The trust problem in ad networks: advertisers vs. publishers

Ad networks are supposed to connect advertisers (who want reach) with publishers (who want to monetize their audience). But in reality? It’s often a digital Wild West of misaligned incentives, data opacity, and fraud on both sides. Both advertisers and publishers can exploit vulnerabilities, leading to significant financial losses and eroded trust.

Here’s how the game is (too often) played:

1. Publisher fraud (cheating advertisers):

• Fake traffic
  Publishers may use bots, automated scripts, or traffic farms to generate fake impressions, clicks, or conversions. For instance, the Methbot operation in 2016 created over 6,000 fake domains mimicking legitimate publishers (e.g., ESPN, Fox News) and used bots to generate 3 – 5 billion fake bid requests daily, costing advertisers millions.

• Ad stacking / hidden ads
  Publishers may stack multiple ads in a single ad slot, where only the top ad is visible to users, but all are counted as impressions. This inflates reported engagement without delivering value to advertisers.

• Domain spoofing
  Publishers can disguise low-quality or fraudulent websites as premium ones, tricking advertisers into paying higher rates for ads that appear on less reputable or irrelevant sites.

• Click injection
  In mobile advertising, publishers may simulate clicks just before an app install to falsely claim credit for conversions, especially in cost-per-install (CPI) campaigns.

• Misreported metrics
  Publishers may falsify analytics data, such as viewability or engagement metrics, to inflate the perceived performance of their ad inventory, leading advertisers to overpay for ineffective campaigns.

2. Advertiser fraud (cheating publishers):

• Non-payment or delayed payment
  Some advertisers may delay or default on payments to publishers, especially in cost-per-action (CPA) campaigns where payment is tied to conversions. They might claim that leads or conversions were invalid, leaving publishers unpaid for delivered traffic.
  
  
• Click fraud
  Advertisers may use bots (yeah, bots are the tricksters of AdTech – they play for both teams) or click farms to artificially inflate click-through rates (CTRs) on ads. This makes it appear that the publisher’s traffic is generating engagement, but the clicks are not from genuine users, reducing the value of the publisher’s inventory. For example, an advertiser might deploy bots to click on their own ads to exhaust a competitor’s budget or to make a publisher’s site seem less effective, lowering its ad rates.
  
  
• Impression fraud
  Advertisers can manipulate impression counts by serving ads in non-viewable locations (e.g., hidden iframes, ad stacking, or pixel stuffing) while reporting them as legitimate impressions. This allows advertisers to avoid paying for real user engagement while publishers receive little to no genuine traffic.
  
  
• Changing attribution rules
  Advertisers move goalposts after the fact, saying conversions don’t “count” due to changed criteria.

Why is it possible?

Because when the system is cracked at its core, fraud doesn’t need an invitation.

First, the opaque supply chain. The programmatic advertising ecosystem involves multiple intermediaries (ad networks, DSPs, SSPs, data providers), each taking a cut and reducing transparency. This complexity creates opportunities for fraud, as advertisers and publishers often lack visibility into where ad spend goes or where ads are served. Up to 47% of ad budgets can be lost to intermediary fees.

Next, lack of trust and verification. Advertisers and publishers often rely on third-party verification services (e.g., DoubleVerify, ClickCease), but these can be manipulated or provide biased reports, further eroding trust.

High-speed transactions are called a marvel of efficiency – but may just as easily be a vulnerability cloaked in speed. Programmatic advertising operates in milliseconds, making it difficult to detect fraud in real time using traditional methods. For example, ad auctions occur in a 100-millisecond window, leaving little time for verification.

And, of course there are data privacy concerns. Publishers may misuse user data to inflate metrics, while advertisers may exploit consumer data without consent, complicating trust and compliance with regulations like GDPR and CCPA.

How does all this resonate with finances and trust?

Ad fraud costs advertisers billions annually, the losses surged to around  $100 billion in 2024, continuing the upward trend. Global ad fraud losses are expected to reach as high as $172 billion by 2028. Roughly 1 in every 4 ad dollars spent globally gets wiped out by fraud. Fraud undermines the integrity of the advertising ecosystem, making advertisers skeptical of publisher data and publishers wary of advertiser payment practices. This lack of trust hampers campaign effectiveness and industry growth. Furthermore, fraudulent activities distort key performance indicators (KPIs) like CTRs, conversion rates, and return on ad spend (ROAS), leading to poor decision-making and wasted budgets. 

Ad networks are meant to be a smooth handshake between advertisers and publishers. But too often, it feels more like a back-alley deal – full of gotchas, disputes, and metrics that magically change overnight.

