Ad fraud is a prevalent problem for businesses of all industries. With display advertising spending already exceeding $160 billion dollars as of 2019 (Source: Statista), the incentive for criminals to commit ad fraud is enormous.
Over the years, fraudsters have created numerous types of ad fraud. Based on past customer data, it’s estimated that the average rate of fraud in online and affiliate marketing campaigns is between 25% and 40% depending on the business and its existing anti-fraud measures.
However, not all ad fraud solutions are equally effective. Some companies have been so disappointed by the performance of their ad fraud solutions that they instead chose to engage in custom software development and make their own fraud prevention solution.
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Why Are Brands Bringing Ad Fraud Software Development In-House?
Why do some brands decide to develop their own custom software instead of using a fraud prevention tool made by a specialist company? Some potential reasons include:
1. Brands Are Convinced They Can Do Fraud Prevention Better
Business leaders need to have a very firm understanding of their business and how it works to achieve long-term success. This can lead to the impression that they know how to protect their business from fraud better than ad fraud experts. And, the insights that business leadership has can be incredibly useful for avoiding ad fraud and protecting the business.
For example, Chase, the banking institution, once reduced its display advertising presence from around 400,000 websites a month to just 5,000 websites that it had “preapproved.” According to a report by The New York Times released shortly after the change, “the company is seeing little change in the cost of impressions or the visibility of its ads on the internet.”
Although this one move helped protect the company’s brand, it didn’t really do anything to stop ad fraud. Remember: the NYT article noted that there was “little change in the cost of impression” for the Chase’s ad campaigns. This would indicate that Chase is experiencing the same rate of fraud, even though the bank managed to remove its ads from unsavory sites.
2. Brands Have Had Bad Experiences with Ad Fraud Solution Providers
Many brands are frustrated with their current ad fraud detection providers. If a company is paying for an ad fraud solution, but doesn’t see results, that’s likely to cause an issue.
Not all ad fraud software platforms are created equally. Some solutions simply provide data to users—and too much all at once to actually be useful since it takes so long to parse. Other solutions might flag activity as fraud that actually isn’t—causing the business to lose out on potentially valuable leads.
These shortcomings can negatively impact a business’s advertising efforts. So, the business’ owners end up deciding to build an entirely new solution to address their specific issues.
3. The Business Is Worried about Control of Ad Fraud Reporting Analytics
Some “solutions” for ad fraud focus less on what’s good for the client and more on what benefits the solution provider and their strategic partners. The vendor controls all of the data and uses that data as they see fit without giving their customers important insights—such as ad campaign measurement data.
This may be one reason why Heineken decided to shift from using external ad fraud solutions to an in-house option. As noted in an article by Digiday, “marketers are aware that some agencies have ‘strategic’ deals with certain ad-verification vendors that are designed to benefit the agency and the vendor, and not necessarily the brand.”
By taking their fraud solution in-house, the beer maker could get more insight into their fraud solution reporting.
While the cost for in-house software development would be high, the Digiday article stated that: “For advertisers like Heineken, however, the control over ad measurement is worth higher costs.”
The Trouble with Building an Ad Fraud Solution In-House
The old saying “If you want something done right, you need to do it yourself” may come to mind when companies choose to custom build their own fraud solutions rather than relying on ones made by others.
However, this saying doesn’t necessarily work out in reality—especially when it comes to expert work like crafting an ad fraud prevention software. Building any kind of custom software program is an incredibly complicated task. Without any expertise and experience in software development, it’s all too easy for the project to go massively over-budget.
Additionally, a lack of experience and expertise in ad fraud can prevent the in-house software from being able to reliably identify fraud. Ad fraud experts like Anura rely on decades of validated conversion data to identify fraud signals inside and out to create an algorithm to accurately pinpoint fraud.
Most businesses simply don’t have the free resources to dedicate to crafting an ad fraud software that works. It takes a huge amount of money and expertise (both in software dev and ad fraud analysis) to do right—and those resources could be better allocated elsewhere in most organizations.
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Why Is It Important to Accurately Identify Ad Fraud?
The risks posed by ad fraud are much too important to leave it to a non-expert. A lack of experience and expertise can lead to falsely identifying legitimate leads as fraud (false positives) or allow fraud to slip through the cracks. Why are these situations problematic? A few reasons include:
1. Wasting Ad Spend
In the average online marketing campaign, ad fraud can account for 25% to 40% of total ad spend. So, if you were to spend $100,000 on digital marketing, fraudsters would be stealing between $25,000 and $40,000 of your money from you outright without providing any results.
This reduces your marketing ROI and wastes money.
2. Wasting Time Pursuing Bad Leads
When fraudsters fill your marketing campaigns with bad leads using lead gen fraud tactics, it can be a massive waste of time for your sales team. Every call, email, or text a sales rep puts together for a fake lead who will never close is one less piece of outreach going to good leads. Delays caused by wasting time on the wrong leads could allow competitors to capture customers.
3. TCPA Violation Fines
The Telephone Consumer Protection Act of 1991 (TCPA) was originally designed to protect American consumers from “nuisance” marketing calls. Under TCPA, there’s a fine that can vary between $500 and $1,500 per incident if a telemarketer calls someone who hasn’t provided express written consent beforehand.
So, say you reached out to 10,000 leads by phone using automated phone messages as a reminder. Because these contacts “opted in” online, you might assume everything’s fine. However, 25% of those leads were made using fake information—but that info still goes to a real person who never opted in to marketing communications.
This would mean roughly 2,500 TCPA violation incidents—or about $1.25 million to $3.75 million in fines.
What to Look for in an Ad Fraud Prevention Partner
After reviewing some of the challenges of building an ad fraud solution in-house, the value of having access to an established and functional anti-fraud software should be apparent. However, it’s important to know what to look for in an ad fraud prevention partner.
Why? Because, not all ad fraud solutions are created equally. It’s important to find a solution that will actually work instead of just providing “security theater” that doesn’t actually do anything to prevent fraud.
Some key things to look for include:
- Thoroughness of Detection. How thoroughly does the ad fraud solution detect fraud? Does it catch some fraud? Does it catch the majority of fraud? Or, does it use decades of collected fraud data while examining hundreds of data points to catch the maximum possible amount of fraud?
- False Positive Rate. How many times does the fraud detection solution flag a lead as fraud, only for it be a legitimate opportunity? Ideally, the rate should be zero.
- Post Sale Support. Does the fraud solution provider just give you a log-in to their platform or a software download and call it a day? Or, do they provide resources, over-the-phone support, and integration help to make sure you get the biggest ROI from your fraud prevention solution?
- Speed of Detection. The faster you can find fraud, the better. Rapid fraud detection can help ensure that your losses to ad fraud are minimized while your advertising ROI is maximized.
There are many companies that have overcome ad fraud in their marketing campaigns by leveraging an ad fraud solution like Anura.
If you need help fighting fraud and protecting your marketing dollars, reach out to the Anura team today!