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article imageRubicon Project issues IPO amid questions on programmatic fraud

By Michael Krebs     Apr 7, 2014 in Business
Advertising automation firm, Rubicon Project, successfully launched an IPO last week, but the company's impact on the advertising business is riddled with questions.
Rubicon Project, one of the leading advertising automation companies, went public last Wednesday – its stock leaping 36 percent by mid-afternoon.
Advertising automation, also known as programmatic and as real-time bidding (RTB), is not understood by most marketers, as Ad Age reported. However, its impact on marketers – from an efficiency point of view – is very much in question.
Programmatic digital media buying, a perceived solution embraced by all advertising agency holding companies, is delivering an alarming percentage – at least 36 percent, as detailed by the Wall Street Journal – in fraudulent ad traffic. Specifically, automated ad buys are delivering ad unit impressions to rogue software bots that are mimicking real human audiences. These bots are developed by cyber criminals, who are syphoning ad impressions – and dollars – at staggering rates and are upending the digital media landscape in the process.
The high rate of fake internet traffic is causing a crisis among ad agency executives desperate for better efficiencies through automation.
“When you bundle bots, clicks fraud, viewablity and the lack of transparency [in automated ad buying], the total digital-media value equation is being questioned and totally challenged,” Bob Liodice, chief executive of the Association of National Advertisers told WSJ.
In the backdrop of all of this, Rubicon Project’s CEO Frank Addante attempted to play down the matter in a separate conversation with the Wall Street Journal.
“Fraud is less of an issue for us than for others,” Addante said.
Many questions remain, however, on the winners in the automation game. Investors clearly see value, as demonstrated in the run-up witnessed in the Rubicon Project IPO. Agency holding companies see RTB products as a cornerstone answer for digital media buying efficiency.
But marketers have the most to lose, and as they become more familiar with the pitfalls associated with fraud and viewability deficits, the future of real-time bidding platforms may very much be in question.
For more information on this topic, please listen to the podcast that parallels this article.
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