Ad fraud expected to grow to over $19bn

Since 1993, when the first clickable banner ad came to life, digital advertising has gone through significant developments. According to the Interactive Advertising Bureau (IAB), digital advertising reached an all-time high in revenue ($48.8 billion), overcoming conventional cable TV advertising ($40.1 billion) in 2013.

The mechanics of digital ads is not necessarily complex; but rather paved with challenges that advertisers must learn to overcome. The main challenge: preventing ad fraud. A Juniper Research report estimated that a $19 billion loss in fraudulent activities will surge by 2018. By 2022, the number is expected to increase to $44 billion. What does this mean for your online business?

New categories of highly-complex fraudulent ads continue to emerge, like auto-page-refresh, sneaky pop-unders, and others. Don’t underestimate their abilities, and pay better attention to ad verification policies.

What’s your take on paid advertising?

If you own an online business and also have a website, chances are you may know a thing or two about paid advertising. Whether we’re talking about paying to have your banner displayed on another website, or about the perks of PPC advertising, there’s no doubt online advertising is on a roll this year. In general, for every $1 you spend for online ads you should get at least $2 in return.

While this seems like good news, it’s not that easy. As a business, you want to grow your ROI; make yourself stand above the competition with killer ads, and expand your target audience, right? The problem is, millions of online businesses around the globe spend a fortune on ads that only look real. Many don’t realize that they’ve been victims of ad fraud until it’s too late. How do you stay protected? How do you know that your ad got clicked by 10,000 real people and not 10,000 bots?

Types of ad fraud lurking around

The profitability and credibility of advertisers and publishers is at risk due to ad blockers.

Global adblock authority PageFair, mentioned in its latest Global Adblock Report that mobile adblock usage increased by 108 million. 380 million active devices use some sort of ad blocking software. On desktop, the usage reached 236 million devices.

Fraudulent ads are disrupting the digital advertising industry; challenging you to spend more money on building a solid brand image. Ad fraud involves scamming you with fake traffic, ad placement, and lead generation. Simply put, you pay for fake exposure; and even if the exposure is real, the actual fraud might be the inability of an ad to reach your target audience.

There are several main types of ad frauds:

We’ve gotten tired of annoying pop-ups that keep showing up on our screens every time we’re just trying to read a piece of content. But there’s more. Ad fraud goes beyond a scammer’s attempt to “force” people to click on a moving ad. Do you want to know more about some of the most dangerous types of ad fraud? Have a look at our top picks:

Click fraud — click fraud is a well-known type of ad fraud (e.g. auto-directs, pop-ups and pop-unders) that dates back to the beginning of digital advertising. The fake traffic generated is meant to show unrealistically high click rates.

Impression fraud — it involves false ad measurement of a target audience. In layman’s terms, scammers fake reports that show the number of times an ad was viewed. From a technical perspective, a fake impression is not a person viewing an ad, but a browser asking for an ad. Impression fraud is defined by the following:

• Bot traffic: bots developed by hackers. The purpose is to inflate statistics artificially after hijacking a device. Bot traffic mirrors browsing behavior performed by real people, such as visiting websites, clicking on links or watching videos. The biggest ad fraud ever recorded was done by Methbot, a botnet that snatched $5 million/day faking over 300 video views.
• App software development kits, also known as SDKs: these create false impressions by hijacking devices.
• Pop-ups & pop-unders that load at the same time, and appear almost impossible to stop.
• Ad stacking: stacking ad units involving placing one ad on top of the other. Only the impression at the top is registered as “seen”; the ones that go underneath are “unseen ads” that are only marked “seen” to charge advertisers.
• AdWare and ad injection fraud: toolbars or malware are used to inject the ads, and disrupt the browsing experience of actual users; the purpose is to increase clickthrough rates and generate more ad impressions.

To the average business owner, the above-mentioned types of ad fraud may not seem that scary. Why? Because we have a habit of thinking “It’s not gonna happen to me.” How certain are you that the marketing agency you’re working with is reliable?

$16.4 billion wasted on financial ad fraud

World leader in advertising and marketing services, WPP, argues that global advertising revenue spent on fraudulent clicks or traffic generated automatically by bots might reach $16.4 billion by the end of 2017. From a statistical point of view, the estimated number is a clear sign that you should keep a closer eye on the quality of your traffic when planning ad campaigns.

