U.S. Businesses are losing Billions of Dollars to Mobile Ad Fraud

The online digital advertising industry is expanding rapidly. Global digital ad spending is expected to exceed $571 billion in 2022 alone. While this is great news for the advertisers and marketers, it also gives fraudsters a wide range of opportunities to exploit. In fact, as per recent research, the digital ad industry is expected to lose $81 billion in losses in 2022, up from $65 billion in 2021.

The Problem

Digital marketing campaigns are vulnerable to mobile ad fraud techniques like bots and click farms being hidden by geo-masking and data center traffic, the campaigns can be exploited from anywhere in the world. While every advertiser in every country faces risk, mobile ad fraud is more prevalent and occurs at higher rates in some countries. The United States continues to be a huge, lucrative target for fraudsters, and it's time to take this fact seriously given the rise in digital ad spending, wealthy customers, and having the world's largest advertisers here.

The definition of Mobile Ad Fraud

Mobile ad fraud is a sophisticated type of ad fraud used to defraud advertisers. The objective behind these actions of fraudsters is to steal from advertising budgets. Click hijacking, click injection, ad stacking and SDK spoofing are some examples of mobile ad fraud prevalent today.

Types of Mobile Ad Fraud and how are they draining marketing and advertising budgets

With so many types of mobile ad fraud and increasingly sophisticated techniques to perform them, marketers and advertisers must be aware of exactly how fraudsters can manipulate the outcomes of digital advertising.

Mobile ad fraud comes in a variety of forms that are widely used in the market and have the potential to wipe out your marketing budget. The most frequent types of mobile ad fraud are as follows:

Impression fraud:

Impression fraud, also known as display fraud, is a type of mobile ad fraud in which fraudsters make it appear as if an ad was seen when it wasn't . Impression fraud is when an ad is not viewable to the human eye, yet impressions are still counted. Pixel stuffing, ad stacking, and fraudulent traffic are the most well-known fraudulent ways used to carry out this fraud.

Pay-per-click (PPC) fraud:

PPC fraud, also known as click fraud, is a type of mobile ad fraud where individuals repeatedly click on banner ads they have no interest in, either to falsely inflate numbers or deplete advertising expenditures. PPC fraud can be carried out by actual humans using click farms, malicious software, automated scripts, or malicious bots.

Cost-per-lead fraud:

This type of mobile ad fraud occurs when fraudsters buy illegal contact information from third-party vendors or use crawler bots to scrape the internet for consumer data to create fake leads. Additionally, bots can automatically complete lead generation or signup forms with fake or stolen buyer information.

Install fraud:

This type of mobile ad fraud is generally performed by real humans working in device farms or by automated tools. Click injection, SDK spoofing, and click hijacking are a few of the techniques fraudsters use to perform install fraud to fake app installations and earn money from cost-per-install (CPI) campaigns.

Attribution fraud:

Attribution fraud is a supply chain drawback that publishers and ad networks exploit to steal organic and other sources traffic. Manipulating the last click helps ad fraudsters steal advertising dollars. Attribution manipulation is often done using incent or malware enabled applications where fraudsters are continuously scanning devices for APK changes and payments.

The consequences of operating without a fraud prevention solution are the same regardless of the forms of mobile ad fraud your campaigns are facing. According to research, because of growing types of mobile ad fraud, businesses may anticipate an 11 percent drop in return on ad spend (ROAS) and a 9 percent rise in cost of client acquisition (COCA).

Why is Mobile Ad Fraud in the U.S. such a big problem?

Many of the countries suffer from a lack of mobile ad fraud regulation and are experiencing large, unstructured economic growth. The U.S. digital advertising industry, however, is widely considered as the “reference” globally— so why does it rank so high on the list of countries exposed to mobile ad fraud?

Data tampering is the biggest mobile ad fraud threat in the U.S., followed by bad bots and impression fraud. The U.S. houses some of the top top cloud providers, VPN firms, and carriers in the world, in addition to the biggest advertising globally. Users from all over the world use VPNs and residential proxies to conceal their location and access apps and websites that aren’t available in their countries. Because of this reason, a portion of fraudulent traffic which is attributed to the U.S. actually comes from other countries.

All this to say, the U.S. suffers from the highest mobile ad fraud-induced losses in the world.

How does Mobile Ad Fraud affect the U.S. marketers and advertisers?

The more your ad budgets are wasted on fake traffic, the more likely it is that you won’t be able to reach your overall business goals.

The U.S. is home to the largest advertisers in the world, and mobile ad fraud prevention is now becoming more of a priority for the advertising ecosystem as a whole — especially for CMOs responsible for the return of ad spends (ROAS).

Fraudsters are constantly refining their techniques and becoming more sophisticated and skilled. Enterprises without proper mobile ad fraud prevention solutions cannot keep up with the pace of fraudsters and will continue to face increased COCA and reduced ROAS and will be outperformed by their competitors