Scrambly.io’s Golden Rules To Fighting Fraud Before It Starts

[Music] hello world welcome to the pocketgamer.biz podcast I'm your host Peggy and salts Brian Bago isn't here at the moment but he will be back he is out there at events and speaking engagements and finding great people for our show which brings me to where we are right now because I was out recently also at a couple of events and I was blown away by the interest in alternative channels to reach players fortunately we have a number of them to choose from and we'll be talking about them in the show you know everything from D to C and web shops to rewarded rewarded ad platforms are also alternative UA channels and they have huge benefits but also some issues that we don't talk about too often so I found someone who is Frank

straightforward I would say straight talk today with our guest who is Alex Harin he is CEO of scrambly and as I said Alex building you up for this we are going to have a a candid discussion about what marketers need to know as they focus on implementing rewarded ad campaigns right that's the idea so have you come with some yeah some thought grenades for us with a ton of those T of those oh boy that that sounds like one heck of a show then we I'll strap myself in for this one Alex I will so um a little bit of background on yourself of course CEO of scrambly you're originally from the Ukraine and then you moved to Italy and you led a sales team at MAF and then you co-founded scrambly so here you are uh a million users in the US and Counting so um yeah how's it been quite a ride for you as well how

old is scramble it's been just two years and a half such a ride it's been crazy but uh we cannot be happier so you've had an impressive Journey as we said you know a company in this space but again that's not all you do right everyone is more than a title and you have a background in amateur boxing uh I had to say that one blew me away because I think of you is just like this super you know focused data Centric person as I've been chatting with you but I have to ask you then how does the experience in boxing shape your approach to this industry and basically what you're doing which is reshaping rewarded that's actually a great question and a lot of not a lot of people know this little fact about me but uh on top of actually being in boxon for almost 12 years in the past I went to a military school Military University and uh I had some time competing in boxing and how this impacted my career and building scrambly as essentially is

sports uh what it do to any person is helping them build a habit of consistency and discipline and this is the most important thing in business and in your career if we cannot really keep going with something for a long period of time as long as long as it's very hard there is basically nothing we can achieve and uh boxing for 12 years and I had like a little over 30 amateur fights helped me actually build the consistency and the discipline of going through rough times and uh really yeah sticking up for myself at some things but not physically of course gut grit I like that um what's also interesting is scrambles approach because you have a a fintech component which I thought was intriguing how does that affect your approach to user quality retention

because fintech yes we gamify fintech but you have a fintech component in what you're offering the gaming industry the reason the reason we wanted to implement a fintech component and by that we mean know your customer uh very Advanced verification that is used by F companies uh just because we wanted to improve the user quality and the user reach that will be offering to Publishers and advertisers that we work with uh when I used to work with different UA channels reward UA channels back before scrambly the biggest problem was that the user quality was in a lower level why because users were solely interested in the rewards in earning money quick and that was that was one of the biggest problems and the second problem was user level fraud there was a part of the users abuse in the offer was trying to get money um not in a legitimate way and uh when we buil scramble first days in we noticed that we were getting 70% of

organic users which were like hundreds thousands of users and we were like super pumped about it however it came to my mind that it was impossible to to get this number of organic users the first days and those users were actually cashing out some real money from scramble and we figured with uh my co-founder and CTO franceski that we had to do something about it so we implemented a robust AI know your customer verification that makes users take a picture of their ID and take a selfie and this is how we make sure that those all users are legit uh they don't open duplicate account and they don't try to abuse our system which is directly correlated with the advertiser cpis and their AOS okay so that's the way to make sure they are who they say they are and then you have players and you get around some of those pitfalls there but there's there's more than that right because rewarded traffic yes it

can drive installs it can drive even more doesn't always guarantee quality users so other than the pitfall that you just discussed maybe you can go into a little bit more about user quality it's one thing if they're cashing out um but there are other aspects you have to keep track of no absolutely uh essentially essentially building an offer B building a solution that rewards users for something it attracts a lot of users who want to earn money but publishers IP driven advertisers which uh have one the vast majority of the budget in the ecosystem here uh they are looking for users who want to spend money not earn money and that's the biggest Pitfall here because offer offeres organically and through the pay channels attract a lot of lowquality users want to earn two big bucks and that's about it and they're not going to be spending they're not going to retain uh in the games that are promoted on across the offer balls after the rewards run out let's take uh

