In the decades since the internet's widespread adoption, digital advertising has provided businesses with a brunch of new revenue streams. When handled correctly, online advertising may help companies reach a large audience and grow their business in quick impact.
The digital advertising ad spend is huge. In 2021, Asia Pacific ad markets will grow by +13%, EMEA markets by +12%. Latin America and North America will both grow by nearly +15%. The United States remains the largest market and will increase by +15%.
The massive ad spend has led to the emergence of ad fraudsters. Furthermore, the more money spent on advertising, the more money lost to ad fraud. For organizations of all sizes and industries, ad fraud has become a significant issue.
So what is Ad Fraud?
The state of Ad Fraud
Fraudsters succeed by building their own websites and attracting advertisers with fake audiences, or by charging real publishers to send invalid traffic to their sites. To guarantee that they can still cost-effectively reach their target audience, smart marketers must be aware of the state and challenges related to ad fraud.
In 2020, advertising fraud inflicted economic losses of 35 billion U.S. dollars worldwide. The size of the global digital advertising market was estimated at 333 billion U.S. dollars, which would put ad fraud at more than 10 percent of the total. The United States suffered the largest losses, followed by China and the United Kingdom. (Statista)
As advertising shifts to digital, ad fraud has emerged in a variety of forms, including bots, pixel stuffing, rogue programs, etc. Ad fraud has progressed to the point where it now affects every aspect of digital advertising. Marketers must ensure that their campaigns are successful and ad budgets are spent on reaching real audiences.
Types of Ad Fraud
Ad fraud is one of the most challenging problems in the advertising industry, affecting the entire ecosystem. It can affect traffic and operate with more advanced features like impressions, conversions, and full-fledged impersonation of user behavior.
There are some of the most common types of ad fraud that marketers and business owners should be aware of.
Click injection is an ad fraud tactic in which fraudsters infect users' devices with malware. The malware will generate clicks on adverts (for example banner ads) in order to massively increase ad spend. It can even be botnets, networks of infected devices.
Developers produce simple-to-build programs that are downloaded millions of times which make fake clicks on invisible adverts in the background without the user's knowledge.
Campaigns' ad budgets may vary depending on different world regions (geo-targeting). Marketers set up higher and lower rates for leads from particular countries.
When a fraudster uses geo masking in advertising, the location of the leads they create is hidden. This includes falsifying the IP addresses of the leads they generate in order to make them appear more valuable so that advertisers will pay more for the "leads" they deliver.
Ad injection is a type of ad fraud in which fraudsters use browser extensions, plugins, and malware to inject adverts into places where they shouldn't be displayed or to replace ads on a website with new ads. The fraudster gets credit for a click when people click on these misplaced adverts, even if they don't own the website the user is visiting.
Fraudulent ads are placed on websites without the authorization of the site owner, so it may lead to lawsuits. Because their own advertising has been substituted with ones from which they cannot profit, the afflicted websites lose out on ad revenue they should have earned.
Domain spoofing is the process of misrepresenting one website as a different, more valuable website in the context of ad fraud. Fraudsters can deceive marketers into paying more for advertising space on a faked website than they should by spoofing a domain.
There are certain warning indications. Traffic from the spoofed domain does not match what the website should be obtaining, and the cost per mille (CPM) is too cheap for a high-value site. The domain does not regularly run ads, the publisher does not sell ad space in RTB auctions, and the domain owner is flagged as a suspect email address.
Cookies are frequently used by affiliate marketers to track which affiliates are responsible for referring a specific website visitor. Cookie stuffing is a sort of ad fraud in which a fraudster places numerous affiliate tracking cookies in the browser of a website visitor.
The affiliate marketing network provides credit for the visit to the cookie stuffer as their browser has an affiliate tracking cookie—even though the fraudster never promoted the site. Because the fraudster is stealing credit for leads and sales from real affiliates, this false attribution can waste advertising budget and harm fair affiliates.
Pixel stuffing is a type of ad fraud in which a fraudster builds a tiny advertising display (1 × 1 pixel) that is invisible to humans. This deceptive ad fraud approach is intended for marketing programs that allocate ad spend based on impressions.
A fraudster can use pixel stuffing to display dozens or hundreds of ads on a single webpage while still receiving credit for impressions. These single-pixel ads, on the other hand, don't bring any results because users have no idea that ads have been displayed to them.
The purpose of ad stacking is the same as the goal of pixel stuffing: to display more ads to website visitors in order to increase the number of impressions. The difference between ad stacking and pixel stuffing is that instead of creating "hidden" ads, numerous ads are "stacked" on top of the other.
If five ads are layered on top of each other the fraudster can claim credit for all five impressions, but in fact, only the "top" ad was viewed by the website visitor. Because each ad might place a cookie on the visitor's web browser, this can also contribute to cookie stuffing.
Ad fraud is becoming more widespread in the advertising industry, but it's possible to deal with. While it may be difficult to eliminate ad fraud, there are ways for industry players to avoid it. It is also the responsibility of the ad tech industry to create a secure environment for all parties involved, including publishers, advertisers, and users.
To keep ahead of the curve, advertisers and publishers should use ad fraud protection tools in addition to applying the tactics that are considered the first line of defense against ad fraud.
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