How Roku plans to battle connected TV ad fraud

Creates watermark to identify when devices are legitimate and cut down on fake traffic that has plagued the industry.

How Roku plans to battle connected TV ad fraud

Roku has developed a new anti-fraud technology for connected TV advertisers as the whole industry looks for safeguards to prevent scammers from stealing ad dollars by “spoofing” devices that mimic viewers.

On Tuesday, Roku announced a new digital “watermark” it would embed in connected TV ads to authenticate ad impressions. The watermark—computer code appended to an ad request—matches up with a key that only participants in Roku’s ad platform can access. The watermark ensures the ad is served to a Roku subscriber’s device.

The watermark “integrates with the Roku operating system to automatically verify publisher ad requests and impressions so that advertisers know they are reaching genuine Roku users,” Roku stated in its announcement on Wednesday.

“We built it to primarily combat device spoofing,” said Adam Markey, Roku’s director of ad platform product management, in an interview with Ad Age.

Device spoofing is one of the most common instances of connected TV fraud, and it’s mostly a problem in programmatic advertising, which is when ads are sold in real-time auctions. Ad tech vendors have been sounding the alarm bells in recent years over schemes in which fraudsters set up fake ad servers that act like they are delivering ads to connected TVs; instead, they are just collecting ad revenue for commercials that never stream to devices.

Battling programmatic ad fraud

About 25% of connected TV ad inventory is sold programmatically, Ad Age reported last year. Double Verify, an ad technology vendor, said that connected TVs generated $17 billion in total ad revenue last year. DoubleVerify also said that 18% of programmatic connected TV ad inventory was fraudulent. If ads are not sold programmatically, they are sold directly by the publisher, which makes it easier to ensure the ads are served to live viewers. Roku has not reported on how much fraudulent traffic it detects in connected TV platforms.

Earlier this month, another type of fraud made headlines—ad impressions were being served to TVs even when the screen was off. The watermark is not designed to combat this type of fraud, but Roku, and other connected TV providers, deploy other methods to identify TV viewing patterns to cut down on the potential for ads to reach blank screens. 

Discovery and Fox are among the publishers working with Roku to deploy its anti-fraud watermark. Google, Basis Technologies, Human, Innovid and Magnite are among the ad tech providers implementing the watermark, Roku said. Roku’s OneView ad-buying platform uses the watermark as well.

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Roku is taking these latest steps to combat fraud while fighting for its share of the growing connected TV advertising market. Roku will participate in the annual NewFronts sales meetings in May, when digital publishers and platforms often highlight their new technology for serving ads online and cutting down on waste.

Earlier this month, Roku also announced it would adopt Nielsen Digital Ad Ratings guarantees, which provide some predictability in the ad delivery on connected TVs, so brands get a sense ahead of time exactly how many viewers they could reach.

Last week, Roku delivered its fourth-quarter earnings report, finishing the year with 60 million subscribers. Ad revenue reached $2.3 billion in 2021, for the full year, up 80% from 2020. Still, Roku faces growing competition from Amazon’s Fire TV, and more electronics makers like Vizio and Samsung are developing connected TV ad platforms. Roku has to evolve from a device maker, with its connected TV dongle, to one where its software is embedded in as many TV screens as possible.

Roku also is undergoing a change in leadership among its ad sales team. In January, Scott Rosenberg, Roku’s longtime head of platform and advertising partnerships, announced he was leaving the company in the spring. Rosenberg has been credited with helping grow Roku’s ad business from scratch, since joining the company in 2012.

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