let's take as an example any Social Casino game which has a break even a break even period of 360 days so users uh you there're supposed to be a part of users that retain for a year and a part of those users maybe like three 4% of this users are supposed to be gaming whales to cover for the whole UA cost right and it's very hard to uh attract those users through the solutions that attract lowquality users rewarding them for doing simple activities because the vast majority of those users they just want to earn five dollar alost because they are low do it quickly right they're not going they do it quickly they're lowi income users it's very hard to attract high quality users there and on top of it as I mentioned there's going to be a part of those users who want to abuse the system by uh not even engaging with the games themselves or engaging with them not in a legitimate way just to get even more of those money by though by by that inflating the cpis and draun in the Aros advertisers so those

are the biggest problems of reward at UA things that we can dive into so it's really about watching a lot what the player does and you have to have a a deeper understanding of that so that gets me to the whole idea of like what does Behavior look like for a high value player I mean what do they look like how do we know the difference between a high value player who's for real and maybe someone who's trying to literally game the system by you know trying to skip levels or do do something or be more intense because some players really do like the game and will play it and will look a little bit as if they're a little bit odd perhaps to the and and you want to make that decision so what are you using to find the signs of high value players the first thing that would what I'd be doing is analyzing their purchase Behavior when they start making their person a purchase and how their retention rate looks like at the same

time they a Ross progression if it's dropping at some point uh or it just goes steady of course it's going to be going down based on the game but usually those are the first signs that you should be looking at when basically looking for a high value user okay so that means they're purchasing they're not um they're not consistent they're having their ups and their downs just like a real human being is that what I'm hearing here exactly but there are basically three very specific metrics that you should be looking at the first one is uh the installed purchase rate this is a very basic the first one is a average number of purchases that the purchasing user makes average revenue per user and average revenue per paying user so and if those metrics come in one place you can easily understand even during the upper funnel behavior that this user might have a higher quality so that's the higher quality how about the difference between a high value user and a bad actor it rewarded Network you know

that's that little bit of the bad actor will be maybe more active than the high value user but that's what I'm thinking but you're watching it what are you seeing what are those signs let Define about actor whether it's a user that is trying to game the system or if it's just a lower lower quality user po which one which one do you think I'm thinking about someone who's trying to game the system because that's that's definitely fraud I mean high value low value that's kind of obvious a a low value will not be making purchases it will it's a player who's not going to be highly engaged probably there's other ways to monetize them but rewarded won't be it no absolutely so essentially uh when assessing the user that tries to game the system the first sign is going to be them going through the user funnel too quickly because they're trying to get as much rewards as possible from the offeral this is the first thing so they're going to be completing levels in a very abnormal way and secondly there's

going to be huge retention rate and Ross drops and on top of it you can also look at the IPS to understand if there is something suspicious going on like duplicated IPS across a lot of different installs or potential users with using uh residential processor reant so that those are one of the most significant facts that you should be watching out so let's stay with the fraud um you see that happening you'll see that the signals you know I have done a lot of work on that since the earlier days with the mmps and we were talking you know what kind of Fraud and there's you know nine types of fraud I mean you can make a science out of fraud but at the end of the day what can you do to contact the Bad actors from the publisher side it's going to be very hard so you should just keeping track of what the network is doing and you should always make sure that uh the network is very cautious about those things but from the publisher side the easiest

thing that you can be doing is just for example by disabling the offline mod like for example like if a publisher has an IA game that is uh IA monetized with ads then by simply disabling the offline plane mod is going to help a lot but the whole uh job the whole work lays on on the network shoulders to make sure that they're not driving any frent users and the biggest problem here is that the ad Network fraud that we are so much aware of like the one that you can hear about from all the mmps ETC it's very scalable and uh this is this was like in the industry like five six years ago it was huge while this is a user level fraud it's very hard to come across that it might be 5 s% and it's going to be dispersed and distributed across tons of installs clicks or Impressions mostly installs in events hardly find like hardly discoverable but that's what

