Ad fraud was actually more lucrative than credit card fraud in 2022 both in terms of money lost and percentage of industry revenue. Cheq research shows that ad fraud accounts for 10.5% of all digital marketing activity.
There are large sums of money involved. Despite the best efforts of major advertising platforms, it seems that ad fraud is on the rise.
Marketers are becoming more aware of the need to avoid fraud. This is why the market for prevention of ad fraud is rapidly growing.
What can you do to prevent this? Is ad fraud a problem that can really impact your business?
What is ad-fraud?
Ad fraud refers to the fraudulent manipulation of clicks or views on an online advertisement for financial gain. This involves placing ads on a website, app, and creating fake traffic.
Ad fraud is, in essence, a scheme to make money for unscrupulous website and app developers.
It takes technical proficiency to create a digital ad campaign that is successful.
Many campaigns use complex technical features, such as click injection, domain spoofing and pixel stuffing. These are all used to fool marketers and maximize impressions. You can also hide traffic sources or generate fake traffic using tactics like impression fraud to trick advertising platforms and make as much as possible.
Click fraud or d fraud
Click fraud can also be called ad fraud. However, it is more well-organized. Click fraud is actually a category that includes less well-organized forms of click fraud, like malicious clicks by individuals.
Researchers from the University of Baltimore, CHEQ and the University of Maryland found that click fraud cost marketers $35Billion in 2020. This amount is expected to rise to $40B in 2021.
Although adfraud is technically not illegal, it can be difficult and lengthy to bring legal charges against ad platforms. Google, Bing and other companies have processes that protect against click fraud from the most obvious sources, but this is often considered inadequate.
Learn more about click fraud in the complete guide
What are the Different Types Of Ad Fraud?
While bots and automated processes are often used to define ad fraud, there are also human-touch methods. These are the most common ad fraud methods you will encounter.
Ad fraud refers to the practice of placing ads on a platform and increasing the number of impressions, clicks, or conversions in order to get a payout.
Hidden ads or Ad stacking
Sites can host ads that are technically invisible to the human eye in a variety of ways. The most common ways to display ads are in a square 1×1 pixels, stacking multiple ads or placing the ad outside the visible area.
This approach will pay the site owner a commission for the display of the ad, but the advertiser won’t see any traffic or clicks.
Advertisement displayed in an imperceptible formatZero or extremely low traffic Chances of fraud
Ad stacking refers to multiple ads being placed on the same property.
Click farms are a major source of traffic that is mass-produced for ad fraud. Click farms employ bots, or people who are trained to click on ads. These bots are not real customers and the click is useless for advertisers.
A click farm is a physical place that houses hundreds of people who are assigned to click, like and interact with content 24 hours per day.
Remote workers can also be a part of click farms. You may have seen the’make money working from home’ advertisements online. These can include remote clicking, via PTC (paid-to-click websites or apps). Marketers now face a problem because of the growing number of paid to click businesses.
Click farms are hard to defeat.
A depiction of an Indian click-farm is taken from the TV show Silicon Valley
Bot traffic is the number one source for ad fraud. It refers to automated systems that interact or click on websites. Bots can be a mixed bag.
Many simple bot programs can be set up to perform repetitive tasks, such as scanning domains and clicking on specific ads. These bots can be easily identified because they share a common IP address and cookie profile.
Perhaps you have seen simple bot behavior with spam messages in your email inbox. If you have a website or blog, you might also have noticed spam comments.
Advertisers face increasing difficulties with bot traffic. These bots can perform more complicated tasks, such as:
Rotating IP addresses to imitate user behavior using proxy servers for their location
These bots are able to play the PPC system and maximize exposure to the highest-paying ads. They also create traffic that looks genuine for a better chance of a large payout.
Fraudulent clicks and adfraud are most common. Simple bots have predictable behaviour and are easy to defeat. Criminal organisations often use complex bots to increase their income.
Hijacking clicks and ads
This clever technique uses malware to hijack an ad on a website (also known as clickjacking or click injection or malvertising). The hijackers then replace the code with their own.
By changing the ad, hijackers can display their ads without paying for them. The original advertiser will still pay the bill.
You can redirect clicks to another site using this method, even though the original ad was displayed. The advertiser pays for each click, but the hijacker reaps the benefits of the traffic.
Malware that alters the code of display ads in hijackers favourCan divert traffic from legitimate ads or display a new ad above the advertisers’. Click injection can claim organic clicks fraudulently using hidden links and ads (without users knowledge).
Arbitrage or Impression Laundering
This clever type of fraud entails the stealing of legitimate display advertising to less relevant or even downright fraudulent sites. These sites also tend to have high traffic. Advertisers are often hit with high-price CPM (cost per miles) campaigns, in which the success of an ad is measured in impressions and not clicks.
Advertisers can use clever redirects to ensure that their ads are displayed on legit partner sites.
Advertisements can be found on sites that are not relevant or promote illegal activity. These sites are high-traffic sites so impressions may be high
How to protect yourself from Ad Fraud
These are the most prevalent types of adfraud, but the goalposts keep moving and new forms are popping up all the time. It can be difficult to minimize or even know your exposure to fraud because the practice isn’t illegal.
You can take steps to reduce your risk of being a victim to fraud and control your ad spending. These are all things that you can do with your PPC campaign. Others will require you to use a paid service. You might consider which service is best for you business based on your potential to gain or lose.
Monitor your data
You can identify suspicious activity by monitoring your traffic sources and CTR data. If you notice suspicious traffic coming from an unknown location or if conversions are low but high, then it is worth looking at your online advertising partners.
You can blacklist IPs and domains that you suspect are sending you dodgy traffic from less reputable partners. You have no control over the malware or traffic they send, so it is best to keep them blacklisted.
d Fraud Protection
ClickCease is a fraud detection service that can detect fraud in ad campaigns. Click fraud prevention services are specifically designed to protect and defend your digital advertising campaigns. These sophisticated algorithms protect against bot traffic, click farm traffic and other invalid traffic like VPNs.
Ad fraud protection is especially useful for high-volume campaigns with high values, and those that target competitive keywords. Even though click fraud and advertising fraud are not uncommon in certain industries, agencies that work with multiple clients will reap the benefits.
You can find our complete report on click fraud and its impact on SME business here.
ClickCease protects online ads from major networks such as Google, Facebook, and Microsoft/Bing. ClickCease can stop bots, increase your leads, and maximize the return on your advertising revenue.
Register for a free trial to run your own audit of ad fraud.
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