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Tag Archives: Digital Advertisement

Digital Advertisement Frauds: A Telco Story (Part 2/3)

This is the 2nd part of the 3 part blog series and covers how the digital advertisement ecosystem works along with understanding how big is the problem of fraud in that ecosystem.

This 3 part blog series puts a light on relevance of Digital Advertisements in telecom space along with providing a high level understanding of it’s ecosystem and fraud risks it injects. Idea is to give readers a basic knowledge of the digital advertisement space and the inherent risks.

The 1st part of this blog series was published on Jan 21, 2016 and you can read the same here.


Part 2 – Digital Advertisement Ecosystem & the problem of fraud

Advertisement Ecosystem is divided into 9 major components, as shown in the image below:

1. Advertiser:

Advertisers are ‘Brands’. Brands which are the source of promotions for a specific product, service etc. This is the entry point of money into the ecosystem – A demand feeder.

2. Ad Agency:

Ad Agencies are the entities who plans marketing & ad campaigns on behalf of the advertiser. They are, generally, also the ad creators, or outsource the creative bit to a media agency.

Ad Agency designs the ad strategy and works with publishers, ad networks and other industry participants making the demand meet the rest of the ecosystem.

3. DSP:

Demand side platform. These are the demand side aggregation platform solution providers. They may be part of an Ad Exchange or maybe separate entities. They allow buyers of digital advertising inventory to manage multiple ad exchange and data exchange accounts through single interface.

4. Ad Exchange:

Like the stock exchanges we all are aware of, Ad Exchanges act as a advertisement digital marketplace that enables advertisers and publishers to buy and sell advertising space, often through real-time auctions/bidding.

These are the points where the demand side generally meets the supply side.

5. SSP:

Similar to DSP, the Supply Side Platform are the aggregation platform solution providers at the supply side who enable publishers to manage their advertising impression inventory and maximize revenue from digital media.

6. Ad Network:

The Googles and InMobis of the world, Ad Networks connects advertisers to web sites that want to host advertisements. The key function of an ad network is aggregation of ad space supply from publishers and matching it with advertiser demand.

The Ad Networks are commonly known to manage most of the data exchange in the ecosystem, while earning most of the revenues.

7. Publisher:

The ad space owner. This is an entity which owns the medium (website, app, content service etc.) to deliver ads to intended end consumers/ad viewers. Commonly known as the consumer touch point.

More touch points, better touch points, better the ranking of the publisher.

8. Consumer:

The ad consumers. Customers. Us. The target entity for the whole Ad Ecosystem.

9. Data Aggregators:

The data crunchers of the ecosystem, Data Aggregators serve as the independent measurement entities for the other players in the ecosystem. Aggregators collect and compile data from individual sites to derive big picture and sell to others.

 

The Payout Models

There are 3 main payout models in the advertisement ecosystem:

1. Pay Per Click:

Pay per click, also called cost per click (CPC), is a payout model in which advertisers or ad network pays the publisher when the ad is clicked by the consumer. It is defined simply as the amount spent to get an advertisement clicked.

2. Pay Per Impression:

Pay per impression (CPI), or “pay per thousand impressions” (CPM), refers to the payout model where advertisers or ad networks pays a publisher each time an ad is displayed on its inventory. CPI is the cost or expense incurred for each potential consumer who views the advertisement, while CPM refers to the cost or expense incurred for every thousand potential consumers who view the advertisement(s).

3. Pay By Lead:

Cost per Lead (CPL), also known as cost per conversion, is a payout model where the advertiser pays for each specified action which the advertiser can consider as a business ‘lead’ with verified interest – for example, a form submit (e.g., contact request, newsletter sign up, registration etc.), feedback, double opt-in, sale etc.

The influencer of each payout model, which governs the actual payout while governing the quality rating of a publisher, is CTR (Click Through Rate).

Click through rate is defined as the rate of consumer taking the intended action – click, form fill, registration etc. over the advertisements being displayed to him.

In simple terms, higher the CTR of a publisher, higher is its quality rating. This when mixed with volume of ad traffic, directly influences the revenue for a publisher.

