[very_difficult]

I have experience doing the exact thing described in this article, but not at the level of sophistication described. I still made a decent amount of money from it.

All of the exchanges (on the buy and sell side) know it's going on, and they generally don't try to stop it provided that it doesn't become news. A large number of well-known, venture-backed ad tech companies make money from this and they're not incentivized to stop it.

It's rare that the companies actively encourage arbitrage, but some do.

[yolesaber]

The level of fraud happening in the ad space from 2013-15 (when I worked in it) was astounding. I saw millions of dollars go up in smoke. AppNexus also recently said up to 60% of its traffic was fraudulent.

[hn_username]

Could you elaborate on the mechanics of what's going on? Any insight is appreciated. Thanks.

[very_difficult]

The general idea is:

1. Get access to a DSP (either AppNexus, AOL, Doubleclick itself or a smaller DSP--there are literally dozens). DSP stands for demand-side platform, but in this case we're going to use them as a supply source.

2. At the same time, get access to a demand source, either AOL, Google, SpotXchange or someone similar. Someone that a reputable website publisher would use to fill ad spaces on their website.

Both steps one and two can be difficult to obtain, as every major player is on the lookout for fraudsters and arbitrageurs and doesn't more crappy, re-sold demand/supply on their platforms.

3. Place demand-source tags (AOL, Google, SpotXchange) in your DSP, so as soon as you buy an impression, you sell at almost the exact same time.

You make a profit when you amount your from demand-source tags (net costs + rev share) is higher than the cost of the ads you're buying (net costs + fees).

Even though the article is from 2014, there a still ton of people still doing this and making money, though the real money is running botnets and buying botnet traffic (which I know how to do but have never done).

[hn_username]

Thanks for your reply. The ad-exchange-related jargon is foreign to me, but your explanation makes sense. Basically, the arbitrageur buys ad space on a website from a demand source (which essentially means buying a demand source tag which secures the ad space on that website) and turns around and re-sells that space which he/she just bought on a DSP. So, money is made when the cost to buy the ad space from the demand source is less than it's re-sold for on the DSP.

Is that about right? What information does the demand source tag include - is that basically a placeholder indicating you bought space for an ad on a website? I assume the arbitrageur's edge comes from finding traffic that can be bought cheaply from the demand source and sold higher on the DSP?

[very_difficult]

The information the demand source tag includes things such as domain name, ad size, among other things. Most of this information is publicly available--take a look at the AppNexus public wiki for more information.

This is generally something that only online ad professionals can pull off, but if you have enough of a bankroll, you can try it as well. It's a very saturated space and the amount of knowledge that goes into it is much more than what I'm able to include in a forum such as this. Good luck.