LONDON: Procurement departments focused on costs are forcing media agencies to buy low quality inventory from online "cesspools" where the risk of ad fraud is greatest, a leading industry figure has claimed.

Marco Bertozzi, president of audience on demand, EMEA, at adtech business VivaKi, was speaking at an event on automated trading organised by MediaTel where he argued that the whole procurement model was a mess.

"We have a situation where every day advertisers, procurement departments and auditors are pushing agencies to buy cheaper and cheaper inventory," he said. "The only sign of success is a lower CPM year on year.

"The idea of value doesn't seem to have any resonance," Bertozzi lamented, as he singled out procurement departments for their emphasis on cost-saving initiatives.

His solution involved rediscovering the idea of value along with better measurement and making advertisers understand why they should focus on premium quality inventory.

Referring to the bottom end of the market, Bertozzi said: "We should not be fishing in these cesspools. Don't accept a £4 CPM from a video ad network and then say it's quality – it's not."

Leading ad organisations in the US came together last week in a new initiative to tackle the fraud problem. The American Association of Advertising Agencies, the Association of National Advertisers, and the Interactive Advertising Bureau announced plans to create a first-of-its-kind cross-industry accountability program designed to fight ad fraud, malware and the piracy of intellectual property head-on, while also increasing marketplace transparency.

"Quality, original content is not sufficiently protected against the threats of fraudulent traffic, malware attacks, and IP piracy, and it is time that publishers, marketers and agencies stand together to combat these dangerous forces as a unified entity," said Randall Rothenberg, President and CEO, IAB.

The scale of ad fraud is huge and growing, with some estimates putting it at $11bn in 2014, a 22% increase on the previous year.

A report earlier this year suggested that more than one in ten ad impressions was fraudulent but added that the rates varied widely between verticals, with tech companies and retailers most at risk.

Data sourced from MediaTel, IAB; additional content by Warc staff