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Fraudlogix Blog

The Biggest Ad Fraud Schemes and Ad Tech Stories of 2018

Posted by Fraudlogix on Dec 19, 2018 12:02:45 PM

From GDPR to ad fraud arrests, 2018 has been an interesting year of ups and downs for the ad tech industry. Here's some of the biggest ad fraud schemes and ad tech stories - along with a collection of company exits and acquisitions from the past year: 

January

Fetch calls Uber's bluff, files counter claim

Starting off the year with a lawsuit, Fetch filed a counter claim against Uber. The ad tech company said it wanted a federal court to hear its challenge to Uber's 2017 claims of mobile click fraud. The American arm of the UK-based ad firm filed a complaint seeking to have a federal court hear its challenge to the suit Uber filed in September of 2017 over the handling of fraudulent ad clicks. (The Register)

Google Chrome extensions found to be harboring ad-fraud malware  

In one of the first ad fraud schemes to hit the media headlines in 2018, security researchers at ICEBRG discovered four Google Chrome extensions that were harboring malware. The extensions were being used as part a click-fraud scheme and had been downloaded more than 500,000 times, effectively creating a botnet for cyber criminals. (The Inquirer)

Mergers/Acquisitions:

InMobi acquires AerServ for $90 million

Mobile ad network InMobi paid $90 million for mobile video monetization platform AerServ in a bid to build a header bidding solution for apps. (AdExchanger)

February

Newsweek caught up in ad fraud scheme

February kicked off with Newsweek in the ad fraud headlines after a report was released by SocialPuncher detailing the fraudulent traffic practices of the media company’s publisher, International Business Times (IBT). What followed was a very public ad tech backlash as programmatic platforms backed away from the news organization. Newsweek Media Group fired two employees in March, but ad tech companies continued to distance themselves. (BuzzFeed News)

New York Times exposes "Follower Factory"

In an in-depth piece, the New York times exposed bot-driven activity within the social-media/influencer-marketing channel. The story details a company named Devumi, which was paid by numerous "influencers", including celebrities, sports stars, and many public personalities, to boost followers and engagement in social media. (The New York Times)

March

Ads.txt enforcement grows

Although ads.txt was introduced in 2017, adoption was slow. Q1 of 2018, however, saw implementation grow and several ad tech companies, including AppNexus and OpenX, begin to enforce the anti-domain-spoofing initiative by blocking ad transactions from non-authorized sellers. (eMarketer)

April

Feds attend ad tech conference to speak about the future of ad fraud and crime

Perhaps a foreshadowing of the largest FBI investigation into ad fraud to date, which would be revealed later on in the year, a member of the Justice Department's criminal division and a special agent with the FBI attended Rubicon Project's digital advertising conference, Executive Exchange, in April to speak about the future of ad fraud and crime. The special agent spoke about how ad fraud represents a new world of crime for publishers and consumers. (Axios)

Amazon advertising worth $2 billion

Amazon announced its Q1 earnings and revealed that its “other” revenue stream, which primarily includes sales of advertising services, grew 132 percent year over year to reach $2 billion. For the ad tech industry, this signified a growing challenger to Google and Facebook. (Digiday)

Mergers and Acquisitions

 Oracle Data Cloud buys Grapeshot

Oracle acquired the UK-based contextual targeting company, Grapeshot, in what was described as a move to strengthen Oracle’s brand safety service. (AdExchanger)

IAB Tech Lab acquires DigiTrust

The IAB Tech Lab, the research and development arm affiliated with the trade group, acquired the nonprofit online identity consortium, DigiTrust. (AdExchanger)

May

GDPR launches

May 25 marked the day GDPR took effect, which was preceded by months of ad tech companies and publishers updating their privacy policies and scrambling to become compliant. (Digiday)

Videology files bankruptcy, Amobee named as lead bidder

Videology filed for chapter 11 bankruptcy protection in May with a deal to sell its assets for about $45 million. The ad tech company had estimated liabilities of more than $100 million, and the filing lists the company’s assets at $86.5 million. Amobee, the ad tech division of Singtel, was named the lead bidder.  (The Wall Street Journal)

Accenture launches programmatic buying division

Accenture Interactive launched its Programmatic Services practice in May. While the consultancy division had been working with clients for some time to help them move their programmatic digital ad-buying more in-house, the new division incorporates the planning, buying, and management of programmatic ad campaigns. The launch made clear the consultancy industry’s ambitions to move into agency media-buying territory. (The Wall Street Journal)

Mergers and Acquisitions

Drawbridge sells media arm to Gimbal, exits ad tech

Cross-device measurement platform, Drawbridge, sold its U.S. media business to location data platform Gimbal, shut down its self-serve ad platform and got out of the advertising sector. The looming May 25 GDPR deadline was partly to blame for the company’s strategic move out of the ad data sector. (AdExchanger)

