The Dark Side of CTV: How to Protect Your Budget from CTV Fraud

Wasted ad spend, distorted performance metrics, and brand safety risks. Ad fraud has become a significant problem in Connected TV industry.

CTV is a highly fragmented advertising ecosystem with many platforms, devices, and apps. These interact very complexly, making it very attractive for fraudsters. Not all marketers and publishers understand complex technical aspects, but we all want to have maximum effect with minimal spending.

As the CTV market shows significant growth ( read more about streaming predictions), it continues to attract CTV fraudsters. DoubleVerify research shows that 2022 bot-related CTV fraud increased by 69%.

Knowing how not to pay for impressions that never reach the intended audience is crucial. Let's explore this topic in depth.

The meaning of CTV fraud

This term involves deceptive practices that create fake impressions or misrepresent ad delivery on CTV platforms. Bad actors exploit the advertising ecosystem by generating views not seen by actual users, tricking advertisers into paying for fraudulent placements. As a result, the ad budget is wasted, and the performance metrics are mixed up due to fake data.

How CTV fraudsters act. The most known cases

Some cases become iconic (in a negative meaning, of course). Let's examine them to understand where we, as marketers, can be most vulnerable.

StreamScam

In 2020, Oracle identified the StreamScam scheme, one of the most significant CTV ad fraud operations ever discovered. It involved over 28,000 fake websites and mobile apps designed to create fraudulent ad impressions. StreamScam targeted CTV's rapid market growth, potentially costing advertisers billions of dollars in wasted ad spend. The scheme worked by faking ad delivery across fake or low-quality inventory, causing inflated impression counts and skewed performance metrics.

diCaprio Scheme

In 2021, Pixalate uncovered the diCaprio scheme, explicitly targeting the Grindr mobile app. Fake apps and domains were created to impersonate Grindr, deceiving advertisers into purchasing non-existent ad inventory. As a result - advertisers wasted budgets on false impressions.

Monarch fraud scheme

Monarch exploited a combination of server-side ad insertion (SSAI) and client-side ad insertion (CSAI), which was also uncovered in 2021. Monarch tricked advertisers into buying invalid ad inventory on CTV and over-the-top (OTT) platforms by manipulating the ad insertion process within streaming content.

ParrotTerra

ParrotTerra operates by setting up counterfeit SSAI servers that produce fraudulent ad impressions across numerous apps, devices, and IP addresses. This method allows the simulation of legitimate ad traffic, misleading advertisers into believing they are reaching real audiences. For publishers, this costs $144 million annually.

CycloneBot

CycloneBot has become one of the largest in whole TV history. It was discovered by DoubleVerify and Roku and cost advertisers $7.5 million per month. CycloneBot can generate around 250 million fake ad requests daily by mimicking extended viewing sessions, making it harder for detection systems to identify fraudulent activity

MFA apps

MFA (Made for Advertising) apps in CTV are a growing source of ad fraud, wasting advertiser budgets by running ads in non-compliant formats. Pixalate’s research revealed that MFA apps made up 2% of CTV apps and 1% of global CTV ad spend in Q2 2024, contributing to $58 million in wasted ad spend. With high rates of invalid traffic (IVT) and app spoofing across major platforms like Roku and Amazon Fire TV, advertisers need to be cautious about fraud risks in the CTV ecosystem.

How CTV fraud impacts metrics and ad campaigns

Let's look closer at what may happen if faced with fraud.

• They waste ad spend. It's all about money. Fraudulent impressions mean advertisers pay for ad placements that never reach real viewers, leading to significant financial waste.
• They inflate Impressions. Bot-driven impressions distort performance metrics, making it seem like ads are reaching more people than they are.
• They lead you to the wrong strategy. Inaccurate campaign performance data causes misinformed strategic decisions.
• They impact your brand's reputatoin. Your ad can be shown as questionable and low-quality, damaging a brand's reputation and eroding consumer trust. You think your campaign is running on a reputable streaming platform like Hulu, but it appears on some scam websites.
• They negatively impact conversion rates All these fake impressions do not lead to real user actions, such as clicks or purchases for example. As a result, advertisers may not see the expected ROI.

How to prevent CTV ad fraud

Now that we know why it's better to avoid CTV fraud, it's time to gain some insights into how to escape it. First, there is no 100% foolproof way to prevent fraud. To protect from ad fraud, advertisers must adopt a proactive, multi-layered approach:

Forge trusted relationships. Most fraud comes from unscrupulous middlemen in the ad tech supply chain. Build direct relationships with trusted publishers and transact through Private Marketplaces, Programmatic Guaranteed deals, or direct insertion orders to drastically limit exposure. While these methods may cost more than open auctions, they can help avoid wasting money on fraudulent activity.

Trust price intuition. Be cautious if premium publishers offer inventory at prices far below market rate. Unbelievably low prices in open auctions are likely too good to be true.

Leverage ad verification services. When buying in the open market, partner with independent verification companies like DoubleVerify to analyze traffic and identify fraudulent activity.

Use advanced fraud modeling. Implement statistical modeling to detect sophisticated invalid traffic (SIVT) and validate that served impressions match actual views.

Monitor in real-time. Continuously track ad campaigns to spot abnormal patterns, such as impressions occurring at odd hours or appearing on unusual devices.

Employ holistic fraud protection. Combine direct publisher relationships with advanced technologies and machine learning to validate supply paths from middlemen in the open market.

Demand data transparency and analysis. Insist on transparency from ad partners and understand how they detect and block fraudulent activity.

Ads working and goals being achieved are the backbone of successful ad campaigns. At the same time, bad actors continue inventing new and more sophisticated schemes that can hurt the brand reputation and cause budget loss, so advertisers must demand transparency, use robust verification tools, and continuously monitor their campaigns to detect any unusual activity.

Fraud detection is one of five fundamental advertiser rights to CTV ad buying — to learn the others, read our The Advertiser's Bill of Rights: Fostering CTV Transparency and Trust in Advertising