you're focused on right because you're looking at fraud detection at the user level and you're flagging fraud early on you're saying we're looking at the user level data this looks like a fraudulent player usually publisher can easily tell when there is a fraud if a user let's say completes a level or in have in event in a very abnormal and quick way and what a publisher would be doing with net Network saying look this doesn't look right you should be setting some futures for users that complete uh this event in a too fast way like too quickly and in this case the network essentially would be blocking those users and not charging the advertiser for those users this is the easiest thing to do but the if you work if you want to work with the solid your rewarded ad Network these concerns should not be very frequent because the ad network uh was supposed to done a great job preventing those sorts of

things from the beginning so how big is the problem actually of user level fraud that you can detect because this is what you're doing and certainly you have an idea because of course you're looking at the data and you're seeing these metrics and I would assume that you're seeing some patterns as well absolutely it depends it really depends on the uh on the tpe of rewards that the ad network uh is providing to their user base the higher the reward is the higher potential the higher chance is that they're going to get user level fraud because it's it attracts a lot of bad players as well uh when I when I used to work for MF I used to buy from a lot of head networks and at some offers on some offers they were paying a lot uh I saw like up to 30 40% of the user level fraud because it was paying a lot it was attracting a lot of users but uh while you're doing a great job of mitigating those problems and also preventing those problems it can be 1 2% and it's not

really it's not really huge however it's always scalable unless we fix those 2% tomorrow we can turn into 20% it's going to be a big problem for both sides AIT and at networks so what metrics should a studio so studios are just starting out they're just thinking about this they're really at the point where they're implementing rewarded add campaigns and thinking about how to use rewarded as a UA channel so they're thinking also about the metrics to prioritize you know you can't really avoid fraud but you can certainly get a clearer picture of it so what would you advise what should they be prioritizing they should be prioritizing the upper funnel retention rate in Aros prediction and the progression of the Aros behavior of the users is going to be very very different compared to their other other channels uh because sometimes Publishers come and say look

uh we predict ouros 100% for 180 days and it's going to be absolutely different for rewarded UA channels they need to make sure that they're going to be hidden their Aros Break Even Point Way earlier they should be looking at their day one day three day seven day 14 AR Ross and retention rate and if there is any potential abrt drops it might signal a problem whether the users have low quality or there might be a part of those users uh frent so what exactly I'm trying to think between a lowquality user maybe someone who's just not interested right some people will never do what you're hoping they will do so they're either not interested and then we have Bad actors who are really um truly um low value and you want them out as well I mean how do you tell the difference basically you're going to be seen very aggressive like Bad actors they're very greedy that's the first time they're very greedy they're going to be trying to get the highest reward like in three days or four days Etc so

there is no way somebody can get to level 50 which which usually which usually gets completed by other users in two months in like and they complet it in four days it's like impossible and you're going to be seeing those signs and it's like they find a way to crack it to crack the code to game the system and to to cash it out and lower quality users they're going to be making purchases their behavior may be a little more aggressive compared to the non-incentivized channels because they just want the rewards they're going to be making some purchases to progress the uh the lower quality users they're going to be just having lower Aros lower rpu uh lower install to purchase rate and those metrics are going to be on the lower side but there's not going to be any super abnormal indicators that uh Bad actors would would actually bring B actor is always trying to get the most out of the systems in the quickest way possible they are like very greedy okay so we look for greedy fast-moving

players not necessarily enthusiastic they're at it for a different reason this is a lot to watch especially for Studios that are just stretched I mean resources are stretched the numbers the team numbers um many have been slashed so where are there or are there shortcuts to do this because you get to look at data anomalies you have to look at user level data you have to be looking at Behavior tering the metrics upper funnel and then looking also at deeper funnel there's a lot to do is there anything here that will make this just a little bit more streamlined the easier thing the easiest thing to do is to set clear expectations with the net Network trust is very very important here they to they need to understand what the at network does about it and how frequent how frequently they do something about it and some sort of reporting if they uh found any fraudulent patterns in the past for

similar games what they do about it and how they could actually communicate on a weekly monthly basis to understand if there is something suspicious going on at the same time the easiest way for a resource scars company to keep track of those things is by simply looking at the Aras and the retention rate because retention rate is going to Signal you a lot of different things and Aros essentially it doesn't really matter how much you're paying for one single user as long as it brings new money right so cup sometimes it doesn't really matter sometimes you're buying users five times more expensive on on one channel then on the other one but this user makes you money and sometimes you might want to tolerate this one 2% of potential Bad actors because the other 98% make money so just look at AR Ross retention rate communicate with the net Network and make sure that the upper fun metrics look great and rely on the on the ad Network as long as you trust them really good advice I mean I have to thank you Alex because you know our audience will say Okay made a note of that because that is a really important blueprint to follow but you're also doing this at

