SpiderAF, one of Japan’s largest tools for protecting against ad fraud
Have you heard the term “ad fraud”? As the words “ad” and “fraud” suggest, it is the illegitimate practice of using bots or programs to inflate the “results” of online ads, such as impressions, clicks, and installs, and a fraud that unfairly takes advertising payments by making it look as if results happened that did not.
Of the roughly 20 trillion yen spent worldwide on internet advertising media in 2018, losses from ad fraud are estimated at about 1.9 trillion yen. The methods are becoming more advanced and sophisticated every year. According to the latest report from the World Federation of Advertisers (WFA), losses are expected to grow to about 50 billion dollars (about 5.4188 trillion yen) by 2025, and the fact that it has become a breeding ground for the mafia and organized crime is also a major social problem.
“Of course, the damage is serious in Japan too. When we investigated online ads in Japan over the course of 2018 with our analysis tool, about 20% of roughly 25 million app installs had been hit by ad fraud,” says Satoko Ohtsuki, CEO of Phybbit. About two and a half years ago, the company developed SpiderAF, an AI-powered ad fraud prevention tool, and launched services for network operators and advertisers. With the vision “Building a Safer & Happier Future With Automation,” it aims to help make the world healthier by eradicating ad fraud, and it is an IT company attracting intense attention in Japan and around the world.
Taking on the problem ahead of the industry, built on two pillars: market fit and awareness-raising
Ohtsuki majored in atomic physics in graduate school. In 2011, as graduation approached, Japan’s science and technology budget had been cut sharply by the “budget screening” of the Democratic Party of Japan government at the time, dealing a big blow to basic research.
“Japan has many excellent researchers and is among the world’s best, producing Nobel Prize winners. But in reality, the fields where they can work were getting narrower and narrower, and I always felt frustrated that talented people were being buried.” While talking about these feelings with an acquaintance, Ohtsuki was pushed forward by the words, “Then why not create a place where you can do that work yourself?” After graduating, Ohtsuki founded Phybbit with several peers, starting a company that took on contract development, with application development for the web and smartphones as its main business.
“At first we mainly did contract work, but we wanted to eventually create our own services too, so we built a framework for big data analysis that was popular overseas. While we were wondering whom to sell it to, someone at an online ad delivery company advised us to try using it to fight ad fraud. That was how SpiderAF was born,” says Ohtsuki. It produced steady results from the test version, and after its official release in June 2017 it quickly spread by word of mouth.
Ad fraud is heard about more often these days, but at the time awareness in Japan was still low, and few services fit the domestic market. To break into that situation, Ohtsuki focused on market fit and awareness-raising. “First, so that customers would see value in the service, we pursued transparency through visualization of the data. And alongside rolling out the service, we held study sessions and events to promote understanding of ad fraud and the need for countermeasures.”
The company’s proactive activities ahead of the industry paid off: it now holds well over half the market for online ad network operators and is steadily growing its business with advertisers too. As a leader driving security in online advertising, it has a strong presence.
A “bout” taken to the world becomes the trigger for the next step as an entrepreneur
One turning point for Ohtsuki was taking the stage at GET IN THE RING OSAKA 2019, a startup pitch contest held in February 2019. Ohtsuki won the competition and earned the right to represent Japan at the world finals in Berlin in June. It did not win globally, unfortunately, but Ohtsuki says there were big gains.
One was that presentation skills and mental strength, both essential in business, were greatly trained. “At first I thought it was a competition to promote the content and results of our service, but what I felt after actually experiencing the fight was the importance of presentation skills and mental strength. No matter how wonderful a product or service is, it is meaningless if it does not come across to people. It is only when value is conveyed that it leads to results in numbers, so I was reminded again how important the ability to communicate is in business.” The other gain Ohtsuki named was achieving fundraising that had long been planned.
“Fundraising was an important challenge for us to move to the next step. GET IN THE RING OSAKA 2019 was a perfect chance to raise our profile, and in fact an investor who came to watch the event decided to invest. We gained a big foothold for the company to take off.”
Ohtsuki seems to be sailing smoothly, but the road here was by no means flat. In global business today, being an “Asian, female CEO” is enough to stand out. In IT, a “CEO who is a mother” is rarer still. Running a company while raising two children, there must have been walls Ohtsuki ran into precisely as a woman and as a mother.
But Ohtsuki faces that tough reality resolutely: “In essence, there is no woman or man. What matters is producing solid results.” “If anything, on business trips I leave behind children who miss me, so there is no such thing as ‘just going to have a look.’ I go with the determination to produce results no matter what. That may be a strength of being a mother,” Ohtsuki replied with a smile.
Expanding the business domain and opening up the future in cybersecurity
About two years after its official release, SpiderAF has grown into one of Japan’s largest ad fraud prevention tools. But Ohtsuki says the challenge of the company’s vision, “Building a Safer & Happier Future With Automation,” has only just begun.
“Our immediate goals are to keep expanding our services for advertisers, and to take our services for network operators, where we have achieved the top share in Japan, overseas. We have cleared fundraising, which was one challenge for that, so we will focus on the other challenge: securing and developing talent.”
Securing excellent talent is now an important challenge for every industry and company, and extremely difficult. In light of the situation in Japan, Ohtsuki looks at the world for talent as well, actively hiring motivated foreign nationals who want to work in Japan. “And the big direction we are aiming for is further expanding our business domain. Recently, needs are growing not only for ad fraud prevention but also for traffic-related security, so we want to roll out new services while exploring various possibilities.” The rigor and boldness of an entrepreneur, the flexibility of a woman, and the strength of a mother: by turning these traits and background into “power,” Ohtsuki keeps moving steadily toward realizing a dream.
Interview date: October 16, 2019
(Interview and text: Mitsuko Yamashita)