Digital advertising has opened up many new revenue opportunities for businesses in the decades since the popularization of the internet. When used effectively, online advertising can put companies in front of a massive audience and help build the business.
Spending on online advertising is enormous. According to Statista, in 2019, “search advertising spending stood at 104.8 billion U.S. dollars worldwide. This amount is projected to grow to about 137 billion U.S. dollars by 2022.” Meanwhile, display advertising spend reached over $160 billion U.S. in 2019. This enormous ad spend has attracted the attention of criminals looking to make easy money by defrauding marketers and merchants of their advertising budgets.
This ad fraud has become a major issue for businesses of all sizes and industries. And, the more companies spend on advertising, the more they stand to lose to ad fraud.
What is ad fraud? How does advertising fraud work? How can it ruin a company’s bottom line? Most importantly: What can you do to prevent it?
Ad fraud is when criminals attempt to defraud businesses of money from their advertising efforts. This fraud can take many forms depending on the tools the fraudster uses and the type of ad campaign being defrauded.
Some of the key types of ad fraud marketers and business owners need to know about include:
In ad fraud, domain spoofing is the practice of disguising one website as a different, more valuable website. By spoofing a domain, cybercriminals can trick advertisers into paying more for advertising space on the spoofed website than they should.
Some warning signs of domain spoofing include traffic from the spoofed domain not matching what the website should be getting, a cost per mille (CPM) that is too low for a high-value site, the domain in question not normally running ads, the publisher not selling ad space in a real-time bidding (RTB) auction, and a suspicious email being listed as the domain owner.
This is an ad fraud strategy where cybercriminals put malware on user devices. The malware will then generate clicks on ads, such as Facebook ads or website banner ads, to falsely inflate spending on those ads. Infected devices may be referred to as botnets.
As noted in a Tech Crunch article: “Developers create junk or easy-to-make apps which get downloaded millions of times, while in the background they’re clicking on invisible ads without the user’s knowledge.” In the article, Facebook had brought a lawsuit against two app developers who were accused of this practice.
Bad bots spread by malicious software in mobile device apps can cause billions of dollars in losses. Anura once identified and isolated two apps as containing bad bots meant to rack up clicks – Lovely Rose and Oriental Beauty. After installing the two apps on a mobile device and leaving that device in sleep mode for a full 24 hours, our team logged that the device had generated 3,061 requests for an ad and 169 successful clicks.
Imagine how these bots could impact ad spend when applied across a million devices running for months or even years.
Because their browser has an affiliate tracking cookie, the merchant’s affiliate marketing program gives credit for the visit to the cookie stuffer—even if the fraudster never actually promoted the site. This misattribution can consume ad spend and hurt honest affiliates since the fraudster is stealing credit for leads and sales from them.
Pixel stuffing is a form of ad fraud where a fraudster creates a tiny, typically 1 x 1 pixel area, advertising display that a normal person would never see. This fraudulent ad technique is designed to take advantage of marketing programs that base their ad spend on impressions.
Using pixel stuffing, a criminal can display dozens or even hundreds of ads on a single webpage and get credit for impressions. However, these single-pixel ads do not generate results since viewers will never even realize that they “saw” an ad.
Some ad campaigns may have different ad spend for different regions of the world (referred to as geo-targeting). For example, a company might set up a paid ad campaign that pays at a higher rate for leads coming from the U.S., a slightly lower rate for leads from Mexico and Canada, and then not trigger for leads from overseas locations not available for North and Central American ground shipping.
Geo masking in advertising is when a fraudster hides the location of the leads they generate. This involves spoofing the IP addresses of the leads they generate to make them look more valuable so they can charge advertisers more for the “leads” they provide.
The goal of ad stacking is similar to the goal of pixel stuffing: To put more ads in front of website visitors to inflate impressions. Where ad stacking differs from pixel stuffing is that instead of creating “invisible” ads that are only one pixel across, multiple ads are “stacked” one on top of the other in the web browser.
For example, if five ads are all stacked on top of one another, the fraudster can claim credit for all five impressions, even though the “top” ad is the only one website visitors actually see. This can also contribute to cookie stuffing, as each ad can put a cookie on the visitor’s web browser.
Ad injection is a fraud strategy where criminals use browser extensions, plugins, and malware to put ads where they shouldn’t appear or replace the ads on a website with different ads. When people click on these misplaced ads, the fraudster gets credit for a click—even though they don’t own the website the person is clicking on.
Because fraudulent ads are inserted into websites without the site owner’s permission, it can potentially lead to legal trouble. The victimized websites lose out on the ad revenue they should have made because their own ads have been replaced with ones that they cannot earn money from. So, they may try to recover those losses with legal action.
How can the different forms of ad fraud affect a company’s bottom line? Here are a few of the potential impacts of advertising fraud:
So, how much is ad fraud costing your business? The answer to this question can vary depending on factors like how your company purchases traffic (leads, clicks, impressions, or a combination of ways), the number of leads/clicks/impressions purchased per month, and how many bad leads you get from your ad campaigns.
For example, say your company pays for 20 million impressions per month, with 25% of those impressions being bad (the industry standard bad impression rate), and pays $5 per thousand impressions. In this case, you might be losing $25,000 per month to ad fraud.
This doesn’t include the cost of time wasted in pursuing bad leads or any of the long-term impacts of fraud.
Wondering How Much Ad Fraud Is Costing Your Business? Try the Anura Ad Fraud Calculator
One of the best things that a company can do to protect itself against the costs of ad fraud is to detect fraud early and put a stop to it as soon as possible. This is where ad fraud solutions like Anura can help.
Anura helps to identify fake leads in real time using a database of over a decade of real-world data to parse the real traffic from the frauds. In addition to powerful and accurate fraud detection, Anura comes with world-class support so you can make the most out of your ad fraud solution!
Instead of having to manually review mountains of data, you can let Anura tackle the difficult task of identifying fraud. This helps free up your time to focus on more value-added tasks that help improve your business’ revenue.
Do you need to stop ad fraud in its tracks? Request a trial now! You can also learn more about how to protect your business against affiliate marketing fraud by downloading The Rise of Affiliate Marketing Fraud whitepaper at the link below:
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