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Share on XThe IAS Threat Lab evaluates fraud in PMP transactions
Marketers widely believe private marketplaces (PMP) create an environment that is resistant, or even immune, to ad fraud. Given the basis for creating a PMP relationship between trustworthy advertisers and publishers, it seems like this could be the case. Unfortunately, the inherent flaws in programmatic open marketplaces still manage to trickle down to PMP transactions.
What is a PMP?
A private marketplace is a digital marketplace where programmatic advertising transactions can take place between trusted and exclusive parties. Within PMPs, a publisher can invite an advertiser to participate in a private auction that occurs in a Real-Time Bid (RTB) environment. PMPs are essentially a programmatic relationship between a publisher and one or more advertisers, attempting to create a clean and trusted environment for premium ad space to be bought and sold.
PMPs are like a hybrid between traditional direct buying and programmatic. The open-ended nature of the auction is reduced by limiting the crowd of buyers. On the flip side, the benefits of RTB environments are still leveraged in order to facilitate an automated and seamless bidding process.
Why should advertisers use a PMP?
The use of PMPs has advantages and disadvantages. On the upside, advertisers can ensure they are paying for premium inventory on trusted publishers and inventory slots can be hand-picked for maximum consumer impact. Plus, along with the benefits of both programmatic and direct buying, content suitability and viewability metrics are assured to be positive—and fraud avoidance is also a likely result.
On the other hand, participation for advertisers in PMPs comes at a premium price point. PMPs also require significant manual interaction and are more time consuming than an open exchange, and there’s no guarantee of ad relevance or having a captive audience.
The assumption is that PMPs assure that advertisers can purchase premium inventory (albeit at premium costs), have their ads prominently displayed adjacent to appropriate content with positive viewability metrics, and lack typical fraud generating behavior.
Due to the benefits of brands being able to protect their reputations with more meaningful ad placements, PMPs have significantly grown in usage in recent years. This is why it is even more crucial to get to the core of the “fraud-free” assumption and understand what’s really at stake beyond placement.
The truth behind fraud in PMPs
To put it simply, PMPs can’t completely prevent fraud. Having evaluated IAS PMP data since the beginning of 2023, we discovered that PMP fraud occurs about 19% as often as it does on an open exchange, indicating there is truth to a lower volume of fraud comparatively. However, we also noted that the CPMs of fraudulent PMP transactions were consistently about 6% higher than they were for non-fraudulent PMP transactions.
While there’s certainly something to be said about a reduced fraud rate in PMPs, fraud actors are clearly aiming for higher CPMs with specific targeting of PMP transactions.
How could this be the case? Unsurprisingly, it all comes back to the thorn in every advertiser’s side: Bots. While the relationship between the advertiser and publisher may be trusted, this still does not prevent bots from eating up impressions by “visiting” any given domain. Plus, even trusted publishers may source traffic — and if that source hasn’t been fully vetted, it’s highly likely to contain fraudulent traffic. And a universal truth is that benign bots (or general invalid traffic) are mostly welcomed for services like SEO and indexing, which creates a significant volume of invalid impressions in PMPs, leading to direct losses for advertisers who participate in PMPs as a substitute for ad verification.
In addition to the significant portion of general invalid traffic in PMPs, we also noted a wide array of sophisticated invalid traffic, like user-agent spoofing, device spoofing, geo spoofing, and anomalous behavioral deviation.
By correlating these factors, we were also able to identify likely cohesive botnet traffic, indicating concerted efforts of fraud.
What can you do to avoid PMP fraud?
That’s where IAS can help. Our unique three-pillar approach uses machine learning and unmatched scale to provide the most accurate detection and prevention while most solutions rely on a simple automated check. The industry-leading fraud detection technologies offered by IAS continue to attract significant investment from marketers.
IAS captures up to 280 billion interactions daily from around the world, and trillions of data events are measured each month globally. We provide real-time fraud prevention for programmatic buys with pre-bid targeting segments that leverage MRC-accredited fraud technology. To learn more about our fraud prevention solutions, contact your IAS representative.
