The Essential Guide to Ad Fraud Detection for Marketers & Advertisers

Did you know that the digital advertising industry is expected to lose $68 billion in 2022 to ad fraud -- up from $59 billion in 2021? Unfortunately, these figures demonstrate that no organization is safe from its impact. But before you can start to defend against ad fraud, you must be able to detect it. 

Gaining a complete understanding of the extent of ad fraud -- including the types of ad fraud that exist, how they relate to your business and industry, and the damage it can cause -- is key to knowing how to approach ad fraud detection for your organization. 

Think of this as your essential guide to ad fraud detection, one that you can share around your organization so that both you and your teams know just what you’re up against and exactly how to stop ad fraud in its tracks. 

• What is ad fraud detection?
• Why do I need to detect ad fraud?
• How can I detect ad fraud?
• Why do I need an ad fraud detection tool?
• What are the top ad fraud detection companies?
• What should I do after detecting ad fraud?

What is ad fraud detection?

Ad fraud detection is an exercise in identifying the presence of ad fraud to protect an organization's ad spend and campaign results, among others.

With the massive rise in ad fraud schemes, advertising fraud detection is fundamental for the majority of businesses, as digital advertising and marketing have become pillars for modern business.

Let’s look at some of the types of ad fraud that span the main stages of the advertising funnel.

Impression fraud

Impression fraud occurs when fraudsters use pixel stuffing and ad stacking to insert hidden ads into a webpage. These ads are invisible to the naked eye, yet the fake impressions are still counted and charged to the advertiser. 

This type of fraud is commonly found in display ads (cost-per-million advertising) and video ad fraud (both online and TV). Its goal is to manipulate legitimate ad campaigns to obtain payouts. 

Common indicators of impression fraud include:

• Sudden spikes in the volume of impressions
• A surge in out-of-target impressions
• Low clickthrough rates

Click fraud

Click fraud, also known as pay-per-click (PPC), occurs when individuals click on ads with no interest in finding out more about the content or in buying a company’s product or service.

This type of ad fraud is usually performed to artificially inflate traffic statistics or deplete advertising budgets. Click fraud can be carried out by fraudulent publishers or competitors, people hired to work in click farms, or automated scripts run by malicious bots.

Common indicators of click fraud include:

• High click volumes coupled with low conversion rates
• High bounce rates
• A high number of clicks from countries outside your target campaign area
• A high number of invalid clicks
• An increase in the volume of clicks while other metrics and campaign parameters remain constant (click-through-rate, cost-per-click, etc)

Lead fraud

Also known as cost-per-lead (CPL) fraud, the fraudster’s objective in using this type of ad fraud is to create fake leads. They can do this by inventing customer data, purchasing illegal data and contact information from third-party vendors, or using crawler bots to scrape the web for customer information. Bad bots can also be used to automate lead gen or sign-up forms with fake customer information.

Common indicators of lead fraud include:

• Unusually high conversion rates from click to lead
• Low conversion rates from lead to sales
• Low engagement rates (in Freemium models)
• A large number of complaints from sales and product colleagues about lead quality
• Out-of-target paid leads (e.g., from countries where you don’t have active campaigns running)
  
  Other types of conversions such as downloads, installs and even sales opportunities can also be executed by fraudsters in a similar fashion.

Attribution fraud

An even sneakier method is attribution fraud, where scammers use malware installed on users' devices to steal credit for legitimate organic leads that actually originated from a different media source.

This type of ad fraud is performed with the intention of stealing credit for installs by sending fraudulent clicks as the “last engagement” just before an app is launched by a genuine user. When they’re successful, fraudsters then receive a financial payout for the fake attribution.

Common indicators of attribution fraud include:

• Sudden spikes in attributed sales from a new partner
• A decline in attributions from old partners
• A sharp increase in attributed sales (vs non-attributed)

Install fraud

Install fraud occurs when fraudsters generate fake app installations and, despite the download being invalid, are able to take credit for the installations.

Fraudsters perform this type of ad fraud in several ways, including through the use of illegal malware installed in a device that automatically downloads applications, click injections, SDK spoofing, and clickjacking.

Common indicators of install fraud include:

• High click volumes and low sales volumes
• Bursts of installs that all have similar click-to-install (CTIT) times
• Sudden spikes in new device rates
• Activity occurring at unusual times of the day

Why do I need to detect ad fraud?

With worldwide digital ad spending expected to surpass $571 billion in 2022, the opportunities for fraudsters to capitalize on your campaigns are rife. Despite the trend in the increase in ad spending, many advertisers and marketers still haven’t taken steps to detect the presence of ad fraud in their campaigns.

However, hoping that ad fraud will simply disappear or accepting it as a cost of doing business is a dangerous path to walk. Ad fraud depletes your ad budgets (benchmarks suggest that 11% of budgets are lost to ad fraud), prevents you from achieving your KPIs, skews your data, and holds you back from reinvesting in future campaigns.

