cybersecurity

As the digital advertising world has moved toward programmatic buying, it’s seen a dramatic upswing in fraud. According to the International Advertising Bureau (IAB), as much as a third of all online ad inventory is fraudulent, a fact that will cost marketers more than $11 billion this year. Whether it’s clicks generated by bots or malware on the sites serving them, this type of fraud is especially hard to detect in a RTB (real-time bidding) environment where computers negotiate ad rates in fractions of a second, rather than salesmen rubbing elbows over golf and steak dinners.

Despite all this lost value, there has been no real way to identify and avoid fraudulent inventory in advance of purchasing. This is where Pixalate, a two-year-old programmatic ad optimization and analytics company, comes in. Today, it announced the first real-time fraud blocking technology for the display, video, and mobile ad markets. The company uses machine learning and big data analytics to crunch billions of historical transactions and identify signatures of invalid or malicious transaction, such as those from click farms, retargeting bots, and malware. Pixalate thus aims to deliver insight into the credibility of each impression prior to marketers bidding at auction, with the overall goal being to create efficiency and efficacy with media spending.

In the past, marketers could only learn about fraud after the fact. Pixalate, on the other hand, promises immediate detection and the ability to block malicious traffic before ads are served. So-called “heat maps” provide advertisers with visibility into the location, size, and engagement of their ads. The company also offers a smart ad tag container that it says allows marketers to updated tracking pixels and tags in multiple locations simultaneously.

“Advertisers are wasting millions of dollars per year on fraudulent ads,” says Pixalate CEO Jalal Nasir. “Ad fraud is a chronic problem in the industry and we are on the front line, fighting against it with data-driven insights and technology.”

Pixalate is a SaaS product implemented between the buyer and an ad-exchange. The basic level of its fraud and analytics protection is free, offering monitoring of up to 10 million display impressions per month. Enterprise-level protection, meaning monitoring more than 10 million monthly display, mobile, email, and search impressions, clicks, and conversions is available for an undisclosed monthly fee.

Good timing. The Media Rating Council (MRC) recently announced plans to lift its viewability advisory this quarter, making viewability a key metric in online media-buying. The company’s freemium strategy will likely be key to its growth, but the company also benefits through gaining access to data on billions of monthly ad impressions which further improve its fraud-detection engines.

Pixalate’s has made some bold claims about its ability to detect malicious and fraudulent inventory and prevent ineffective ad spending. These are difficult to verify without concrete data. The best indication that the company can deliver is the fact that after nearly two months in beta, it’s signed marquee clients that include TripAdvisor, Orange Telecom, and Amazon.com.

As more money flows into the world of programmatic ad buying, however, so will fraudulent actors, who will bring more sophisticated techniques. The company will  need to continue beefing up its analytics and detection capabilities if it wants to prevent inefficient ad spending.

Pixalate has raised a total of $5.6 million to date, including a December 2013 Series A round led by Javelin Venture Partners. After being founded in San Francisco in 2012, the company moved to Los Angeles last year in search of engineering talent and subsequently grew its team sixfold to 25 people. Nasir, who predicts adding an additional 10 people in the coming year, calls the move to SoCal the single most important decision in the company’s young life.

“We’ve found the quality and availability of engineers here to be far better than what we could attract in the Bay Area,” he says. “This is a hot market right now. Fraud is one of the biggest problems, no the biggest problem, in the advertising ecosystem. We like where we’re positioned and will try to grow quickly in light of this opportunity.”

Indeed. With tens of billions of dollars in ad spending at stake the notion of spending blindly isn’t one advertisers can tolerate much longer. As a result, we should expect this to be a hotly contested market.

Pixalate may well be the first solution of its kind, but that will hardly matter unless it can also claim to be the best. Time, and data, will tell.

[Image via TechTalktoMe]

  1. Pixalate
    Pixalate is an ad tech data company that brings efficiency to RTB advertising.
    Follow on AngelList

    Our real-time, big-data ready media analytics suite is not only first-in-kind, but in some cases only-in-kind; our products include: ONE Platform - real time reporting and analytics dashboard with baked-in viewability and media discrepancy reporting FirePath - first-in-kind user interaction heat maps for ad buyers and sellers Adtribute - real-time attribution reporting AdWisely - white-box optimization recommendation tool All products are enabled by the remarkably easy and flexible SuperPixal.

    1. Jeremie Berrebi
      Past Investor