Ad fraud can be an enormous problem for your online marketing campaigns. One of the best ways to fight fraud is to use an ad fraud solution to detect fraud and put a stop to it before it can have an impact on your campaigns.
What are the costs of ad fraud? How can you tell a truly effective ad fraud solution from the pretenders that only provide a sense of safety instead of actual protection from fraudsters? Most importantly, how can you put a stop to digital ad fraud?
Digital ad fraud can have a variety of impacts on a business. Knowing what these costs are is an important part of preparing to fight fraud. Having data on the cost of ad fraud can also demonstrate why it’s important to stop fraud—which is useful for getting investors and key stakeholders to buy into the adoption of an ad fraud solution.
Here are some of the most common impacts of digital advertising fraud on a business:
The Telephone Consumer Protection Act of 1991 (TCPA) is a piece of legislation that was designed to “protect consumers from unwanted telemarketing calls” at their landline home phones. Over time, the TCPA was amended and expanded to include new protections against “autodialed or prerecorded telemarketing calls.”
When a company receives fake contact information from a fraudster and uses it to reach out to the “leads” they’ve gotten, it can lead to TCPA violations and fines. How much is a TCPA fine? The cost can range from $500 to $1,500 per call.
So, if you reach out to 10,000 contacts, and 25% (2,500) of them are fake and haven’t given you consent, then you could face between $1.25 million and $3.75 million in TCPA fines. This is an enormous price tag for any organization that was hoping to get cost-effective leads to grow business.
Another potential cost of ad fraud that’s closely related to TCPA fines is legal fees. Fighting a fine (and class-action lawsuits brought by irate consumers) is not a fast, easy, or cheap process. Companies will need to retain legal counsel to represent them in court since they are considered artificial persons. There are some exceptions to this rule.
For example, as noted by Romano Law, “Law firms incorporated as professional corporations” are allowed to represent themselves without an attorney in the State of New York. This is per New York’s Consolidated Laws, Civil Practice Law and Rules (CPLR), subsection 321(a).
A lawyer’s fees can range from $150 per hour to over $1,000 per hour depending on location, experience, and specialization (Source: UpCounsel.com). Worse yet, if a settlement cannot be reached, a class action suit for TCPA violations can take hundreds of hours of work for lawyers to resolve—leading to a massive legal bill.
According to DNC.com, “the average cost of a TCPA class action settlement during the first 10 months of 2018 was $6.6 million.” This can put a severe dent in almost any company’s cash flow.
Not all costs of ad fraud are as straightforward as TCPA fines. Another potential cost of digital ad fraud is the damage to the company’s reputation with prospective consumers. This can lead to consumers actively avoiding the company’s brand.
This cost can be hard to quantify, as it’s more difficult to clearly establish a causal relationship between a company’s reputation and a drop in sales. After all, there are many other factors that might affect sales performance beyond a drop in reputation—such as seasonal shifts in demand or a new competitor entering the market.
Another potential impact of a damaged brand reputation is that prospective investors and business partners may avoid the company. This can cause the company to miss key opportunities to grow or launch new initiatives.
One of the most obvious impacts of advertising fraud is the money wasted on ad spend for fraudulent clicks, impressions, and leads. There is some variation in the amount of money wasted based on the percentage of fraud found in the campaign and the size of the campaign.
Based on past data from Anura customers, the average rate of ad fraud in an online marketing campaign is usually between 25% and 40%. So, on a $500,000 marketing campaign, that can mean between $125,000 and $200,000 in wasted ad spend.
This drives up the company’s actual cost per lead, as a percentage of all ad spend is going towards fraud instead of real prospects.
Part of the problem with ad fraud is that, when the company gets bad leads from fraudsters, the sales team will end up wasting time pursuing leads who aren’t interested.
They may spend hours trying to talk to people who have never actually heard of the company, who seem confused about who these sales reps are and why they’re reaching out, or who simply have no use for the organization’s products or services.
The vast majority of the time, these outreach efforts won’t result in a sale. If they generate anything, it will be TCPA violations and consumer complaints that cost money and brand reputation rather than earning it.