CTR also helps gauge the quality of ads itself – in terms of its creativity, contextuality & relevancy.

 

Role of a Telco

While traditionally Telcos have been playing a role of an advertiser, they have been slowing growing as publishers too, utilizing their web portal space for the purpose.

But, as I wrote in the first part of this blog series, Telcos are now riding on a significant ‘ad capable’ inventory being generated by their next generation product & services, specially content related.

This significant inventory at their disposal has a capability of turning Telcos into a small or mid sized Ad Network, while setting up advertisements as one of the key revenue source or service adoption enabler over the coming years.

Fraud Risk Levels in Advertisement Ecosystem

Before we move to the 3rd part in this blog series, let’s look at the existing fraud levels in the Advertisement Ecosystem.

Let me tell you, if you are all concerned about the 1-3% fraud loss levels against traditional telecom services, the fraud levels in the advertisement domain is going to give you sleepless nights.

To give you an example, one study by MediaPost reveals that, if a company has an online display ad budget of $100,000, then only $8,000 of that ad spend has the “chance” to put advertisements in front of human eyeballs.

That means, if you are paying $0.10 per impression, then the $10,000 that you will pay for 100,000 impressions will result in “chance” of only 8,000 human views—meaning that the effective Cost per Impression will actually be $1.25.

Pushes an organization’s ad investments of the track completely, isn’t it ?

Below are some industry statistics around existing levels of advertisement frauds published by the likes of SunTrust Robinson Humphreys, Ad-fraud prevention firm Pixalate & Forensiq:

Now, if a Telco’s Fraud Management team were to analyse frauds in the digital advertising domain, it will need to focus on 3 different areas:

  • Safeguarding your organization’s marketing investments & sales targets: It is more relevant when you see the Telco you are working for, as an advertiser or a brand.
  • Protecting the revenues from AD business & also safeguarding your publisher rating: This is relevant when a Telco acts as a Publisher or an Ad Network
  • Lastly, your own subscriber’s satisfaction & security levels: Now, this one is a bit confusing. But, to understand how advertisement frauds affect Telco’s end subscribers directly, let’s watch a short video courtesy Forensiq:

 

As shown in this interesting video by Forensiq, advertisement frauds not only impacts a Telco’s investments and expected revenues, but also influences customer satisfaction directly.

Recently Three, a leading telecom operator from the UK & Italy, decided to install network level ad-block solution with the below mentioned intent:

“Irrelevant and excessive mobile ads annoy customers and affect their overall network experience. We don’t believe customers should have to pay for data usage driven by mobile ads. The industry has to work together to give customers mobile ads they want and benefit from.”

If Three are successful, I can only imagine similar actions becoming widespread over the coming years or the sane players of the advertisement ecosystem gearing up to counter the problem of fraud like never before.

Clearly, there are two sides of the coin – while advertisements open up new exciting revenue avenues for Telcos, the fraud problem in the ecosystem is so widespread that it has potential to disrupt the whole revenue model built upon it.

In the next part of the blog, we will cover the most interesting bit and understand the presence of digital advertisement fraud risks in the ecosystem along with looking at a few case studies. You will not have to wait far too long, that I promise!

Abhijeet Singh

Abhijeet is currently working as Principal Consultant with Subex.

He specializes in Telecom Fraud Management and his 360 degree experience in this field includes extensive exposure in Fraud Operations Management, Consulting & Advisory, Risk & Health Assessments, Business Development – Product & Managed Services and Analytics.

Out of professional life, he is a blogger, tech enthusiast and a traveler.

Digital Advertisement Frauds: A Telco Story (Part 1/3)

Look around you and you see posters, hoardings & stand-ins. Look at whatever screen you carry or face and you will see videos, popups & banners. These are “Advertisements” and they are everywhere!

I will not be going overboard when I say advertisements are the fulcrum of relationship between every business and its consumers. Organizations put significant investments into their marketing functions which in turn enables advertisements.

While earlier advertisements were statics in nature – channel run time, physical hoardings etc., they were easy to track to ensure the investments are protected. But, with the advertisements becoming digital, increasingly dynamic & internet driven – There has been an increasing need for measuring & protecting the advertiser’s or brand’s money and even the publisher’s real estate which is used for ad delivery & consumption.

