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Chief marketers have 'significant fear' about ad fraud — and here's what media agencies need to do about it

The relationship between brands and their media suppliers has been in the spotlight since the start of the year when one of the world's largest advertisers attacked agencies for being untrustworthy.

Marc Pritchard, the chief marketing officer at Procter and Gamble, said the media supply chain was "murky at best and fraudulent at worst," in a speech given at a digital marketing conference, although he added that P&G was partly to blame for not scrutinizing agency contracts closely enough.

The problem is complex, ranging from how much online adverts are actually seen by anybody and the definition of digital ad measurement, to "hidden" rebates, where media agencies don't disclose or return savings to their advertiser clients.

It also includes marketers' concerns about their ads appearing on websites or next to unsavory content, including brands like HSBC, L'Oreal and U.K. retailer Marks and Spencer which pulled adverts from YouTube after some of them appeared next to extreme content back in March.

The latest twist in the tale came last week when Uber filed a lawsuit against mobile ad agency Fetch, claiming that the company billed it for fake clicks on its online ads. Fetch has denied all allegations.

Now chief marketing officers (CMOs) will be aiming to take much more control of where their brands appear, according to industry expert Liz Miller, senior vice president of marketing for the CMO Council, a U.S. business network.

"We are dealing with a day and age where massive brand incursions can come in from any direction, be it a security breach, or be it negative adjacency (of advertising next to inappropriate content) but we are seeing CMOs really taking a step and saying: advertising is no longer advertising for advertising's sake," she told CNBC by phone.

"We are no longer placing (mass) ads to reach an audience to drive response. Advertising is a critical piece of the customer experience, and we are treating it as such."

A report by the CMO Council published Tuesday reveals that ad fraud and ad misplacement are two primary concerns for senior marketers when it comes to protecting their brands in digital media. For a third of the more than 300 CMOs the council surveyed online, the misplacement of advertising in "inappropriate content channels" is a '"significant fear" they have when using automated – or programmatic – ad placement, and a third are also concerned about ad fraud or fake clicks.

Of the marketers who use programmatic advertising, most (67 percent) say their media agencies should have primary responsibility for making sure their ads appear in the right place and not next to damaging content. Added to this, 27 percent of CMOs have pulled ads from digital channels because they ran next to hate content and a further 10 percent plan to do so.

But rather than clients going to the extremes of lawsuits, media agencies should be prepared for account reviews, Miller said.

"I think we're going to see more accounts come up for review, which will likely be massive accounts that come up for review. Marc Pritchard was clear that he stepped back and reviewed every single dollar and he went and asked the agency (or agencies) about every single metric, and he forced the agency to realign metrics to the business."

Media agencies should also expect to push their clients to involve them in advertising strategy, Miller added. "I hope that smart agencies will also ask hard questions of their brand partners, to sit down and demand to be part of that strategic conversation. Far too many times I hear agency heads say: 'Well, we never heard from the CMO about what that strategy was,' and that's awful, that is a terrible thing to hear."

"Because not only should the CMO be sharing the business strategy behind customer experience, the agency needs to hear that and then figure out how they are part of it, not how to sell against it. I hope this is a call to action for the agencies, because they are the ones that can make the most immediate lasting change in this value chain," she said.

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