Digital advertising fraud is on the rise. According to projections by Juniper Research, the scope of digital advertising fraud will cost advertisers $100 billion by 2023.
What is digital advertising fraud? What information should you collect if you encounter it? Most importantly, how can you prevent digital ad fraud from affecting your online marketing campaigns?
A Brief Definition of Digital Advertising Fraud
Digital advertising fraud, or ad fraud, is the practice of viewing, clicking, converting, or generating false interactions with any web asset for the sole purpose of earning money—either directly or indirectly.
Such fraud can take many forms, including:
- Domain Spoofing. This is the act of driving fraudulent traffic to an illegitimate domain and making it appear as if that traffic comes from a trusted domain. They may also use a “look alike” domain with URL substitution to trick people into visiting their site.
- Click Fraud. Some businesses use cost per click/pay per click (CPC/PPC) revenue models that only pay when clicks are generated. Click fraud uses bots, malware, or human fraud farms to click on ads and make money.
- Cookie Stuffing. Fraudsters who cookie stuff will tag web users with cookies from unrelated websites that they did not visit without their permission. These cookies affect the attribution of traffic. For example, if an affiliate marketer directs a customer to make a purchase, the cookies will link back to the fraudster, who will receive credit for the sale.
- Pixel Stuffing. A fraud technique that allows a fraudster to maximize their impressions generated by putting tiny (often 1 x 1 pixel) ad displays on their site. The ad registers the impression, but the visitor doesn’t ever realize that they “saw” an ad.
- Ad Stacking. Another technique to boost impressions. Instead of creating “invisible” ads that are too small to see, multiple ads are stacked in one spot. People will see the “top” ad, but still generate impressions for all the ads buried under it.
- Geotargeting Fraud. This type of fraud is mainly used when an advertiser targets a specific geolocation. In this form of fraud, a fraudster sends ads from a different location, masking it to look like the location the advertiser targeted.
- Ad Injection. This method uses malware to infect a website to override normal ad placement protocols. This opens a site up to unwanted advertising, which can be placed in spots that haven't been paid for or, worse, were purchased by legitimate advertisers. Most injected ads are irrelevant to the website in question or feature inappropriate content. Due to the malware required to achieve this strategy, ad injection poses a significant risk to the sites in use.
Warning Signs of Digital Ad Fraud
Detecting digital advertising fraud can be difficult. However, there are some warning signs that can help you spot ad fraud, such as:
- High bounce rates for websites;
- Reductions in ad spend ROI;
- Traffic from unfamiliar sources or non-targeted geolocations;
- Abandoned carts;
- A sudden large increase in clicks without a proportional increase in conversions;
- Complaints from leads; and
- Sudden increases in chargebacks.
4 Questions to Ask when You Spot Digital Advertising Fraud
If you think you’ve found fraud in your online ad campaigns, there are a few questions you’ll want to ask, such as:
1. How Accurate Is My Data?
Working off of inaccurate or unreliable data can be an enormous mistake. Establishing the accuracy of information is crucial to avoid making potentially costly errors that can damage relationships with legitimate advertising partners. So-called “gut instinct” is not a reliable indicator of fraud.
So, you will need to verify the accuracy and validity of the data that you’re basing your assessment of digital ad fraud on. For example, does something simply look like bot activity because a customer/lead data entry was accidentally cloned, or is the same data being entered by different IP addresses over and over?
Using data deduplication tools can be an important early step in verifying data accuracy. For example, HubSpot has a deduplication tool that can find duplicate contacts in your customer relationship management (CRM) software. Other tools like Dedupely can also help.
Being able to draw on a massive database of fraud signals and compare them to suspected fraud activity can be one way to ensure accuracy. This is something that the Anura ad fraud solution uses to verify ad fraud and eliminate false positives.
2. How Many Fraudulent Leads Do I Have?
Having fraudulent leads in your sales funnel can be a massive waste of your time and resources. Bad leads who aren’t interested in your company’s products aren’t likely to close deals.
In fact, reaching out too frequently to fraudulent leads may result in penalties under the Telephone Consumer Protection Act (TCPA). Under the TCPA, states have the authority to “bring a civil action on behalf of its residents to enjoin such calls, and actions to recover for actual monetary loss or receive $500 in damages for each violation, or both such actions.”
Because the penalty is on a “per violation” basis, if your company reached out to 1,000 leads by phone based on fraudulent contacts made by bots or human fraud farms, that could result in $500,000 in penalties. There is also a clause in the Act that allows a court to triple the penalty if they find it to be a “willful violation.” So, the penalty for those 1,000 violations could be as much as $1.5 million instead.
Being able to establish exactly how many leads are fraudulent and remove them from your contact list quickly can be invaluable for protecting your business. Using a real-time detection solution can help you spot fraudulent leads quickly so you can remove them before they become a TCPA compliance risk.
3. How Much Money Have I Lost Because of Fraud?
For many business owners and marketing team leads, this is the (possibly literally) million-dollar question: How much money has advertising fraud cost my business? First, it’s important to consider the following:
- Your total digital advertising spend;
- Your advertising payment strategy (pay on a click or on a conversion);
- Your number of fake transactions;
- How much you spent per transaction; and
- How long the fraud went undetected.
For example, if your ad spend budget was $100,000 for a given campaign and you experienced a 40% fraud rate, you would have lost $40,000 to fraud for that one campaign. This doesn’t include the lost time and labor from sales reps pursuing bad transactions and having to clean out your contact database, as well as potential costs from dealing with TCPA compliance issues.
Curious about how much ad fraud is costing you? Check out the Ad Fraud Calculator.
4. What Should I Do about Ad Fraud?
After investigating how much digital advertising fraud is costing your business, what should you do about it?
The first step is to cut off fraudulent affiliates with extremely high percentages of fraud as soon as possible. The sooner you can cut fraudsters off, the better. The next thing to do is identify the good affiliates and work with them to drive more traffic, since you know they have good quality and you need the volume to fulfill your client's budgets.
Finally, you need to put a system in place to surgically remove individual fraudulent transactions to keep your network clean.
How to Prevent Digital Advertising Fraud: Use an Ad Fraud Solution
If you want to put a stop to digital ad fraud, using a proven fraud solution can be an important first step.
For example, Anura’s ad fraud solution helps you:
- Detect Fraud in Real Time.Using machine learning and experienced engineers, Anura can help to find fraud as it happens and help you to remove it with surgical precision.
- Ensure Accuracy of Detection.Anura captures hundreds of data points about each visitor to uncover exactly who, or what, is visiting your site with extreme accuracy, virtually eliminating the possibility of false positives.
- Gain Analytical Insights.With the most advanced dashboard in the industry, you have the proof of exactly where fraud is coming from so you can stop it at the source.
Are you ready to transform the effectiveness of your digital advertising campaigns and eliminate fraud? Reach out to Anura today to get started.
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