Advertisers will lose more than $65 billion to ad fraud in 2024, according to experts at Business of Apps. We’re talking about fake clicks, app installs and video views. But fraudsters are going even further, creating fake websites that mimic the real thing to attract ad budgets. In addition to, advertisers, publishers, and consumers all lose.
The problem of advertising fraud is not static: it is predicted that by 2030, losses from ad fraud in the U.S. alone could exceed $20 billion unless effective measures are taken to combat the threat. Growth areas are opening up through the increase in malvertising and the rise of cryptocurrency investment fraud. Thus, CIOs are faced with the daunting task of how to protect their advertising investments. However, there is a way to minimize losses. The solution is Supply Path Optimization (SPO). For those looking for a quick fix, our independent consultants at SmartyAds offer an expert article on this topic (https://smartyads.com/blog/understanding-supply-path-optimization). And for those who prefer to delve into the details, below we explain how SPO works and how it helps reduce the risk of fraud. By reading this article to the end, you will learn about the benefits and strategies of ad chain optimization that will help you improve the effectiveness of your campaigns.
What is Supply Path Optimization?
SPO sells ad space to multiple buyers on real-time ad exchanges. Logistically, SPO’s technology finds the most direct and cost-effective routes to buy digital advertising inventory among many publisher offers. The effect is achieved by eliminating unreliable intermediaries from the chain. This approach benefits two strategic positions:
- Supply Path Optimization reduces the number of requests for unselective bidding in favor of the most informed buying decisions. Advertisers get the most effective platforms for their messages, while supply-side platforms (SSPs) retain high revenues.
- SPO also plays a key role in combating fraud through supply chain transparency. This technology enables transparent tracking and control of every step of the ad buying process — from the demand-side platform (DSP) that manages ad buying to the supply-side platform (SSP) where publishers bid for their ad inventory.
Fraudsters are developing increasingly sophisticated schemes to defraud advertisers, such as auction manipulation and fake ad inventory. Major industry players, including the Interactive Advertising Bureau (IAB), are advocating SPOs as a means to effectively combat ad fraud. The effectiveness lies in improving the quality of the data on which decisions are made. The point is that SPOs significantly improve data collection and analysis, which helps to detect anomalies characteristic of ad performance manipulation at the stage of ad inventory selection.
Examples of Supply-Side Platform (SSP) effectiveness:
- Disney. As a result of using an SSP, Disney saw a 20% increase in ad revenue and a 15% improvement in occupancy.
- Amazon reported a 25% increase in ad revenue and a 10% reduction in unsold inventory after implementing an SSP.
- Netflix saw a 30% increase in occupancy and a 20% increase in ad revenue after using SSP.
In the experience of SmartyAds’ digital security experts, SPO also has already proven effective in the fight against fraud, helping companies reduce losses by 30%.
Incorporating SPOs into Your Advertising Strategy
From theory to practice. It all starts with analyzing and evaluating your current advertising pathways. It’s about identifying supply chain participants such as ad networks, exchanges, and platforms — all of which should be monitored to ensure they are identified as intermediaries and effective in delivering ad inventory. Ad load rates and transparency levels are considered indicators of effectiveness. Numbers also matter: each ad channel is compared for the value and revenue it generates. The goal of quality and quantity monitoring is to identify bottlenecks that undermine the effectiveness of current channels. The resulting data helps you make informed decisions about which channels to keep and which to eliminate.
Identifying problematic ads’ delivery platforms in the previous step will help you select new ad delivery channels in the next one — it’s all about how to select and customize SPO solutions. Here are some steps to help you through the process:
- Define goals: These can include reducing costs, increasing visibility, increasing revenue, improving inventory quality, and optimizing performance.
- Select an SPO platform: Your criteria should include functionality, compatibility with your current systems, and reviews and feedback from previous userоs.
- Integration and customization: Aspects such as parameters and algorithms are important at this stage — this includes rules for inventory selection and prioritization for different partners that you have defined during the monitoring phase of your current ad networks.
- Test and validate: Start with small amounts of data. This should convince you that the settings are correct and effective. The goal is to identify and fix any potential problems before a full-scale implementation.
The four previous steps are accompanied by training the team to understand the functionality of the new SPO system, obtain analytical tools, and interpret the data obtained. Intelligent monitoring and reporting systems of such systems constantly track the performance and efficiency of advertising campaigns. SPO platforms such as SmartyAds offer 24/7 technical support, which is important for timely resolution of issues arise.
The monitoring and optimization phase is the icing on the cake. Firstly, the KPIs of the advertising campaigns within the new SPO system are significant. Metrics for evaluation: CTR (click-through rate), CPA (cost per acquisition), ROI (return on investment) and others. Here is a table of approximate KPI metrics for video advertising that will help you evaluate its success:
| Metric | Description | Values |
| CTR | Percentage of clicks on the ad. | 1% – 2% |
| VTR | Percentage of video completions. | 70% – 80% |
| CPV | Cost per video view. | $0.01 – $0.03 |
| CPA | Cost per customer acquisition. | $10 – $30 |
| ROI | Return on investment. | 200% – 300% |
By regularly monitoring and analyzing your data against industry benchmarks, you can optimize your campaigns to change budgets, adjust targeting, test new creative, and more.
Conclusion
Ad fraud is a serious threat to advertising budgets. Understanding Supply Path Optimization can protect your advertising investment from fraudsters. But that’s not all: by reducing reliance on intermediaries and increasing transparency, SPO enables more informed spending and more predictable returns. In a rapidly changing digital landscape, adopting SPO puts you in a strategic position to build the trust between you and your partners that is essential for long-term success. This approach also provides a competitive advantage — the ability to adapt quickly to change for better results.