In fact, as well as being the most lucrative type of cybercrime, ad fraud is the easiest type for fraudsters to commit. This is partly due to the ambivalence of those in the industry who aren’t tackling it head-on.

Their location doesn’t limit the damage that fraudsters can do, and the techniques they use vary by geography. Opticks’ 2022 Ad Fraud Report shows just how they can and will devastate campaigns that are run anywhere in the world, by all organizations across all industries.

Our Ad Fraud Report 2022 shows that non-compliant traffic and bad bots are the most significant threats facing the digital advertising industry globally.

Plus, as fraudsters increasingly use more sophisticated techniques, you often won’t even notice that ad fraud is destroying your ad campaigns, meaning that a dedicated ad fraud solution is the only real way of detecting it. 

In fact, our research shows that organizations with an ad fraud detection and prevention function in place can escape a massive 11% reduction in return on ad spend (ROAS) and a 9% increase in customer acquisition costs (CAC).

How can I start detecting ad fraud?

There are two main ways that organizations can begin detecting ad fraud.

Manual ad fraud detection

You can manually identify anomalies in your campaign data (we listed the common indicators of different types of ad fraud in the first section of this guide). This entails poring through the data in the backend of the campaigns to identify inconsistencies. Other signs of ad fraud include IP addresses from data centers, other unfamiliar traffic sessions, and very low session durations.

Keeping a close eye on these anomalies can help you reduce the risk of ad fraud affecting your campaigns.

In some organizations, IT teams use their in-house skills to build their own early tools to help them detect ad fraud based on a set of rules, click journeys, and filters. However, given how ad fraud methods are rapidly becoming more sophisticated, these detection tools can only go so far.

Using ad fraud technology to detect ad fraud

Ad fraud detection solutions are built to analyze traffic and automatically detect instances of ad fraud. The best anti-fraud solutions can detect, block, and track the most sophisticated ad fraud in real-time using advanced machine-learning algorithms to separate real users from bad actors, ensuring that genuine users aren’t blocked.

Digging a little deeper, some anti-fraud technology uses machine learning to extract data patterns and identify relationships within huge volumes of data -- those that are too big for the human eye to assess with any degree of efficiency. By applying algorithms to these datasets, the engine applies what it’s learned from them to new ones and instantly recognizes new trends.

Plus, within large volumes of traffic, ad fraud can easily be camouflaged when organizations use manual detection methods. In short, humans are incapable of identifying fraud patterns at the same rate as anti-fraud technology solutions. Without an ad fraud solution, organizations are left vulnerable to all types of deceptive techniques.

Why do I need an ad fraud detection solution?

Ad fraud is complex. There are countless types and subsets of ad fraud, and fraudsters utilize many vehicles to perform it.

Many modern fraudsters that target digital ads are highly equipped, knowledgeable, and driven to perform it. They also make use of highly sophisticated methods that those without a coding background will be unable to understand.

What’s more, there isn’t just one type of fraudster. There is an entire spectrum of fraudsters in the digital advertising and marketing industry with different levels of experience, commitment, and threat.

So, while it is possible to detect ad fraud manually when you consider the actors behind it, the sheer amount of data that each campaign produces, and the number of channels and devices involved, it soon becomes clear that manual methods just aren’t up to the task.

Let’s go through three of the countless reasons why your organization needs an ad fraud detection solution.

Ad fraud detection solutions provide you with the necessary expertise

The responsibility for detecting ad fraud requires a solid expertise to be carried out effectively and should not be a job that falls to one person in your organization.

Professional anti-fraud solutions are built and maintained by ad fraud experts and offer the most comprehensive, long-term protection against ad fraud. Not only do they detect ad fraud in real-time to prevent it from ever entering your campaigns, but they’re constantly updated to help detect new ad fraud techniques.

The methods used to perform ad fraud are becoming increasingly sophisticated. This, combined with the rapid rate and spread of ad fraud means that manually detecting it by identifying patterns in data is becoming nigh-on impossible. Ad fraud solutions can cut through the noise and detect fraudsters who are mimicking human behavior -- something the human eye simply can’t do.

Advertisers and marketers aren’t experts in ad fraud -- and they shouldn’t have to be. Ad fraud solutions provide organizations with the relevant and necessary expertise so that you don’t have to worry about missing instances of fraud or mistakenly identifying it as legitimate user activity.

Your time and resources are better used elsewhere

Your team needs to focus on where they should be excelling -- on running optimized ad campaigns.

Ultimately, inexperienced teams aren’t adept at identifying instances of sophisticated ad fraud. In fact, doing so is highly time-consuming, costly, and inefficient, and also distracts your team from your core business. And, the impact of manual detection methods that can slightly reduce the repercussions of ad fraud is incredibly marginal compared to thorough detection solutions.

Ad fraud solutions can accurately detect thousands of instances of ad fraud at the same time your team might be able to detect a handful. Allowing an ad fraud solution to take the reins on detection gives your team countless hours back to focus on what really matters.

