MdotLabs, Backed by Great Oaks & Others, Sifts Out Bogus Web Traffic
When is a page view not a real page view?
That is one of the questions MdotLabs offers to help Web companies answer through its software.
Much of the revenue in digital publishing and online ads rides on audience flow. So being able to verify the number of people who check out websites is crucial. The MdotLabs software-as-a-service platform, AdSecure, is designed to pick out real Web visitors from fraudsters.
The Madison, WI-based company raised $1.25 million in November in a round led by Chicago Ventures and New York’s Great Oaks Venture Capital. Angel investors also participated in the round. MdotLabs CEO Timur Yarnall says his company plans to use the funds to expand its staff from 12 to 18 within the next eight months.
Andrew Boszhardt, managing partner with Great Oaks Venture Capital, says he has invested primarily in digital tech startups in Wisconsin’s entrepreneurial community. “The Madison to Milwaukee corridor is one of 10 or 20 secondary markets that is rich with highly educated people,” he says. However, the corridor’s innovation scene, he says, thus far has been underdeveloped.
Boszhardt, an alum of University of Wisconsin-Madison, says security and fraud issues on the Internet are massive—which is an opportunity for startups. His firm looks for early-stage companies to back, and MdotLabs fit the bill. “We had gotten to know [co-founder] Paul Barford through the university’s computer science department,” Boszhardt says. “Through him we met Timur.”
He foresees MdotLabs developing more software for advertisers and others in consumer packaged goods.
Yarnall says botnet fraud, click farms, and other sources of bogus traffic are significant sources of waste. They pump up page view numbers and clicks, creating false impressions for online ad sales. This is an issue for publishers and brands alike, he says. “How would you feel if I told you that you’re losing 30 to 50 percent of your revenue to operators who have fake websites and use stolen content?” he asks.
There are some valid ways to boost Web traffic, Yarnall says, but the majority of providers sell activity from click farms and botnets. With a quick credit card purchase, a website can multiply its traffic with a fake audience, he says.
Legitimate publishers, Yarnall says, may have to contend with shifty rivals who use such schemes to inflate their Web traffic and generate more ad revenue. AdSecure’s software examines user behavior for patterns indicative of bogus traffic.
Advertisers can use the platform, he says, to audit their campaigns. The software also lets publishers prove to advertisers that their audience is real.
AdSecure uses a mix of machine learning, applied math, and statistics to scrutinize each ad impression. The platform looks for various telltale signs of Web traffic fraud. Botnet software, for example, automatically browses and clicks on websites, and even makes purchases to appear to be a real person. Click farms use people in sweatshops, spending their days clicking on ad after ad.
This can be a touchy subject for some folks in the online ad industry, Yarnall says. “Anyone who’s generating revenue on a per impression basis,” he says, “has an incentive to not talk about the issue or to passively let it happen.”
MdotLabs was spun out of Yarnall’s preceding company, Broadcast Interactive Media, a provider of content managing and publishing tools. After BIM developed an ad network for its clients, Yarnall noticed that some of the sites were trying to defraud his company through fake Web activity.
He shopped around for ways to screen for botnet activity. Not seeing anything to his liking, Yarnall got to work on MdotLabs with co-founder Barford, who’s also a professor of computer science at University of Wisconsin-Madison.
MdotLabs has a satellite office in San Francisco, and Yarnall says a New York office is in the works possibly for the second quarter 2014.
Ultimately, Yarnall believes his software might change minds about buying Web traffic for trumped-up pages, and scamming the online ad market. “It gives you a tool to fight back against these garbage ‘long tail’ websites,” he says.