Advertising is a crucial activity for any business. Being able to attract new customers, entice existing customers into closing new deals, and even just keep your brand top of mind among your target audience is crucial for maintaining (and growing) your company’s revenue.
Online advertising, in particular, has become a standard practice for companies of all sizes and industries. Programmatic display advertising has become particularly popular because of its extremely favorable cost-per-lead (CPL) compared to other advertising channels, while typically display ads are sold on a cost-per-thousand (CPM) basis.
According to Linchpin SEO, the average CPL for display advertising of a programmatic nature is about $38—the only channels with a lower average CPL are online retargeting ($31) and search engine optimization ($31). The average CPL for “traditional” advertising channels (like TV, radio, and print ads) is about $619. In short, for every lead a traditional ad could generate, you could expect to generate about 16 leads with programmatic display ads using the same budget.
What Is Programmatic Advertising?
Programmatic advertising is a type of digital marketing that uses software tools to help with ad placement for specific audiences. Display ads specifically refer to graphic advertising on websites, in-device apps, or on social media channels. These include banners or other formats consisting of text, images, video, and/or audio.
So, programmatic display advertising is the placement of display ads before a specific audience on various channels based on the use of software tools. The automation of where leads are placed is part of what makes programmatic display ads so efficient when it comes to generating leads.
With the right settings, it’s possible to showcase display ads to people who are expressing interest in a type of product or service based on their browsing activity.
For example, a programmatic display ad could show an advertisement for a roofing company or homeowner’s insurance to anyone who searched for “roofing replacement” in a Google search or who visited a roofing company’s website. Even if the user was browsing a competitor’s website, a programmatic ad on a different site could entice them to check out another company’s services that they might never have heard of otherwise.
However, as powerful of a tool as programmatic advertising can be, there are still risks involved—such as programmatic ad fraud.
What’s the Risk of Programmatic Ad Fraud?
How much of a risk is programmatic ad fraud to your online marketing campaigns? If you’re in the business of buying ad space on other websites, then you’re at risk of ad fraud. Fraudsters will employ a variety of schemes to steal money from your programmatic advertising budget.
Some examples of ad fraud that target programmatic display campaigns include:
- Click Fraud. In pay-per-click (PPC) oriented ad campaigns, fraudsters may use bots and click farms to repeatedly click on display ads over and over again to claim credit for generating clicks so they can take your money.
- Impression Fraud. In impression-based campaigns where money is paid out each time an ad is “seen” by potential customers, fraudsters might use bots, ad stacking, pixel stuffing, and other fraudulent techniques to claim credit for impressions when they aren’t really showing your ads to potential customers.
- Lead Generation Fraud. If your ad campaign revenue model is based on how many leads are generated from the campaign, then some fraudsters may use form bots to fill out forms on your website after “clicking” on the display ads leading to those forms. This not only wastes your ad budget on fake leads, but creates TCPA compliance risks by giving you bad information that could be used to reach out to leads who never actually opted to receive communications from your company.
- Domain Spoofing. When buying programmatic display ads directly from a website publisher, some fraudsters may try to disguise their website as a different, higher-value website. Here, the fraudster is hoping to overcharge the victim for their advertising space.
On average, any given programmatic campaign will have between 40% to 50% fraud—though your specific rate of fraud may be higher or lower depending on your industry and the revenue model fueling your campaign. Generally speaking, impression-based campaigns are the easiest to defraud, click-based campaigns are slightly less easy to defraud, and lead-based campaigns require slightly more sophistication to defraud—though the barrier to entry for lead gen fraud is still remarkably low.
Whether or not the risk of programmatic ad fraud is acceptable for your business will vary depending on what your ad budget is, how the fraud affects your ability to attract new business, and how many competitors you have bidding on the same ad platforms. If your ad budget runs out, then the programmatic ad platform provider will start showing the ads of other businesses—giving them a chance to steal the attention of your customer base.
What’s the Best Way to Stop Programmatic Fraud?
So, how can you stop programmatic ad fraud? There are a lot of different ad fraud prevention techniques that can be applied to programmatic campaigns to try to minimize the risk of fraud, such as:
1. Carefully Vetting Advertising Platform Providers
Whether you’re working directly with a website publisher or through a third party that provides real-time bidding services, it’s important to carefully vet them before entering a contract for services.
With a direct programmatic ad campaign, check the publisher’s website to verify that it’s the real deal. Some things to check include:
- Registry data such as the website owner/publisher’s name.
- Whether or not the website is generally known to run display ads.
- Website URLs to spot any apparent typos that could indicate a spoofed domain name.
For real-time bidding (RTB) platforms, try to find the platform’s other customers and ask them about how well or poorly their previous interactions with the platform provider went. Be sure to check how their results stack up against other platform providers. A lot of unsatisfied clients or a distinct lack of results could be a warning sign that you need to avoid that DSP (Demand Side Platform).
Unfortunately, this analysis is often subjective rather than objective. A customer could be disgruntled with a platform provider or have poor results for reasons other than fraud. For example, they could be targeting the wrong metrics or have an ad that doesn’t line up well with whatever content or offer it links to—which could cause a low rate of clicks or reduce the conversion rate.
Another thing to vet when checking an RTB platform provider is what tools they have in place to counter ad fraud. Many RTB platforms rely on overly simplistic pre-bid fraud detection solutions. In some cases, these solutions only check for a single data point to flag traffic as real or fake!
When choosing a DSP, it’s important to verify that their ad fraud prevention tools are as robust and capable as possible. If your vendor doesn’t have one, or you want to check the effectiveness of your vendor to weed out fraud, you might want to add an ad fraud solution of your own!
2. Checking Your Ad Metrics During Programmatic Campaigns
Sometimes, a thorough look at your advertising campaign metrics can prove to be invaluable for identifying programmatic fraud. For example, if you have a PPC-based campaign with a record number of clicks, but your total new leads generated remains stagnant, that could be a strong indication of fraudulent clicks in your programmatic campaign.
However, reliably identifying patterns of fraud can be extremely difficult. For all but the most blatantly obvious examples of fraud, it will require a great deal of expertise in fraud analysis to accurately identify fraudulent activity in an ad campaign—especially to the point of being able to confront your DSP and to know which source to cut off.
3. Altering Ad Revenue Models
One way that some organizations may try to prevent fraud is to change the monetization model of their ad campaigns. For example, they may switch from an impression-based model to a click-based or lead-based one.
However, although this tactic might make it slightly harder for some fraudsters to take money from your business, it isn’t much of a deterrent. While impression-based campaigns are extremely easy to defraud, fraudsters can still buy premade botnets to carry out click fraud and lead generation fraud with ease. In some cases, it can cost them as little as $0.50 per bot!
Armed with these bots, fraudsters can easily engage in fraud that works against different revenue models. So, changing models is far from being the best way to stop programmatic ad fraud.
Why Using an Ad Fraud Solution Is the Best Way to Stop Programmatic Fraud
Ad fraud solutions help to automate the process of detecting fraudulent activity in your online ad campaigns. With the right ad fraud solution, you can check your web traffic in real time to actively identify bot traffic and other warning signs of fraud before they can wreak havoc on your ad campaigns.
Instead of having to painstakingly analyze massive data sets to identify fraud manually, you can have an ad fraud solution examine hundreds of data points for each website visitor that interacts with your ads. Anura’s ad fraud solution checks all of this information to accurately identify fraud as it happens.
Anura’s ad fraud solution also provides you with all of the information that was used to flag a particular interaction as fraud. With this data, you can block the fraudsters targeting your advertising budget and send them packing.
Why wait? Start testing your traffic now!