What Is Ad Fraud? Here’s What You Should Know
With every new technology, there are people looking for new ways to exploit it for profit or personal gain. Online advertising is no exception, with the industry projected to reach $100 billion in 2023, according to Statista. The fallout impacts everyone involved in creating and publishing digital ads ad.
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The cost of ad fraud is rising each year, so advertisers and publishers must find a way to combat those abusing the system. Let’s start with an overview of what ad fraud is and how you can protect your organization.
What Is Ad Fraud?
Ad fraud is any dishonest or illegitimate activity designed to manipulate or deceive the digital advertising system. They’re typically driven by people or organizations seeking profit by exploiting vulnerabilities in the online ad space.
One of the most significant issues with ad fraud is that the complexity of online ads makes it difficult to bring charges against platforms or fraud operators. Bigger platforms like Google have established some protections against more obvious click fraud. However, that doesn’t come close to addressing how fraudsters pull their scams.
Ad fraud is divided into two main categories:
- General Invalid Traffic (GIVT): Traffic caused by spiders or bots without the specific intent of committing ad fraud.
- Sophisticated Invalid Traffic (SIVT): Traffic generated by bots disguising themselves as humans when interacting with digital ads. More challenging to detect than GIVT.
Types of Ad Fraud and Online Marketing Fraud
That’s the simplified version of what ad fraud is. Now, let’s look at the different forms it can take.
1. Click fraud
Click fraud involves clicking online ads to inflate click-through rates (CTR) without genuine interest from users. This usually happens in online advertising channels like display advertising and affiliate marketing. Ad fraud is often associated with fake CTRs.
Perpetrators of click fraud can include individuals, automated scripts, and entire networks of malicious objects. The main goals for this type of ad fraud include:
- Boosting metrics artificially to make campaigns appear more successful than they are
- Harming competitors by driving up their advertising costs or draining their budgets
- Generating revenue from affiliate programs and ad networks that pay publishers based on CTR
2. Impression fraud
Impression fraud, also called view fraud, involves generating fake impressions. It’s designed to deceive advertisers into believing those views came from real users. Ad fraudsters use techniques like bots or scripts to generate multiple fake impressions on a website or app.
When advertisers look at key performance indicators (KPIs) to assess the reach of their marketing campaigns, they are fooled into thinking the campaigns are more successful than they are.
Impression fraud often manifests as fake impressions on banners, videos, and other visual ads. It’s difficult to catch because bad actors continually develop new ways of evading detection. Marketers, advertisers, and publishers must all be aware of evolving techniques.
3. Conversion fraud
Conversion is similar to click fraud and focuses on manipulating conversion actions like sign-ups, purchases, or other user actions. Below are some examples of how it works:
- Illegitimate conversions: Perpetrators make it seem that real users are taking specific actions that advertisers value, like signing up for a newsletter or downloading an app.
- Deceptive metrics: Fraudsters manipulate conversions to make it seem like a specific advertising campaign is more effective than it is.
- Financial fraud: Bad actors get money from driving fake conversions from affiliate programs.
4. Ad injection
Ad injection, also called adware injection or adware bundling, is a more complicated example of ad fraud. Cybercriminals trick users into installing adware or other potentially unwanted programs onto devices. It’s typically bundled with freeware or shareware applications that claim to provide certain functionalities. However, they exist primarily to inject ads into apps and web pages.
After installation, the adware places additional advertisements on web pages a user visits from the affected device, regardless of whether the site owner has given permission. The injected ads display next to legitimate website ads.
Adware creators generate revenue by distributing it through pay-per-click models and affiliate marketing. They benefit even more if users accidentally click on an injected ad because of the additional ad impressions.
Ad injection is one of the worst types of ad fraud. It degrades the user experience by placing intrusive, distracting ads that may contain malicious viruses or other malware. Website owners end up losing control over their website content and risk damaging their brand.
5. Domain spoofing
With domain spoofing, bad actors create websites that appear to be legitimate, high-quality spaces. They then fool advertisers into paying money to display ads on the fraudulent site. They get away with this by altering the data submitted in a bid request or ad exchange.