Ad fraud is a core concern in the ad tech scenario. 78% of marketers agree that consolidation is the key to reducing bot traffic. Integral Ad Science argues that 9% of ads sent via programmatic channels are scams. Because there are numerous intermediaries involved in the process, the complexity limits the ability to detect ad fraud and bot traffic efficiently.

Fighting ad fraud? Follow the money trail behind the ads

Marketers, publishers, and ad tech firms are all players in the digital advertising scenario. To put an end to ad fraud, the key to fighting ad fraud is to follow the money behind the ads. A traceable, transparent supply chain that supports identification of everyone involved in the transactional process is one solid way of reducing fraud.

To get started, the first step would be to come up with a streamlined method to identify all transactions and partakers in transactions. Ad fraud is profitable, and that’s why it exists. In marketing, brands should commit to higher standard and take precautionary measures ahead of time to prevent fraud.

Botnets are a huge threat because they’re adaptable, and can mimic human traffic when the right coding is implemented. Some publishers feel powerless in front of fraudulent ads displayed on their sites; these often hinder user experience, also known as “maladvertising”. Truth be told, visitors can’t be blamed for wanting to protect themselves.

Ad fraud predictions

Automation makes the ad buying process a lot more efficient and detailed. However, it’s also the perfect ground for fraudsters to take advantage. Your company’s ad ops team may seem

incredibly excited that they can buy traffic at extremely low prices. Sadly, they often don’t realize that they might become victims of ad fraud.

The moment the quality of an ad drops, advertisers become desperate to do whatever’s necessary to get more traffic; oftentimes, entering a vicious cycle that only benefits ad scammers.

The good news is there are solutions. Ad fraud can be predicted, provided that the right precaution measures are taken into consideration. Video, for example, is a tempting target for fraudsters because of the format (higher CPMs than mobile or display). Even though there are ways to spot fraudulent video interactions — such as clicks made by bots — video ad fraud demands advanced coding skills.

Some tips that protect you, your brand, and business from ad fraud:

• Leverage the power of AI to verify your pages
• Reports issues the moment they happen
• Read as much as possible about ad fraud, and don’t rely solely on brand name verification.
• Assess metrics the right way: steer clear of buying in bulk, or depending on metrics such as general likes or shares. Insist to evaluate all your campaigns with conversion metrics (e.g. real sign ups, real purchases made, real views).

Blockchain technology, a key player in fighting ad fraud

Because all the data stored on the blockchain is transparent and opened to the public, it can’t be changed after it has been stored; hence, can’t be duplicated. What does this mean for ad tech companies? Basically, that all ad impressions can be closely monitored, tracked and recorded on the supply chain.

Blockchain technology could help spot fraudulent traffic, thus adding an extra layer of transparency to the technical ad buying process. According to the World Federation of Advertisers, the global cost per ad fraud might increase to $50 billion in 10 years. Consumers have already started allocating more time on digital media consumption, whereas advertisers are putting more money into digital channels.

AI — a solution to combating ad fraud?

AI continues to revolutionize tech industries, providing new insight levels into the way we predict consumer behavior. Combining math, digital building block combinations, data, and algorithms, artificial intelligence can solve complex problems normally done by people. Facebook, Apple and Amazon leverage the power of AI to combat ad fraud because they’re aware of its potential.

Implemented correctly, AI can play a fundamental role in advertising. Some of the benefits include enhancing the ability of advertising platforms to target audiences correctly and detecting fraudulent ad activities ahead of time. The problem is the digital ecosystem is vast; so vast that it will keep feeding bot farms with information to disrupt advertiser ad budgets.

Detection strategies to prevent ad fraud are being perfected with the help of AI. Whereas low level ad fraud can easily be detected and monitored, preventing bot fraud demands a much bigger investment. The end goal is to minimize non-human ad traffic.

Bottom line

Did you know that there are click farms that go beyond the conventional bots? These farms use actual humans to make calls, fill out forms, and perform extra actions that bots can’t do. Don’t look at fraud like a “set and forget” strategy for your business. The best thing that you can do is realize that it’s a threat constantly lurking around the online scenario. The best approach: acknowledge that ad fraud is not going anywhere, and work your way around building a strategy that curves fraud and protects your business and advertising budget.