June

Defy Media stops paying its publishers

Defy Media, creator of video content for young adults, became the latest network to stop payments to small, third-party publishers for ads posted on their sites. This caused several publishers to turn to social media to demand payment. Publishers posted to a Reddit thread with claims that ranged from a few thousand dollars to tens of thousands of dollars. (The Drum)

Programmatic ad spend begins to recover after post-GDPR drop

In the days after GDPR took effect on May 25, programmatic ad buying was down as advertisers were wary about targeting their ads legally and some publishers lacked the technology to secure consent for targeted advertising. A month in, ad spending returned as some of the initial concerns eased, but not quite to the same pre-GDPR levels. (Digiday)

Google kills off DoubleClick, AdWords names in rebranding of ad products

It signaled the end of an ad-tech era when Google announced the sunsetting of the DoubleClick and AdWords names as it rebranded its ad suite into three main pillars: Google Ads, Google Marketing Platform, and Google Ad Manager. (Variety)

Mergers and Acquisitions

AT&T buys AppNexus for $1.6 billion

In what was considered the biggest ad tech acquisition of 2018, and the exit for one of the industry’s largest players, AT&T bought programmatic ad marketplace AppNexus. The deal added programmatic capabilities to AT&T, helping the telecom company to match ads and add analytics to its broad set of inventories. (MarTech)

Verve buys video ad platform Receptiv

Location-based mobile marketing platform Verve acquired Receptiv, a mobile video ad platform. (MediaPost)

Outbrain acquires AdNgin

Native advertising platform Outbrain announced its acquisition of AdNgin, a UI optimization company built to enhance the reader experience. This acquisition was Outbrain’s sixth to date. (Press Release) 

July

California passes new privacy law, raises questions for ad industry

California quietly and quickly passed a sweeping privacy bill, which was signed just one week after being introduced. It’s reminiscent of Europe’s GDPR and gives consumers the right to learn what personal information about them is held by businesses and to opt out of the sale of that information. The bill has a broad definition of personal information and the ad industry is evaluating how it would affect its members. (MediaPost)

Fraudsters use 10,000 hacked WordPress sites and online ad ecosystem to launch massive malvertising campaign 

Security researchers at Check Point reported on the infrastructure and methods of an enormous malvertising and banking trojan campaign that delivered malicious adverts to millions worldwide, spreading assorted malware including crypto-miners, ransomware and banking trojans. The hackers redirected stolen traffic from hacked WordPress sites and sold it to an RTB platform, who then resold to criminals posing as advertisers, who used the ad space to distribute the malicious ads. The infected ads appeared on thousands of sites worldwide. (The Register)

Mergers and Acquisitions

IPG agrees to acquire Acxiom Marketing Solutions business for $2.3 billion

Ad holding company Interpublic Group (IPG)  acquired Acxiom Corp’s Marketing Solutions business for $2.3 billion. The move was thought to strengthen IPG's assets with Acxiom’s large bank of consumer data. (The Wall Street Journal)

MediaMath seals $225m financing for AI ad tech and tactical mergers

In a year when investors increasingly shied away from the ad tech industry, MediaMath announced $225 million in new financing, bringing its total funding to over $607 million. The new financing was to provide the growth capital needed to accelerate the expansion of its DSP and DMP and place the company in a strong position for mergers and acquisitions. (MarketingTech)

Amobee wins bankruptcy auction to take control of Videology assets

Amobee was named the winner of the auction to take control of the assets of Videology with a bid of $117.3 million. Auction competition came from British commercial broadcaster ITV. (The Drum)

August

Index Exchange finds itself in bid caching controversy

The practice of bid caching, where a losing bidder in a programmatic auction holds onto the bid to try to serve an ad on the next piece of content the consumer views, was forced into the spotlight this month. Index Exchange didn’t think it was a problem and had been doing it for over a year, but it caused buyers to take a closer look at RTB auction dynamics and it angered fellow exchanges, who claimed the company was manipulating the auctions to gain an unfair advantage. (AdExchanger)

September

Tiny island atoll’s domain used in widespread ad fraud

Another month, another ad fraud scam, this one involving “.tk” domains - the suffix that's supposed to stand for the tiny Pacific island nation of Tokelau. The scam redirected unsuspecting users to fake blogger sites that were collectively bringing in close to $22,000 per month in advertising revenue. The scam had been active since at least May 2018. (Threat Post)

Brave files adtech complaint against Google

Strategically filed the same week as ad-tech fair DMEXCO, privacy-focused web browser Brave, which was set up by Mozilla co-founder Brendan Eich, filed privacy complaints against Google. The complaints were filed in Britain and Ireland and are thought to be a GDPR test case against Google and other digital advertising firms. (Reuters)

Amazon continues its march into online advertising

eMarketer released its latest ad revenue forecast and placed Amazon in the No. 3 slot among top U.S. digital ad sellers, directly behind Google and Facebook. Amazon is expected to surpass Verizon’s Oath platform and Microsoft for the first time in 2018. (The Wall Street Journal)