scrambly and when we were chatting when we met you know it was like um some horror stories that you had as well about fraud and uh you know some of the bigger issues that maybe we don't understand all the time because they're sort of under the radar signs that many studios simply might be missing because they're looking at so much other data and everything else because this is about a new monetization model and this is something you need to get your head around it's very hard it's very hard and I saw some some horror stories B real rewards it just um it just it just can bring about a lot of different a lot of different uh thrand patterns that we we could never even think of so the the easiest thing to to notice here is when a user signs up to a platform they start engaging with the offers and they basically complete six different offers that pay more than $100 in like like 20 minutes they try to cash out and but we

have qyc here and qyc doesn't let them cash out and then we we understood that we wanted to prioritize advertisers more so we moved the kyc upper funnel so users in order to engage with the campaigns that we're promoting of our Publishers they need to the to do the qyc first and this is how we make sure that those users are legit but on top of it users can also manipulate the system even after the qyc right okay so they're legit US citizens EU citizens Etc They're Not Duplicate they have one account because we have their IDs their data Etc they start the system but we set some Futures in place to make sure they never do it little bit like whack-a-mole isn't it it's it's we are always at War like it's always War yeah okay I I see that I totally do and it's probably you know looking to the Future we're we're shifting I mean there is rewarded UA

that's what we talk about this is our new way of monetizing and it and it's good to have choice but it's also challenging as we've been discussing you yourself you're looking at it you're in the industry in this part of the industry for two years what are the biggest shifts that you see coming to rewarded um are we going to see for example new types of Engagement or even like bits of of of tweaking and and a twist on the monetization model that we see emerging uh the biggest shift that we're seeing right now is that there is way too many players popping up this is the first because the unit economy works for them so they're driving their UA it's profitable they install some other offer walls they're making some money however to scale it further they're going to need to work with Publishers directly otherwise their monetization is going to be on the lower side and UA is not going to be profitable so I believe there's going to be a big Market

consolidation and Publishers they just cannot work with 20 different rewarded ad networks they want to work with two tops or three tops everybody has Reserve scarcity and uh so there is supposed to be some kind of a market consolidation and a few players should come on top that that's how I see it otherwise it's going to be impossible to compete in this market for both Publishers and the networks and what about the teams themselves I remember asking Studios you know how do you work with your ad Network partner you know what does that look like is it is it daily calls you know some people had slack channels whatever this is a this is not quite the same level but there is a lot that you have to be engaging and exchanging with your rewarded ad platform partner what does that even look like to manage this properly it's a great question because a lot of people uh don't really understand understand the importance of making life of

Publishers easier how we How We Do how we go about this is by actually managing everything ourselves so we say look if you want to pay $5 CPI let's do it just give me your Aros goals open up n events we're going to take it from here but at the same time our goal is to Mage the right users with the right games by collecting user data I want to understand who your best audience is so typically it looks like Publishers would be setting up cpis goals open up some events and keeping keeping track of progress on a weekly basis in terms of the Aros metrics retention rate and also their spending as well so those are the most important things but uh some of the reward UA players networks they progress a lot and they make it they make t optimization possible so it's when basically Publishers have nothing to worry about as long as they limit their budget and they just look at the results let test it the difference between

rewarded UA channels and let's say programmatic channels or video networks is when you test a rewarded UA Network you're going to see the results immediately so don't if if a rewarded U Network says is going to take us one two weeks or three weeks to optimize not really essentially when you start and you reward you a channel you're going to be seeing the best users immediately so look out for results because you will see some I mean you can still optimize because algorithms need to learn I totally get that but you will see already some of the signs because you talked about that the patterns and the behavior so you're going to see that and then you can decide do I dial up or down um speaking about advice let's let's let's wrap it up with a piece of advice you'd give to Studios especially when they're just starting out with rewarded as a UA Channel this is a great question so the first thing that I would ask them the first advice that I would give them

