Blockchain use in preventing digital ad fraud and fake news

July 26, 2018
Chris Wheal

Digital advertising fraud is on the rise, costing industry billions of dollars a year, but blockchain technology may now be able to provide the answer for frustrated ad executives.

Advertising fraud loses the industry billions of dollars a year

Authorities are now beginning to take a serious stance on the spread of disinformation on the internet – including advertising fraud and fake news. The good news is, blockchain is widely seen as a tool that could help in both areas.

But first we need to understand the problem. Let’s look at how the fraudsters get away with it, and some of the statistics involved.

Advertising fraud

Advertising is a multi-billion dollar industry that has traditionally been linked with the information media. Newspapers, magazines, radio and television have been the dominant media carrying commercial advertising, but posterboards and street furniture have played their part too.

Given the rise of the personal computer, tablets and smartphones, however, total spending on digital advertising in the US overtook spending on television ads for the first time in 2017, with 37% of the total spend on digital compared with 35.8% for TV.

At current growth rates, by 2020 spending on digital advertising will account for 45% of the total spend compared with 33% on TV.

Furthermore, Cisco estimates that by 2021 four-fifths of all consumer internet traffic will be from video content. This is manna from heaven for the fraudsters.

Here’s what they do: using bots and malware, the fraudsters manipulate online video views. Advertisers pay internet media companies to play their ads among popular content that is getting strong numbers of page views and shares and growing organically as more and more people enjoy it.

Advertisers rely on strong hit and share rates to ensure their message is getting to their target audiences, while advertising sellers rely on accurate data for page hit rates to satisfy the customer and ensure their payment.

Fraudulent operators, however, put the ads among lower-quality content that has been spiced up with fake views data created by the bots and malware. These trick network algorithms into showing the content to more people.

“With an ever-growing pool of content being produced every day it’s getting much harder to get noticed,” says Adam Simmons, co-founder of Verasity, which has a blockchain application that could help.

Some statistics

The ad fraud bot “Chameleon” cost advertisers more than $6m a month in 2016, while marketers lost $7.2bn to digital ad fraudsters in the same year. AdAge estimated in 2015 that for every $3 spent on digital ads, fraud takes $1. And these figures are only expected to have risen.

Blockchain use case for ad fraud

So how can advertisers be sure a real person is seeing its content and not a bot, or that the view statistics it receives are not spiced up by malware?

Verasity’s “proof of view” (POV) protocol could be one solution, the company believes. POV analyses more than 14 different interactions to ensure audience metrics are accurate – only real views from someone who’s actually watching content will get validated, the company says. Block creators earn Verasity’s cryptocurrency, called vera, for watching adverts.

“This means content can now be surfaced based on its value to each individual viewer and not through fraudulent manipulation,” says Simmons. “Once a view’s been confirmed as legitimate, it can be anonymised and then added to the blockchain where it can be seen by everyone.”

He concludes: “Not only will advertisers know that their advertising impressions have been seen by real people, they’ll also have full accountability of their campaigns thanks to the power of blockchain technology.”

Fake news

The way producers of fake news monetise their efforts is by attracting advertisers to their websites – often using similar technologies to the ones described above to generate thousands of fake views in order to convince advertisers their message will be seen by a multitude of people.

President Trump has been outraged by fake news since the start of his term in office

Publishers generate revenues by placing ads on their site, which they get paid for each time the content is clicked on.

“The business model of fake news thrives on the demand for it,” says Aisha Salaudeen of Stears Business, citing the 2017 fake news of the death of President Muhammadu Osinbajo of Nigeria while on a medical trip to London.

“Numerous Nigerian news outlets scooped out the information without investigation to increase their website traffic, gathering views that lead to ad revenues.”

In a recent paper, the European Union addressed the problem saying that the ultimate goal should be the creation of an “open market for fact-checking that avoids a ‘monopoly of truth’ which could be potentially abused in some countries”.

Blockchain use case for fake news

The EU is explicit in the need to keep developing new technologies in the fight against fake news.

Blockchain technology, it says in paper published in April, is one of the “emerging technologies which are changing the way information is produced and disseminated, and have the potential to play a central role in tackling disinformation over the longer term”.

Its use case could be very simple: before a story can be published on any website describing itself as a news or information provider, it must first be verified.

If the stories produced are fed first into a network of blockchain-enabled verifiers who check facts in the story before publishing, the problem could be – if not eliminated (everyone makes mistakes) – then at least much reduced.

Userfeeds is a start-up and one of its aims is to reduce the amount of fake news disseminated on social media sites.

“Using bitcoin and ethereum, they are trying to create transparency in content network algorithms,” says Lovekush Sain of Oodlestechnologies on Quora.

“They are thinking that they will allow developers, publishers, and users to run ranking to produce search results, recommendation systems, top 10 lists.”

Blockchain can help publishers, developers and advertisers identify the producers of fake news and fake ad views

Such a system would help publishers, developers and advertisers identify the producers of fake news and fake ad views and “improve the organic ranking of people who don’t believe in the likes, votes or links”.

Criticisms and conclusions

Because blockchain has a proven pedigree on verification in cryptocurrency transactions, payments systems and supply-chain documentation, it’s assumed that it will be useful in all types of verification processes.

Verifiers must be rewarded in some way, however, and critics believe that in use cases of blockchain for the processes described above, the rewards would be so insubstantial that the temptation to game the system and fraudulently drive up transactions – a problem similar to that of “double spending” – is inevitable.

Scalability is another likely issue – simply put: are there enough verifiers out there to tackle the content problems of two multibillion-dollar industries?

Indeed, there are some who believe a better solution is to adopt artificial intelligence technology. Machine learning algorithms have been used to identify when bots are being used to generate fake clicks, and it is believed they can eventually produce bots of their own to combat the problem.

Blockchain, however, may be the answer. Verification appears to be its key faculty and if blockchain producers can overcome issues of scalability and ensure the rewards match the work, advertisers’ money will be much better spent and US presidents will no longer be able to blame fake news for their shortcomings.

Post written by Chris Wheal
Chris Wheal is editor of OpenLedger's news and features service. An award-wining business journalists himself, he runs a team of freelance journalists from across the UK and north America.

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