What is ad fraud? How does it work and how to prevent it?

For Every $3 Spent on Digital Ads, Ad Fraud Takes $1

The above figure has been cited so frequently that it has undoubtedly affected the perception of digital advertising. Unfortunately, this is also true, as cybercriminals have been snatching considerable sums of money from major businesses' advertising budgets throughout the years.

One of the most poignant instances of fraud in any industry is certainly ad fraud. Digital ad fraud, mobile ad fraud, bot fraud, and other forms of practices that were once believed to be insignificant, are now costing the industry more than $68 billion in losses each year. Publishers and advertisers lose money as a result of the organised cybercrime activities that have grown out of ad fraud.

But as a marketer, how should you respond to such sort of malicious activity? To answer that query, you first need to understand what ad fraud exactly is and how does it influence your advertising efforts? In this article, we will be discussing advertising fraud in the digital ecosystem.

Ad fraud: What is it?

Ad fraud constitutes efforts made by cybercriminals and fraudsters to deceive online networks in order to make financial gains. More specifically, ad frauds prevent adverts from reaching the real target audience and redirect them to non-human traffic.

Digital ad fraud can function on several levels. Scammers employ bots to commit ad fraud, and they also have the ability to control traffic as well as elements like impressions, conversions, and imitating user behaviour. In marketing campaigns over the world, metrics such as traffic, bounce rates, impressions, conversions, etc. are used to determine its efficacy. However, it is relatively simple for cybercriminals to skew such data and figures. As a result, they have been duping big brands and businesses all over the world and stealing a good portion of their marketing budget.

How does Ad Fraud function?

There are many ways fraudsters can get advertisers and ad networks to pay them. In most cases, fraudsters send fake impressions, clicks, and traffic on digital ads. And not only bots, but fraudsters also rely on human-controlled traffic to engage in ad fraud.

Bot traffic, often known as non-human traffic, refers to fraudulent ad impressions made by bots. Bots are typically programmed and trained to carry out automated processes. This way, they can perform suspicious activities such as clicking on adverts, visiting websites, and so on under the instruction of a fraudulent programmer. Their robotic behaviour and conduct make them easier to detect.

On the other hand, incentivised fraud carried out by actual human beings is slightly difficult to assess. Impressions resulting from click farms will appear genuine (since they are from real beings), but those clicking on adverts are not the real targeted users for the ads.

In addition, there is also mobile ad fraud, wherein malware is injected onto mobile devices. It not only compromises the mobile apps and ad campaigns running on the device but also puts the users’ private data at risk.

What types of fraud exist in online advertising?

Cybercriminals can commit ad fraud in a number of different ways. Sometimes the fraud targets ad networks for views, and on occasion, they may also impersonate clicks or impressions. Let us now look at some of the most popular and damaging ad fraud techniques that exist.

Click Spam

Click spamming, which is also referred to as click flooding, involves sending a lot of clicks to a digital advert. It is very common in mobile ad fraud, where fraudsters send a huge number of fake clicks in an effort to claim credit for app installations. The commission intended for the advertisers is given to the fraudster after the app is installed. Although the consequences vary, click spamming fraud affects almost every player in the advertising industry. It has a minor impact on users, but it has a significant financial impact if you are a network, publisher, or advertiser.

Domain Spoofing

Domain spoofing is a type of phishing in which an attacker impersonates a well-known publisher’s domain, and then trick advertisers and people into trusting them. Many websites reserve space on their platform for advertisements and charge advertisers to promote their business. Scammers use a publisher’s website and create a fake domain, fooling advertisers into thinking it is a real website. As a result, they charge a premium to place the advertisements there. Moreover, advertisers receive good impressions, traffic, and clicks, but most of these interactions are fake. (since the website is fake)

Click Injection

Click Injection is another common technique used largely for mobile ad fraud that steals legitimate, organic traffic from other sources. Using an app (suspicious app with malware) that is already installed on the user's device, Click Injection will trigger a click even before a new app is fully installed, allowing fraudsters to claim credit for the install. Click Injection exploits the existing drawbacks of the last-click attribution model and injects a click before the lead is submitted or an install is completed. Fraudsters can click on numerous adverts simultaneously by using bots or bot networks.

Ad Stacking

In ad stacking, numerous ads are stacked one on top of one another. In the single ad placement, fraudsters stacks multiple ads, but only the top ad is displayed to the user..In general, all of the ads below the top ad count as impressions but are not really seen by the user. The user only sees the top ad. Consequently, marketers are charged for all of the ad impressions and clicks obtained from the adverts underneath, even though the user only sees the top ad. Advertisers are paying for unseen or un-clicked ads since they still load properly and comply with the rule that at least one pixel must be visible for at least 0.5 seconds (a common metric in the digital advertising industry). The objective of ad stacking is to bill publishers and advertisers for each impression and click on each stacked ad.

​Click Farms

It is one such ad fraud where the actual human beings were engaging in the crime. Click farms involve a large number of low-paid individuals recruited to particularly engage in target paid advertisements in order to "fake" impressions, clicks, and overall engagement of ads. Since it features real human traffic, it is also very hard to stop and avoid.

Geomasking

Geo Masking is a technique that can trick marketers into believing low-quality traffic ad high-quality. It is very easy for fraudsters to spoof or conceal the genuine location or address of a website, resultantly, also presenting fake users as a real ones. Some regions invest more in advertising and see higher conversion rates than others while running marketing initiatives. Thus scammers geomask their genuine identities using a VPN or RDP and thus get paid for irrelevant traffic, which is not the intended audience for the ad.

How does Ad Fraud affect online advertising?

While the primary motivation for ad fraud is money, in the context of ad tech, it is not exactly the end result. Decisions that are crucial to the campaign's operations are impacted by incomplete information. In addition to costing money, skewed statistics and misrepresented campaign outcomes can force marketers to implement more questionable decisions. The effect of the their method is overshadowed by the existence of malicious sources, even though it might be advantageous in a typical setting.

How is Com Olho combating Ad Fraud?

Monitoring anomalies in your ad campaigns can help determine the source of fraudulent or suspicious traffic. The anomaly-based strategy examines ad spaces for suspicious activity, such as unusually high traffic, unusual placements, and others.

Ad fraud is becoming increasingly difficult to identify, particularly without the usage of anti-fraud technologies designed expressly to protect your campaigns and ad spending from such frauds. Com Olho's technology can assist organisations in preventing different types of ad fraud before they have the opportunity to steamroll their ads and drain their budgets. Schedule a free demo to learn more about how Com Olho may help secure your advertising initiatives.