Like it or not – In Telecom space, Digital Advertisements are coming to steal sleep off every fraud manager’s eyes.

From the risk perspective, the domain is complex and different from the traditional Telecom frauds, but the most important point is that advertisements from the internet space bring fraud exposure levels which are much higher than what Telco’s are used to. And containing that, will be a real challenge!

This 3 part blog will put a light on relevance of Digital Advertisements in telecom space along with providing a high level understanding of it’s ecosystem and fraud risks it injects. Idea is to give readers a basic knowledge of the digital advertisement space and the inherent risks.

This is the 1st part of the 3 part blog and covers why telecom industry is looking at Digital Advertisements as their next enabler. 


Part 1 : Digital Advertisement and Telcos: A match made in heaven

When we think about internet or technology, there are 4 names which cross mind – Google, Apple, Facebook & Amazon.

What the 2 of these 4 giants, Google & Facebook, have taught us that AD revenues are a big deal when it comes to the digital world. With Apple & Amazon also planning to jump the advertisement bandwagon, the belief only gets stronger.

No surprise that Google & Facebook earn 90% of their revenues from advertisements. Also, most of the Apps, specially communication apps also have advertisements at the centre of their revenue model.

Considering this, it was just a matter of time our own Telecom industry shifts its focus on exploring the digital advertisements as one of their primary source of revenue.

The likes of Verizons, Axiatas & Singtels have already invested big in the area of advertisements.

Also, some other leading operators like Vodafone, Telefonica, Etisalat and France Telecom have also openly agreed for a bright future of advertisements in telecom industry.

Digital advertisements: Attracting attention within Telcos

If you look at telecom industry as an advertiser, you will find telcos spending 10-15% of their total yearly revenues as marketing budget, out of which 46% is only on digital advertising like website banner ads, video ads etc.

That is quite higher than any other comparable industry sector.

And if we believe certain studies conducted by industry experts like Adobe, spend on advertisements is only set to grow:

It only shows that telco industry agrees that this spending will only increase with mobile advertisements leading the pack.

What will drive this spending on Advertisements further ?

Now lets look at what are the factors which are going to drive the investments in the area of advertisements further.

If you look at the areas marked in yellow in the chart below, you will find that digital Advertisements are among the fastest growing revenue streams for Telecom Industry.

And, if you look at the elements which are marked with red circles, you will see a list of services on which telcos are currently betting big on.

These services, which include M2M, Gaming, Music, Video etc., interestingly are set to become the “enabler platforms” to drive advertising revenues further.

And not only that, these services also ensure that Telcos have sufficient advertisement inventory for them to upgrade from just an advertiser to become a big ticket publisher or a small AD Network.

This is the reason why you will find that these services have “Ad Delivery” inbuilt as a core functionality within their framework.

Digital Advertisements are key to make upcoming & exiting product & services more affordable to a Telco’s subscriber base and in turn boost adoption

Apart from this, we all are aware that content services are set to become a big ticket to monetize the large investments Telcos have been making towards infrastructure & quality of data services.

There are researches from the likes of eMarketer which indicate that content is set to make up 66% of the total traffic in Telco data pipes by the year 2017.

Driving on content services, advertisements are set to attract 100 billion dollars in next 1 year and an increase of 233% increase mobile ad spending in next couple of years.

Now, there is little doubt that advertisements are set to become one of the major source of revenues for Telcos or power that next big idea which will be a star of their upcoming annual report!


In the next part of the blog, we will understand how the digital advertisement ecosystem works along with understanding how big is the problem of fraud in that ecosystem. You will not have to wait far too long, that I promise! 

Abhijeet Singh

Abhijeet is currently working as Principal Consultant with Subex.

He specializes in Telecom Fraud Management and his 360 degree experience in this field includes extensive exposure in Fraud Operations Management, Consulting & Advisory, Risk & Health Assessments, Business Development – Product & Managed Services and Analytics.

Out of professional life, he is a blogger, tech enthusiast and a traveler.

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