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Businesses nowadays heavily rely on online advertisements to reach their customers. The money spent on digital advertising is expected to reach US$740.3bn in 2024. However, this large amount of money has attracted fraudsters to create fake traffic and generate ad revenue using illegal practices.
In fact, according to a study by Juniper Research, ad fraud is expected to cost marketers $170 billion by 2028, accounting for 22% of all online ad spending. This is an alarming trend that needs to be addressed.
In this article, we will discuss what ad fraud is, how it affects businesses and consumers, and the steps that can be taken to prevent it.
Conversions on online advertisements. Moreover, it is a practice that aims to deceive advertisers by falsely representing the performance of their ads.
As clicks or impressions increase, advertisers are led to believe that their ads are being viewed and clicked by interested users. However, these clicks or impressions may come from bots or other fraudulent sources.
The fraudster earns money once the ad is clicked through pay-per-click or pay-per-view models. This results in a waste of advertising budget and misleading data for advertisers.
Ad fraud can occur in different forms, including:
Hidden ads are those that are not visible to the user. They are usually placed behind legitimate ads or hidden within a webpage’s code. When the page is loaded, the hidden ad also loads and generates revenue for the fraudster without being seen by the user.
Fraudsters can also use fake app installations to commit ad fraud. They create fake apps that claim to have a large number of users and display ads within the app. The fraudster earns money from the fake ad clicks as these fake apps are downloaded.
URL hijacking is when a fraudster manipulates a legitimate website’s URL to make it look like their own. This is commonly done by adding a subdomain or directory to the URL. When users click on the ad, they are directed to the fraudulent website instead of the legitimate one.
Clickjacking is a technique used to trick users into clicking on ads without their knowledge. This is usually done by placing invisible buttons or links over legitimate content, so when the user clicks on what they think is genuine content, they click on the ad.
Bots are computer programs designed to automate tasks on the internet. They can be programmed to click on ads, generate fake impressions, or even fill out lead forms, all with the intention of deceiving advertisers.
Fraudsters use these bots to simulate human activity and generate ad revenue. They can be challenging to detect as they can mimic actual user behavior.
Invalid traffic (IVT) is any clicks, impressions, or conversions that are not genuine. It can be classified into 3 categories:
General invalid clicks refer to clicks that do not come from real users. This includes bot traffic, automated scripts, and manual click farms. These clicks do not generate any real value for the advertiser.
Sophisticated invalid clicks are more difficult to detect as they mimic human behavior. They can come from bots with advanced algorithms or human click farms where individuals are paid to click on ads manually.
Non-authenticated traffic refers to clicks that cannot be verified as coming from a legitimate source. This can include clicks from hidden ads or fake websites.
Bot traffic is any traffic generated by bots, as mentioned earlier. It is an umbrella term that includes all types of invalid traffic bots generate
Fraudsters use various techniques to commit ad fraud, some of which include:
Cookie stuffing is a technique where fraudsters place cookies on a user’s computer without their knowledge. These cookies can generate fake clicks and impressions, leading to ad fraud.
Ad stacking is when multiple ads are placed on each other, with only the top ad visible. This allows fraudsters to generate impressions for multiple ads from a single user.
Pixel stuffing is similar to ad stacking, but invisible pixels are used instead of placing multiple ads on each other. This means an impression is generated even if the user does not see the ad.
Ad injection is when ads are injected into a user’s browser without their knowledge. These ads can appear on legitimate websites and generate fraudulent clicks and impressions.
Device ID spoofing is when fraudsters manipulate the unique identifiers of devices to make it seem like multiple devices are generating ad impressions. This can artificially inflate ad metrics.
GEO masking is a technique that hides the actual location from where clicks and impressions are generated. Fraudsters can use proxy servers and other methods to mask the actual location of their fraudulent activities.
Click frauds involve generating clicks on ads without any genuine interest or intent. This can be done through bots or click farms, resulting in wasted ad spend for advertisers.
Domain spoofing is when fraudsters use a fake domain to make it seem like an ad is being served on a legitimate website. This tricks advertisers into thinking their ads are reaching a specific audience, but in reality, they are not.
Non-human traffic refers to any clicks or impressions generated by bots. These clicks do not come from real users and are intended to deceive advertisers. This can artificially inflate ad metrics and waste ad spend for businesses.
Several tell-tale signs can indicate the presence of ad fraud. These include:
An unexplained spike in clicks or impressions can be a red flag for ad fraud. For example, if a campaign typically receives 100 clicks per day but suddenly gets thousands of clicks in a single day, it is likely that bots or other fraudulent activities are involved.
If your ad campaign has a high number of clicks but a low conversion rate, it could be an indication of ad fraud. Bots can click on ads but cannot make purchases or fill out lead forms, resulting in a low conversion rate.
Location and referral sources of clicks can also indicate ad fraud. For example, if a majority of clicks are coming from countries with low internet usage or suspicious websites, bots are likely involved.
If leads generated from an ad campaign seem confused about how they got to your website or do not remember seeing the ad, it could be a sign of clickjacking. This means the user unknowingly clicks on an ad and is not genuinely interested in your product or service.
A high click-through rate (CTR) is usually seen as a good thing, but it can also be a sign of ad fraud. For example, if your campaign has an abnormally high CTR compared to industry standards, it could mean that bots are clicking on your ads.
To prevent ad fraud, businesses can take the following measures:
Your ad network or platform should be transparent about your traffic sources. The location you are targeting, referral sources, and device types can help identify suspicious traffic. Also, consider the reputation of your traffic sources and if they have a history of fraudulent activities.
Tools such as ad fraud detection software, click fraud detection tools, and viewability measurement can help identify fraudulent activities in real time. These tools use advanced algorithms and machine learning to analyze traffic patterns and detect suspicious or non-human behavior. If detected, the tool can automatically block the fraudulent traffic or flag it for manual review.
Key Performance Indicators (KPIs) such as click-through rates (CTR), conversion rates, and bounce rates can help identify anomalies in your advertising data. Regularly monitoring these metrics can help you detect sudden spikes or drops that may indicate fraudulent activities.
Ad verification is the process of verifying if an ad was delivered to a real human user and appeared on a legitimate website. This can be done through third-party tools or ad verification services. Ad verification also ensures that your ads are placed on suitable and brand-safe websites, reducing the risk of ad fraud.
Ads.txt is a text file that lists all authorized digital sellers of a publisher’s inventory. It allows advertisers to verify if legitimate publishers are serving their ads, preventing fraudsters from spoofing their websites and stealing ad revenue.
Regularly auditing your traffic sources can help identify any discrepancies or fraudulent activities. This includes checking for invalid clicks, suspicious IP addresses, and non-human traffic. Immediately block the source and prevent further damage if any fraudulent activity is detected.
Partnering with a trusted and transparent advertising platform can help prevent ad fraud. A reputable ad network or platform will have measures in place to detect and block fraudulent activities, ensuring that your ads reach real human users. They will also provide transparent reporting and analytics, allowing you to monitor your ad campaigns and track the performance of your ads.
A DSP partner like Venzi Media, with strict quality control measures, can help businesses avoid falling victim to ad fraud. The platform uses tech stack solutions and AI algorithms to detect and block fraud in real time.