Mergers and Acquisitions

Deloitte buys Magnetic Media’s AI platform, bolstering its adtech and martech offerings

In another consultancy company move into the advertising and marketing tech space, Deloitte announced that it was buying Magnetic Media’s artificial intelligence platform.  Deloitte acknowledged the strategic importance of investing in AI, machine learning, and audience data analytics. Magnetic is a privately owned ad tech and targeting company that uses machine learning to optimally target ads to the right audiences. (MarketingTech)

October

Fraudsters masquerade as real DSPs

In the latest scheme, fraudsters pretended to be legitimate DSPs to try and fool partners and blend in with real ad calls as a way to spread malware within ads. (AdExchanger)

Android apps used in multi-million-dollar ad fraud scheme

Not to be left out of the ad fraud headlines, the mobile universe was targeted by fraudsters that bought up legitimate apps and then transformed them into ad-clicking bots, racking up close to $10 million in ad revenue. (TechRadar)

ANA assists in FBI’s investigation into media buying practices, suggests members should cooperate

The Association of National Advertisers (ANA) confirmed that it was assisting the FBI with its investigation into media buying practices. This, after reports surfaced in June that the FBI was contacting people with knowledge of the ad industry. The ANA notified its members and urged them to review their media buying history and contracts. (Campaign Live)

AppNexus co-founder Brian O'Kelley steps down

In what some said was the end of an era, it was announced that Brian O'Kelley, founder and CEO of AppNexus, would step out of that position to shift to an advisory role within AT&T. This after AT&T acquired AppNexus and launched its new advertising and analytics unit, Xandr. (The Wall Street Journal)

Mergers and Acquisitions

DataXu hires bank to explore possible sale

It was reported that DataXu was exploring a potential sale, seeking a $300 million exit. The Boston-based company—which offers software to help marketers use data to target audiences across the web, apps and television—is working with investment bank GCA Advisors LLC on the process. (The Wall Street Journal)

Vista Equity Partners exploring sale of Mediaocean

It was also announced in October that Private equity firm Vista Equity Partners is exploring a sale of Mediaocean with an estimated price of more than $1.5 billion. Vista acquired Mediaocean in August 2015 at a $720 million valuation. (The Wall Street Journal)

November

FBI busts international ad fraud ring, arrests are made

In what could be considered the grand daddy of ad fraud stories of 2018, the US Department of Justice unsealed a 13-count indictment and the names of eight defendants involved in a digital ad fraud scheme. This followed a months-long FBI investigation and collaboration with the ad tech industry. This marks the largest criminal investigation yet into ad fraud and is an indicator that government officials are beginning to pay attention. (US Department of Justice)

Cheetah mobile and another Chinese firm accused of mobile ad download fraud

A mobile ad fraud scheme was also unveiled in November. According to app analytics company Kochava, seven apps owned by Chinese firm Cheetah Mobile are accused of engaging in app-download fraud. An app owned by another Chinese firm called Kika Tech is also similarly accused. (Marketing Land)

AdForm Files IPO

Danish ad tech company Adform filed for an IPO with the Copenhagen Nasdaq exchange, becoming one of the few (if not only) ad tech companies to do so in 2018. The company hopes to raise $115 million in its initial offering. (AdExchanger)

December

Google warns app developers of three malicious SDKs being used for ad fraud; TechCrunch names them

As a result of Google’s ongoing investigation into Cheetah Mobile and Kika Tech apps engaging in ad fraud, it discovered three malicious ad network SDKs that were being used to conduct ad fraud in these apps. The company emailed developers who had these SDKs installed in their apps and demanded their removal. TechCruch identifed the ad networks. (TechCrunch)

Defy Media shuts down, its creators left wondering if they'll ever get paid

Some of the most prominent YouTube creators were blindsided when the Defy Media network shut down. They now wonder if they'll ever be paid the hundreds of thousands of dollars they're owed. (The Verge)

Senator blasts FTC for failing to crack down on Google's ad fraud problems

US Senator Mark Warner blasted the Federal Trade Commission for failing to crack down on Google's lack of effort in reducing ad fraud on its advertising network. He says Google is directly profiting by letting ad fraud run rampant at the expense of the companies who buy or sell ads on its platform. This is not the first time (and probably not the last) that Warner has tried to bring Washington's attention to the ad industry's dark side. (ZDNet)

Verizon kills off the Oath brand

A week after disclosing a $4.6 billion writedown of the value of Oath, Verizon announced plans to sunset the Oath brand name in January 2019, replacing it with Verizon Media Group. Oath debuted in 2017 after Verizon's AOL and Yahoo acquisitions. (ZDNet)

As 2018 ticks down, we look forward to 2019 to see how the ad tech industry will continue to evolve and adapt to new challenges and changing landscapes. To stay updated throughout the year subscribe to our email updates. 

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Topics: Ad Fraud, RTB Corner, Ad Tech