Live Sports Streaming Ad Market Rife With Fraud, Experts Say

As sports increasingly head to streaming services and bundles, local companies are facing a significant challenge: making sure their ads reach actual people. Companies that sell those ads directly are increasingly frustrated by what they believe is dishonest behavior from a subset of resellers.

Just as streaming services and OTT bundles have fragmented the viewing experience for live sports, the advertising industry has had to adapt to viewers consuming the content on a variety of platforms and devices. Over the past several months, advertising industry experts have expressed concern to Front Office Sports that this splintering has opened the door for practices that could charitably be referred to as confusing and potentially as outright fraud.

“I have such empathy for buyers as they really don’t know what to trust in the local sports digital video space,” Chris Young, the SVP of digital at Good Karma Brands, tells FOS. “Everyone says they can do everything.”

The Key Issue

Good Karma Brands owns major radio stations in New York, Los Angeles, and Chicago, and sells ads for major sports properties including the NBA and ESPN Radio and digital. Young says there are “aggregator” companies that are misrepresenting what they have the ability to sell. He defined these as companies that combine ad space together in the streaming or smart-TV space, but do not have direct relationships with “publishers” (meaning: networks) and then go to the marketplace to sell ad space across dozens of them.

“They’re essentially buying this space on the open marketplace and then reselling it to advertisers and ad agencies,” Young tells FOS. “They don’t really rep the networks. They acquire the inventory at a certain price and sell it at a margin.”

Networks, as well as streaming distributors like Roku and smart-TV brands like Samsung and LG, will often put unsold ad space into the marketplace where it can be purchased at scale. 

“Many publishers give an ‘ad share’ to whatever platforms they’re working with, commonly giving up a sliver of inventory,” said Wade Nielsen, SVP of ad sales at NESN—which has the rights for the Red Sox, Bruins, Pirates, and Penguins. “If you’re on their platform you give them a certain percentage of ad inventory for their platform services and distribution. In those agreements, they are set up on a semi-blind basis, where they fill the ad space alongside their other inventory.”

“Passive” Opportunities

This inventory, where the publishers no longer have direct control over the sales, is often bundled up, repackaged, and sold to middlemen. It’s those companies—or another company that buys another fragment of the ad inventory down the road—that could plausibly misrepresent how precisely ad buys can be placed. 

“There’s a passive opportunity to buy space on a sports network, without guarantee of placement or volume or impression delivery,” Nielsen said. “In most cases, these actors in the marketplace who might be misrepresenting things are grading their own homework with their own reporting platforms that ‘validate’ what they’ve delivered.”

Young says that large tranches of inventory get sold into the marketplace on a legitimate basis. However, confusion happens after they “white-label their OTT [streaming] platform to TV and radio groups and allow thousands of them to sell onto the platform they’ve built.” 

What this means is that individuals who would typically sell radio packages are being “armed” to sell live video space from the big platforms that they might not fully understand the scope of, Young says. 

Who Gets Hurt?

Therefore, ad space gets acquired and is then sold to local firms, such as car dealerships or HVAC groups, who are hungry to reach regionalized audiences. As entertainment programming has splintered, there is an insatiable appetite to reach the live audiences that sports command. 

“Unless you are working directly with the publisher or an authorized seller, you cannot sell individual single-game insertion by trying to buy that inventory off the open marketplace,” Young says. “If someone just wanted to buy Georgia football games, even Good Karma can’t go in and sell just that. I could sell a college football package to somebody. I can promise it will land on an SEC game, generally. I can’t sell individual specific games. 

“What’s happening is companies are going out in the marketplace and ‘guaranteeing’ impressions on a Georgia football game, and they’re doing that for almost every pro and college team in the country. It’s not functionally possible with the way they’re acquiring the inventory.” 

Michael Juhas, chief customer officer at Digital Remedy, which helps brands and agencies buy advertising, has also noticed deception and fraud in the live sports streaming space. “There’s a lot of companies out there that are claiming they can gain access to very specific pockets of inventory that would have little to no scale, and it doesn’t make any sense,” Juhas said. “Based on everything we do and all the access points we have, it doesn’t add up.” 

Like Young, Juhas pointed to the inability to access specific games and events, such as the Masters. “It’s an exclusive advertising event that Disney puts a lot of control over [in the first two days of the major], so the idea you can sell that in mass market to advertisers large and small at scale seems very far-fetched,” he said. 

“Scale is key. Obviously some inventory makes it to the secondary market, but the idea that you could scale [sell a lot of ads to] an HVAC company in Athens, Ga., against the Masters is a far-fetched idea. When companies have marketing materials in the marketplace saying they have access to the Masters or the Super Bowl, or a specific college football game at scale, it’s very suspect that they can actually deliver on it.” 

Regarding the Masters specifically, only official advertisers of the tournament are permitted to air on any broadcast of it, linear or streaming.

Whack-a-Mole

How pervasive is the misrepresentation of ad placement guarantees?

“We see packages for professional and college teams in local markets all the time,” Young says. “It is a game of whack-a-mole. We send the packages that our clients send us to the rights holder all the time, and they may provide a cease-and-desist—but because you have so many radio and broadcast companies that are using these OTT platforms, and each of these companies employ so many individual sellers—it’s impossible at this point to manage. Large agencies are hip to it, but the local marketplace is the Wild West.”

While big companies have ad agencies sophisticated enough to know whether promises are too good to be true, this is not the case for smaller firms competing for local eyeballs. One of the ways this muddles the marketplace, the experts say, is it creates an expectation of cut-rate costs for some advertisers that are being promised something effectively impossible to deliver. 

Another concern is it affects the rights holders that pay for live sports, particularly regional sports networks, if local advertisers believe they are getting ad rates at lower costs from third-party sellers than what the networks themselves are offering. 

Grace Briscoe, EVP of client development at Basis Technologies, an advertising automation platform, put this matter succinctly: “If it sounds too good to be true, it probably is. If somebody’s telling you that you can get Gucci shoes for $20, they’re probably not real.”