So, where is the solution?

There is no one simple answer because the problem is too multi-level and complicated. However, one of the lights at the end of the tunnel are blockchain-based real-time microtransactions, where publishers are paid instantly for verified ad impressions or actions, offering a promising approach to combat ad fraud and improve trust. 

What part of the mess can they mop up?

Transparency and immutability
Blockchain’s decentralized ledger records every ad transaction (e.g., impressions, clicks) in real time, visible to all parties (advertisers, publishers, ad networks). This transparency reduces opportunities for fraud, as all actions are traceable and cannot be altered. 

Real-time payments
Microtransactions enable publishers to receive payments per impression or click immediately, reducing the risk of non-payment or disputes over invalid traffic. AdEx eliminates withdrawal thresholds, allowing publishers to access revenue instantly.

Smart contracts automate payments based on predefined conditions (e.g., a verified view lasting 10 seconds), ensuring advertisers only pay for legitimate interactions.

Elimination of intermediaries
Blockchain removes unnecessary middlemen (e.g., ad networks, DSPs, SSPs), reducing costs and complexity. For example, Adshares’ decentralized platform supports 1.4 million transfers per second, enabling efficient, fraud-free transactions across digital spaces.

Fraud prevention
Blockchain’s immutable records make it harder for publishers to inflate impressions or clicks, as discrepancies can be flagged instantly. Moreover, digital identities for advertisers and publishers prevent domain spoofing by verifying the authenticity of each party. And combining blockchain with machine learning can enhance bot detection by analyzing transaction patterns in real time. Platforms like AdEx and Verasity (VeraViews) use blockchain to record impressions immutably, ensuring advertisers only pay for verified engagements.

Improved trust and efficiency
Transparent ledgers foster trust by giving both parties access to the same verified data, reducing disputes over metrics or payments. Smart contracts streamline negotiations and execution, making campaigns more efficient and cost-effective – neither side needs to trust the other. If traffic meets agreed criteria, the smart contract pays instantly. Lucidity partners with brands like Toyota to improve campaign performance by 21% through blockchain-based verification of ads. 

Consumer benefits
Blockchain can reward users for engaging with ads (e.g., Brave’s Basic Attention Token (BAT) system), ensuring ads are relevant and reducing intrusive experiences. Decentralized identity solutions allow users to control their data, enhancing privacy and compliance with GDPR/CCPA etc.

The flow is very simple:

• Advertisers deposit funds up front.
• Publishers deliver impressions, clicks, or conversions.
• Smart contracts verify performance and release payment – instantly.
• No haggling. No waiting. No funny business.

But let’s be real: blockchain isn’t a silver bullet

While promising, blockchain microtransactions face challenges – is not a panacea. Blockchain networks can struggle with the high transaction volumes of programmatic advertising, which processes billions of bid requests daily. Real-time bidding requires sub-100-millisecond processing, which many blockchains cannot yet handle. Solutions like Adshares claim to support 1.4 million transfers per second, but widespread adoption requires further optimization.

Another blocker is adoption – for blockchain to be effective, all parties (advertisers, publishers, ad networks) must adopt the same system. Lack of industry-wide standards hinders integration. For example, large Web2 brands are cautious about adopting Web3 solutions due to unfamiliarity and integration complexity.

While blockchain ensures transparency, it cannot fully detect sophisticated bot traffic without integration with machine learning or other anti-fraud tools. Detecting click farms or advanced spoofing may require additional AI-based pattern analysis.

What’s more, Blockchain’s public ledgers may conflict with privacy regulations like GDPR if not designed with anonymization or user consent mechanisms. Platforms like Ambire AdEx address this by storing user data locally, but widespread compliance remains a challenge.

And last, but not least, implementing blockchain requires significant investment in infrastructure, training, and integration with existing ad tech stacks, which can deter smaller players. Then we come back to adoption – round and round we go: same circus, different clowns.

Are you feeling confused?

Don’t worry. We wrangle the chaos so you don’t have to.

Blockchain-based real-time microtransactions offer a compelling solution to ad fraud. To fully transform ad networks, it requires widespread collaboration, standardized protocols, and complementary technologies like AI for fraud detection. Despite these limitations, the industry is optimistic and sees the development of blockchain technology as an opportunity to improve the AdTech ecosystem.

And this is what we are working on.

Because we believe AdTech doesn’t need another band-aid.
It needs a sunbeam.

🌴Holiday Rescue👉 AdTechMarTechHotline@sanddev.com

Cheers!

PS. Hungry for more? See which other industry “standards” we’ve dismantled here.