is to understand their metrics right so get their data and Metric right if they understand that their AR RW 100% kick in in six months they need to structure their prediction around that properly so they can go with some alternative channels like reward UA and also understand the profitability and when the money kicks in the second thing is they need to have some Flex ability to test add in app events uh give reward your channel some Liberty to optimize and to find the best formula to deliver success and the but the biggest the biggest advice here would be to really test all the standard channels properly to understand their data and to understand the their economy behind this data and once this works once the stand Channel work go to rewarded channels they can make some wonders for them companies that are just starting out

with this um they're also going to have to be more focused on not just looking at the results but looking at those signs you were talking for example um the telltale signs of Bad actors um and people who want to game the system but I'm also thinking you know we're going to see more and more as we have ai we're going to see more and more that aren't just Bad actors who are trying to get through very quickly because you know there are stories about different regions where you know this is this is this is a sport even if it's not for the money it's a sport like I'm G to crack it and I'm G to show everybody but then we've got Bots we've got AI we have we have players who aren't players what does it look like there the biggest thing that I've seen so far is uh we had a few kyc verifications with the Deep fake eye uh faces and also the ID pictures so that was crazy and I had to jump on a call with the qyc provider immed say hey guys what you what are you going to do about this because our fraud

our whole fraud protection strategy relies heavily on you and you work with banks of course there is a big responsibility there's way bigger cash in the turnover and they implemented a set of rules immediately to to mitigate that but it's crazy AI is not going to make U fra detection any easier for sure it's going to get quite smart quite quickly and it's going to look fairly fairly genuine I can imagine as well what does that mean for for you at scrambly are you having thoughts about um broadening how you hunt and find the Bad actors the Bots we just had to come up with a few ideas and they've working great for us first of all we uh check the upper funnel user data once user sign up to understand that they come from the correct countries and their device data looks right then once they start engaging with the platform

and with the offers we we look at their behavior data with the qyc in place we understand that they're legit users they don't open duplicate accounts then once they start engaging with the campaigns more start making purchases uh our algorithm analyzes their behavior and with those a few with those few uh check points we we basically understand that the users Sol it so it tends to it tends to do the job almost to to 100% extent however it's just a cat and mouse game all the time so we need to be we look into this on a daily basis so we're almost going full circle if you think about Alex because we talked about you have to be disciplined for boxing and sports right you have to be focused uh you have to not give up you said at the beginning I'm not afraid I'm not giving up so maybe you leave us with a little bit of advice that maybe brings together sort of like the boxing and the gaming and tell us how to hand handle this additional load of work

responsibility and yeah just all of it coming in 2025 what would you say uh what I'm saying to our team is that we are in a very competitive space sometimes very hard but we're doing a great job because we're growing 300% year-over-year and I'm super grateful to our team and the only way this is possible is when uh mentally and physically we are on the right side of things so I encourage everyone to work out to and this is like the physical uh Fitness helps us with the mental shape as well and that's the only way we can lash out uh let off some steam let off some steam as well and it's what helps us um to go forward and through some very intense challenges that we face on a daily weekly basis but I think I think we're doing great that sounds like great advice and it's also

important because we need to stay focused this is going to be massive it's going to be a massive Market which is good news for Studios it does work we can see the positive impact of rewarded but with everybody sort of going into it there's going to be a lot to watch there's going to be a lot to manage which um is why you're focused on working out in your free time but we always end it Brian always says we bring It full circle we bring it back to games we started with games we end with games so I'd like to know your favorite game you're currently playing currently obsessing about and your favorite game of all time the current game that I've been playing actually it's been maybe like a few months that I'm playing this game one of our teammates kind of she was like you you have to you have to play this game it's awesome it's Red Shadow Legends of Barum it's very fun but the biggest one it comes from my origin my childhood is GTA Grand Theft Auto San Andreas C with it all he just

uh Never Dies I was gonna say it's a classic it goes on that is a good call indeed well Alex it's been great having you also understanding you know the the the the hard truth the dirty details about fraud we know what we need to be watching we know what we need to be watching for in the future and if the audience wants to watch for you connect with you see what you're up to maybe even just check out at an upcoming event what's the best way to stay in touch with you Linden get very close slack but I'm I'm very available to anything so thank you so much for having me Peggy was absolutely Alex it's been great and uh and learned a lot is a plus you know it's great to have a chat but then to leave with actionable advice that is pure gold so thanks so much thank you baby this show is all about how to do your job better how to make an amazing

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