Digital Ad Fraud is a $20 billion Issue. Here’s How to Stop It — Q&A with Oxford BioChronometrics’ William Scheckel

The World Federation of Advertisers warned last year that digital advertising fraud was “endemic.” The estimation is that up to 30% of all created ads are not seen by consumers, which could result in a loss of $50 billion by 2025. This sinister thief is actually not even human, but rather computer programs called “bots.” These bots are designed to go from website to website, masquerading as web users clicking on ads. Many times, these bot programs are even silently running as malware in the background of home computers. Still, many advertisers are unaware of the fraud caused by these bots, continuing to drop big money into this now ubiquitous advertising space without any safeguards to protect their ROI. One of the few companies in the industry with sophisticated technology to combat ad bots is Oxford BioChronometrics.

For Oxford BioChronometrics, fending off bot farms and hackers is a fight that is about more than just marketing dollars. Bots are used to falsely raise review numbers on Apple’s app store and bots are employed to filch valuable concert tickets. The company is raising awareness for a battle that impacts our daily lives more than we know, especially as digital commerce continues to become more prevalent.

Equities.com spoke with William Scheckel, Chief Marketing Officer of Oxford BioChronometrics, to learn more about this mounting plague across the digital advertising industry and how the company has developed the technology to help put a stop to the dysfunction that’s costing consumers and advertisers tens billions of dollars.

EQ: Can you tell us about Oxford Biochronometrics and how the company got started?

William: In 2013, the company was born out of research done in the University of Oxford Software Incubator, and that is where the term ‘Biochronometrics’ originated. To break that down, bio is life, chrono is time and metrics is measurement. So, the term really means the measure of life over time. In fact, this is a perfect description of our technology. We look at life signs over time. We monitor anything trying to approach a digital asset—whether that is a digital ad or secure data on a government network—and we analyze what it is attempting to access in order to determine its true nature.

We don’t rely on old technology like IP addresses, Alexa rankings or what a device claims to be because hackers have become very savvy. Hackers run a successful business. Year after year, they commit theft on a massive scale, so we are not using old detection tools. We’ve created our own form of detection. Most importantly, we can tell you whether that thing knocking on your door right now is a human or a bot.

EQ: Upfront analytics has stated that as much as 88% of online traffic today is bot traffic. Can you talk about why this has become such a huge issue with digital advertising and why no one is talking about it? Just how significant is this issue?

William: We estimate that it is a $20 billion issue, every year around the world. As digital consumption grows and print consumption shrinks, and traditional TV models are being turned on their heads, more and more advertising is turning digital. It’s online. It’s on websites. It’s on social networks. So, ad metrics are becoming increasingly important for the companies that are trying to get their word out, trying to be recognized, be heard, and really remind customers that they still exist.

Advertising is what makes the internet go, which is why access to information on the internet is free or largely free, because it’s ad supported. If you’re an advertiser and you’re funding all of this, you need to know that your budget is being spent wisely. In traditional marketing, if you got a 3% rate of return on a blind mailer, you were happy. Times have changed and digital marketing is supposed to be more efficient in terms of ROI.

There’s a lot of technology built to make sure that a digital ad is going to someone who cares about it. However, even though most ads are now digital, most everyday marketers are not technologists. So, the problem is keeping track of the actual performance of the digital asset, which can be very tricky and it has left a door open for bad actors to say, ‘Hey, those people are paying every single time their ad is clicked on. Let’s publish their ad and click on it a bunch of times.‘ This tiny idea turned into widespread digital fraud. Ever since, it has grown to now where there are a hundred different ways a bad actor can make money in digital advertising.

EQ: Who are the bad actors and, in addition to the obvious financial motivations, why are they doing this?

William: They can be malicious publishers or they can be competitors who click on your ads to drive up your ad revenue, eating into your budget. There are some people, as the saying goes, who just want to watch the world burn. Some people will just click on things to be annoying. The bottom line is that there are those who have figured out how to manipulate the digital advertising system to make money illegally.

With that in mind, the cheapest way to exploit anything online is to use an automated program; or what we call a bot. Basically, it’s just a program that’s constantly running and designed to do things like find ads and click on them or find forms and fill them out. Anyone who has ever run a website knows that they receive a ton of spam comments and logins or registrations. They understand that level of bot and that sort of problem. However, they don’t think about the fact that bots also attack their ads. You can think of that spam as training for more sophisticated bot activity.

In our studies, we have seen digital ad loss rates as high as 90% for some sites. Not every company has results that bad, but staying on top of the fraud can be very difficult to do in house, which is why most companies outsource and hire a service like ours. Furthermore, malicious actors are selling tools to help people circumvent the protection that advertisers use to protect their assets. This is what advertisers are up against. There is an industry built to do nothing but drain advertising dollars.

EQ: As you mentioned, the level of sophistication of the bad actors has greatly increased. In many cases, they’re outpacing the standard technology available to combat these issues. What can Oxford Biochronometrics do to detect fake traffic?

William: This is where our background as a cybersecurity company is especially helpful. We use none of the standard detection tools that most marketing and advertising solutions deploy. I’m a marketer by trade. So, I know most detection tools are built from a marketer’s mindset. Typically, in marketing, you have a list of IP addresses that you think are residential, so you white-list them, black list others. But, suddenly, those “good” addresses can hit your servers 10,000 times in under a minute, which clearly means a bot has hijacked it. So that list of good and bad IP addresses you had, all of which are based on past performance, is useless now because bot programmers are smart and rapidly change their IP addresses. At Oxford BioChronometrics, we are not looking at IP addresses, but rather we are watching how attackers behave and considering their signs of life.

We’re looking at how that thing knocking on your digital door is actually behaving. Is it what it claims to be? Because we look at it from a security point of view, we are able to look behind their mask to see if that digital actor is pretending to be something it’s not. For example, we might notice that its computing power is too powerful for a simple mobile phone, or that so many of these people are coincidentally using an outdated version of Chrome. There are hundreds of things we look at. We take an entirely different approach to our analysis based on cybersecurity rather than marketing tools.

EQ: Are marketers and advertisers beginning to catch on to these types of fraudulent practices? Are they recognizing the need for services such as yours, specifically the traffic analytics and anti-fraud services?

William: I think anyone who is mindful of their budget is aware of the need for tools like ours. There are a small handful of companies out there that are really spreading the word about digital ad fraud because the truth is that it is a problem that can be solved. However, I also see this as a generational difficulty. For example, if you’ve got an low-level, but digitally savvy employee going to the boss with an idea like anti-fraud detection technology, will they get the attention warranted? It might be a tough sell.

We see companies every day that are realizing they need improved returns on their digital advertising, and an important step to do that is to detect all the fraudulent activity. Often, when they hit that point of frustration, and they need to generate better performance with less resources, that is when they start to find services like ours.

EQ: For anybody who wants to learn more about this issue and find out more about your services, where can they go to follow up on this information?

William: We have our research and an overview of what is available on our website (https://oxford-biochron.com/). On our website, we include third-party studies that do an excellent job at showcasing what a challenge this industry is facing.