Additionally, time wasted on bad leads is time that isn’t spent with the good leads that marketing efforts generate. Modern consumers are becoming increasingly used to instant gratification. In fact, according to a study of 1.25 million sales leads by Harvard Business Review (HBR), “Firms that tried to contact potential customers within an hour of receiving a query were nearly seven times as likely to qualify the lead… as those that tried to contact the customer even an hour later—and more than 60 times as likely as companies that waited 24 hours or longer.”
In other words, your speed of response to new leads is vital for generating new business opportunities. Wasting time with fake leads may mean missing out on good leads, which can have an impact on the business’ bottom line.
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Considering the potentially millions of dollars at stake in fines, the long-term damage a loss of reputation can cause, and the risk of losing out on good leads, it’s clear that having some sort of solution for dealing with ad fraud is a must.
But, the problem is that not all ad fraud solutions are created equally. Knowing what to look for in an ad fraud solution can mean the difference between getting a solution that puts a stop to fraud and one that simply looks good on paper without actually producing real results.
What should you look for in an ad fraud solution? Here are a few things:
In fraud detection, there’s no room for “gut feelings.” Businesses need reliable, accurate, and actionable data about contacts to sort the fraud from the legitimate contacts. The problem with some ad fraud solutions is that they don’t provide sufficient data to back up their fraud analyses.
Fraud detection isn’t a simple thing where a single ad fraud metric provides absolute proof that activity on the company website is fraud. It’s a complex subject that requires analysis of hundreds of data points to reliably and accurately identify frauds.
It’s not enough for the solution to use “vanity metrics” that simply look advanced. Take, for example, the viewability metric. While it looks good on paper to filter for views that last for at least a second—and it can be helpful—such a basic filter won’t catch the more sophisticated bots that do a better job of emulating human users.
You need an ad fraud solution that goes the extra mile to perform a deep, data-driven analysis of website traffic to reliably and accurately identify fraud and bring it to your attention.
Some ad fraud solutions go too far in their fraud detection—flagging anything and everything that meets one piece of potential fraud criteria as fraud. This results in throwing out the proverbial baby with the bathwater.
Instead of eliminating just the fraudulent activity from your website, these solutions mark legitimate traffic as fraudulent on accident. This, in turn, means missing out on valuable business opportunities. It can also be frustrating for consumers who visit the site but don’t receive any responses to their queries.
This is why it’s important to look for an ad fraud solution that has a 0% false positive rate. The solution should continuously validate its rules for flagging fraud against real conversion data to precisely detect fraud.
What does the fraud solution provider’s other customers have to say about the solution? What results have these customers experienced with the software? Taking the time to reach out to the company’s other customers and ask for references can be incredibly useful for sorting out the top performers from the fakers who provide substandard service.
If numerous companies have seen positive, verifiable results with an ad fraud solution, that’s a strong indicator of quality.
How quickly does the solution detect fraud and bring it to your attention? The ideal is to monitor fraud in real time and bring it to your attention immediately. Even better would be the use of application programming interface (API) integrations with your own marketing management software to automate the response—such as creating a real-time visitor firewall to keep the fraud off your site entirely.
Before you commit to spending thousands (or tens of thousands) of dollars on an ad fraud solution that could save you millions later, it’s important to get some hands-on time so you can see how the product works. So, an important thing to look for in an ad fraud solution provider is whether they’re willing to let you do some pre-purchase testing before you buy their solution.
If an ad fraud solution really is as good as its maker says, they should be confident in letting you contact them directly and asking for a demo or some hands-on time with the product.
Get More Info about How to Select the Right Ad Fraud Solution: Download the eBook now!
Ad fraud is a pervasive problem that steals billions of dollars from companies all over the globe every year. However, now that you know the problem exists, you can put a stop to it in your own business.
By adopting a proven and reliable ad fraud solution, you can eliminate ad fraud in your digital marketing campaigns—saving enormous amounts of money and improving the ROI for your ad campaigns by filtering out the fraud while keeping the good leads.
Don’t wait until ad fraud has caused a catastrophe! Proactively put a stop to it and save yourself a lot of time, money, and frustration by scheduling a call with Anura’s sales team and asking about our ad fraud solution today!
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