, ad executives said.
Fragmentation among devices, platforms and the number of ways advertisers can purchase ad space on streaming TV doesn’t help either.
The issue is compounded by connected-TV ad prices that are generally higher than other forms of video and digital media; the cost of a thousand ad impressions can be $20 to $40, if not higher, as marketers seek high-quality inventory next to movies and TV shows, according to ad executives.
“Fraudsters go where the money is,” said Nicolas Bidon, chief executive of WPP PLC-owned agency Xaxis.
“Emerging technologies often require new solutions, and CTV is no different,” he added.
Hershey Co.
has been increasing its spending on ad-supported streaming platforms and services in the past year, particularly since the coronavirus pandemic drove more viewers into streaming.
But the maker of Hershey’s Kisses, Reese’s peanut butter cups and other snacks has also been actively monitoring its spending to ensure that its ads are seen in the right places and by actual people, said Charlie Chappell, head of media for Hershey.
“As we were getting into it, we knew fraud was gonna come,” Mr. Chappell said. “We’re working with partners on the publisher side and the tracking side to get ahead of it—because it should not be a surprise to anybody.”
Advertisers are also increasingly seeking to do direct deals with device owners and app publishers, including executing buys through private, invitation-only automated marketplaces, which can offer more control, security and visibility over where their ads run. Those options are preferred over conducting automated buys through open ad exchanges, where ad buyers said fraud can be more prevalent.
Dentsu
Aegis Network does not use open exchanges to buy streaming-TV ad time for its marketer clients, said Brad Stockton, vice president of video innovation at the ad agency, part of Japan’s Dentsu Inc. He described open ad exchanges as a fraud-ridden environment, similar to the situation in mobile advertising during its infancy years ago.
“If you are running in an open exchange, you are putting [a percentage] of your money in the garbage can,” Mr. Stockton said.
Write to Sahil Patel at sahil.patel@wsj.com
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