Comprehensive Analysis of Programmatic Advertising Supply Chain Efficiency in Q4 2023 by Pixalate

In a significant development for the digital advertising industry, Pixalate, a leader in ad fraud protection and compliance analytics, unveiled its comprehensive Q4 2023 report on SupplyChain Object (SCO) Validation. This detailed analysis brings to light the intricacies of programmatic advertising’s supply paths, encompassing various platforms such as Connected TV (CTV), mobile applications, desktop, and mobile web environments. The report’s primary focus is on the measurement and identification of Invalid Traffic (IVT) rates, which include instances of ad fraud across the programmatic supply chains assessed.

The SupplyChain Object validation mechanism is pivotal for stakeholders within the programmatic advertising domain, offering transparency by allowing buyers and intermediaries to identify all entities involved in the selling or reselling of open programmatic advertising inventory. The complexity and fragmentation of these open programmatic supply paths often make them susceptible to fraudulent activities. Through this report, Pixalate benchmarks the current state of supply path transparency and highlights the critical need for effective risk management strategies within the programmatic advertising ecosystem.

Key Insights from the Report:

• A notable finding from the analysis is that 25% of the traffic analyzed, which was tagged with SCO, failed to meet Pixalate’s validation criteria during the fourth quarter of 2023.
• Traffic that was associated with SCO but did not clear Pixalate’s validation check experienced a 64% higher rate of IVT.
• There was a 34% reduction in the market share of SCOs tagged as ‘incomplete’ from the first to the fourth quarter of 2023.
• Conversely, there was a 32% increase in the market share of SCOs that failed validation checks from Q1 to Q4 2023.
• The analysis further revealed that SCOs with longer chains, consisting of three or more nodes, exhibited an average IVT rate that was 80% higher than those with shorter chains (one to two nodes).

Amit Shetty, Vice President of Product at Pixalate, emphasized the crucial role of transparency in the supply chain to combat inefficiencies and fraud. He stated, “The findings from our latest SCO report underline the significance of maintaining transparency and conducting thorough validations within the supply chain. It’s alarming that a quarter of the traffic with SCO did not pass our validation, underscoring the necessity for more rigorous validations to ensure that all selling parties are explicitly approved by the publishers.”

Pixalate’s validation process is designed to ascertain the legitimacy of the supply path, verifying that it originates directly from a publisher who has an established direct relationship with the initial seller in the supply chain. This validation is conducted using standards set by the IAB Tech Lab, including the ads.txt and sellers.json frameworks, alongside SCO data sourced from the OpenRTB bid stream.

This report is a testament to Pixalate’s commitment to enhancing transparency and security within the digital advertising supply chain, offering invaluable insights for advertisers, publishers, and intermediaries aiming to navigate the complexities of programmatic advertising with greater efficacy and reduced risk.