Tricking advertisers this way diverts money from legitimate publishers and can decrease user engagement with those ads. You often see domain spoofing done in programmatic advertising and real-time bidding because of the complex, decentralized nature of digital advertising. It’s hard for advertisers to recognize that they’re placing ads on a fraudulent site until it’s too late.
What Is Ad Fraud Doing to Publishers and Advertisers?
A publisher is any content creator who displays ads to monetize their online platform. That includes website owners, app developers, and social media owners. Advertisers are organizations, individuals, or entities promoting a product, service, brand, or message. They use advertising to achieve specific marketing goals, like increasing brand awareness, generating leads, driving sales, or pushing certain statements or value propositions to customers. Ad fraud has a huge impact on both.
Effect on publishers
Legitimate advertisers often reduce their marketing investment because of money wasted on fraudulent impressions, so publishers lose out on revenue. Publishers can also suffer reputational damage when advertisers realize they’ve been showing ads in low-quality spaces because of ad injection or domain spoofing.
Combating ad fraud in all forms requires dedicating a spot in the budget to ad fraud detection and prevention solutions. Publishers must worry about issues like traffic monitoring, locating fake ads, blocking suspicious activity, and setting up proactive measures to stop ad fraud. Paying for additional protections can become a financial burden for smaller publishers with fewer resources.
Effect on advertisers
Advertisers must worry about how ad fraud impacts their marketing budgets, brand reputation, and return on investment (ROI). They must determine whether a marketing campaign’s impacts are real or if bad actors altered the metrics. Below are some of the ways ad fraud hurts advertisers.
- Wasted money: Advertisers must work within a specific budget. They gain no value from their efforts if the money goes toward fake or low-quality impressions and conversions.
- Misleading metrics: Ad fraud distorts KPIs, making it hard for advertisers to accurately assess the true impact of a marketing campaign. Advertisers may make bad decisions that cost them even more money.
- Lower ROI: Fraudulent ads inflate costs and skew KPIs, which lowers ROI and makes it hard to justify spending more money on digital advertising.
How To Prevent Ad Fraud
Dealing with ad fraud requires publishers and advertisers to commit to a strategy of discouraging bad actors. One way to do that is by setting up reliable proxies. They make it possible to verify that ads shown on sites are going to the correct audience. Below are some other ways advertisers and publishers can prevent ad fraud from affecting their bottom line.
Advertisers
- Use ad verification tools: Look for ad verification tools from third-party providers that review the quality and legitimacy of ad impressions.
- Establish traffic quality standards: Set up guidelines for inventory and traffic you wish to purchase. Make these standards known to ad networks, exchanges, and demand-side platforms.
- Use Ads.txt and Sellers.json: Use industry initiatives like Authorized Digital Sellers (Ads.txt) to increase transparency and verify the authenticity of inventory sources.
- Set up fraud detection algorithms: Invest in machine learning technology and fraud detection algorithms that identify and block fraudulent traffic in real time.
Publishers
- Monitor traffic sources: Pay attention to traffic sources going to your website or app. Check out any unusual traffic spikes or suspicious patterns. That can indicate the presence of ad fraud.
- Use HTTPS encryption: Adding HTTPS encryption to websites enhances their security. It also helps stop other types of ad tampering.
- Track user engagement: The main thing to understand about ad fraud is that the main goal is to mimic real people. Keep your eye on user engagement metrics like bounce rates and time spent on site. If you see negatives there, that can indicate the use of fraudulent ads.
Protect Your Sites With Proxy Servers
Website owners can help prevent ad fraud by using residential proxy servers. They’re also helpful in setting up web scraping processes to gather competitor data. Check out how Scraping Robot can enhance data collection processes and manage proxies for you.
The information contained within this article, including information posted by official staff, guest-submitted material, message board postings, or other third-party material is presented solely for the purposes of education and furtherance of the knowledge of the reader. All trademarks used in this publication are hereby acknowledged as the property of their respective owners.
