Richard Kahn
Ad fraud is a very real problem for any organization that uses online advertising to promote their goods, services, or causes to others. Every day, countless marketing dollars are wasted on fraudulent impressions, clicks, and leads that will never lead to any real results.
One question that many people have about ad fraud is “How much of a problem is online ad fraud, really?” The cost of ad fraud can be incredibly high, but it’s often difficult to accurately assess.
Let’s discuss the economic impact of ad fraud, why it’s difficult to estimate, your ad fraud risk, and what you can do to stop it.
How Much Does Ad Fraud Cost the Economy?
The economic impact of ad fraud is incredibly high. Estimates for the cost of ad fraud to the economy vary from one source to the next, but even the lower estimates rank the losses from ad fraud in the billions of dollars. Here are a few examples from different sources:
These three estimates were all for the year 2022, and ad fraud is projected to grow over time as more money is invested into digital advertising. This fact alone should demonstrate why identifying ad fraud and fighting it effectively is a necessity for modern marketing.
Why Ad Fraud Estimates Vary
You may have noticed that the global estimates listed above have a very wide range—the largest estimate is nearly double what the smallest estimate was. The question is “why do estimates of ad fraud vary so much?”
There are a number of reasons why some organizations might provide different estimates for the global cost of ad fraud than others.
Some of the potential reasons include:
- Different Data Sources. Different organizations might be pulling their data from separate sources. For example, one organization might base their estimate on a global corporate survey of different businesses. Then, they establish the average cost of ad fraud against the average online marketing spend for the companies surveyed and extrapolate that against the global spend for online ads. If another organization does the same thing with different companies, they might come up with a completely different number.
- Not All Ad Fraud Gets Reported. Not every victim of ad fraud reports the event. In some cases, an organization might not want to report that they’ve fallen victim to a fraudster. Others might simply not know that they’ve been defrauded of their ad spend—assuming that the leads they’re getting are genuine. Whatever the reason, unreported ad fraud can bring down the estimated cost to the economy. So, any studies that don’t account for unreported ad fraud may undershoot the actual figure by a large margin.
- The Cost Categories in the Report. Some estimates of ad fraud may use different cost factors when assessing the economic impact of such fraud. For example, one report might simply focus on the wasted ad spend alone. Meanwhile, another report might include labor time lost pursuing bad leads, the cost of increased spending for ads that aren’t actually working, TCPA violation fines, and projected loss of business from reputational damage or reduced customer conversion rates.
Any one of these factors could be a reason for two different estimates to have differing results.
What’s Your Risk of Encountering Ad Fraud?
Of course, the estimates above are for the cost of ad fraud to the global economy, not what it would cost your business. For the cost to your particular business, the total impact would depend on how much you spend on ads, the types of ads you run, whether you have a reliable ad fraud detection system in place, and how proactive your organization is in remediating fraud.
So, what could ad fraud cost you? What’s your risk of encountering ad fraud in your online marketing campaigns?
If you’re engaging in any form of online marketing, odds are that you’ve already encountered at least some ad fraud. Based on past Anura customer data, the average online ad campaign has about a 25% rate of ad fraud. Meaning for that every 4 impressions, clicks, or leads generated by the campaign, one is fake.
This can be corroborated by the prevalence of bots in web traffic. According to Help Net Security, roughly 39% of all web traffic comes from “bad” bots (25% comes from “good” bots like web crawlers, while 36% comes from human users). In other words, there are more malicious bot programs on the internet than actual humans. This doesn’t even account for the risk of encountering fraud from human fraud farms.
So, it’s almost certain that your online advertisements have at least been targeted by a fraudster, if not actually compromised by fraud.
The cost of ad fraud to your business can vary. Generally speaking, the more you spend on online advertising, the higher the business costs of ad fraud will be.
For example, say that you have a monthly ad spend of $100,000. If 25% of your leads are fake, then that’s $25,000 of wasted ad spend right there. If the campaign generated 200 leads, then 50 of them would be fake. The time your sales team spends following up with these leads would be wasted labor.
Then, there’s the chance that, in the time your team spends pursuing fake leads, real customers move on to a competitor and you lose any revenue they may have generated.
Finally, if the fraudsters used real contact information illicitly, you could end up making unwanted and unapproved contact with consumers. This opens up the risk of facing TCPA class action lawsuits. This could not only cost millions of dollars in fines and legal fees, it could harm your reputation—harming future revenue as consumers avoid your brand because of the negative PR.
Stop Ad Fraud with Anura
So, what can you do to stop ad fraud from costing you money? One effective tactic is to use an ad fraud solution that can identify fraudulent impressions, clicks, and lead generation form fills and report them to you in real time.
With Anura’s real-time ad fraud solution, you can identify fraud as it happens and disavow fraudulent affiliates, fake leads, and malicious programmatic platforms that are more interested in taking your money than they are in generating results.
Why waste 25% (or more) of your advertising budget on fraud? Stop ad fraud now with a little help from Anura! Contact us today to get started.