Ad fraud detection solutions are tried and tested -- and tried and tested again

Even if you successfully manage to detect ad fraud using manual methods, how do you go about preventing it?

Leading ad fraud solution Opticks is built with rules-based detection and a machine learning engine that is constantly learning and applying the lessons learned to future scenarios. Plus, false positive redemption can be easily performed -- another function that humans cannot realistically achieve.

What are the top ad fraud detection companies?

Like most software, not every ad fraud solution is created equal. And, using multiple solutions to solve the various ad fraud problems you’ll encounter is not an option.

Plus, since each business has unique detection needs, advertises across different channels, and operates in a specific industry, it’s essential that you select an ad fraud detection company that’s not only right for you but which can provide a full catalog of detection functionality.

Here, we run through an overview of four different companies to give you an idea of those that can give you the holistic ad fraud detection capabilities you need.

Opticks

Opticks is a cross-channel and full-funnel ad fraud detection and prevention solution. What does this mean? While many solutions only provide ad fraud protection at certain points of the advertising funnel, Opticks protects across the entirety of the advertising funnel, which means that Opticks can differentiate real users from fraudulent behaviors at the view, click, lead, and attribution levels.

The holistic solution is fully customizable and can analyze any advertising channel on any device or browser. The company uses its own proprietary technology to identify the most advanced fraud techniques, and its ever-evolving machine learning engine also means that the technology is always one step ahead of fraudsters’ new tactics.

In 2021, Opticks helped organizations protect over $43 billion worth of digital spend by detecting click, attribution, and lead fraud present in their campaigns.

The solution offers a rich feature set that helps organizations protect their entire advertising funnel and all channels from ad fraud. Opticks’ key features include:

• Cross-channel ad fraud detection: Opticks provides complete detection coverage for all of your marketing and advertising efforts, no matter which or how many channels you use. No matter the traffic source, Opticks offers a full catalog of detection functionality that covers detection across all channels, including:
• Social media: Facebook Ads, Instagram Ads, etc.
• Search engines: Google Ads, Microsoft Bing, Yahoo Ads, etc.
• Programmatic
• Affiliate: Affiliate or ad networks, agencies
• Native advertising

The solution also detects fraud from organic traffic, meaning that the platform is suitable for all use cases.

• Full-funnel ad fraud detection: Opticks protects organizations from ad fraud at every stage of the advertising funnel. This means the solution detects ad fraud anywhere it’s present -- from PPC campaigns, display ads, and lead generation campaigns, to ads within mobile apps. Opticks detects a comprehensive scope of fraud types, including bot traffic, geo-masking, click farming, click spamming, pixel stuffing, data center traffic, non-visible ads, and clickjacking -- all of which target different stages of the advertising funnel.
  
• Advanced fraud intelligence: The platform digs deeper for insights and metrics that can support your growth efforts. It provides fraud visualization, enabling granular insights such as ad fraud by origin (channels and partners), by vehicles of fraud (devices and browsers), as well as geographies and timestamps.

Opticks also offers several other additional features, including:

• Customizable security parameters: Knowing that every business has different marketing models, acquisition channels, and partners, the Opticks platform enables organizations to customize their security parameters in real-time, including the triggers to be considered fraud.
  
• Robust methodology: Opticks combines the precision of rules-based fingerprinting with the scalability of statistical analysis and machine learning detections.

Opticks’ ideal clients

Since Opticks is a full-funnel solution, medium to enterprise-level businesses can benefit from its ad fraud detection functionalities, wherever they operate within the digital advertising space and whatever their size.

In particular, Opticks is the ideal ad fraud detection solution for:

• Advertisers: Opticks helps advertisers improve growth and reach revenue targets by detecting SEM, programmatic, affiliation, native, and other fraud affecting their ad channels. This also allows them to gain more insights into their ad performance and make decisions based on reliable data.
• Agencies and networks: Using Opticks to identify and prevent ad fraud helps agencies and networks build more credibility by guaranteeing the highest quality traffic to their advertising partners. This allows them to partner with leading advertisers and outperform competitors.
• Telecoms: Opticks allows telecoms to guarantee the quality of their traffic by protecting their ecosystem from fraud, thus stopping bots and malicious traffic sources and therefore identifying unwanted subscriptions to protect mobile users. This also reduces the complaint rate coming from unwanted subscriptions and improves the NPS and ROI.

IAS

IAS is a digital ad verification solution that provides impression-based fraud detection and brand safety features. Focused on the top of the advertising funnel, IAS ensures that organizations’ ads are only seen by real humans and shown on safe and appropriate websites.

The solution is a great choice for businesses that want to protect their brand image. However, since IAS can detect impression fraud only, the solution lacks holistic, full-funnel capabilities. These are incredibly important capabilities since performance marketers are investing more and more resources at the bottom of the advertising funnel, and need a solution that can eliminate ad fraud from their campaigns and channels completely.

IAS’s ideal clients

IAS offers solutions to a variety of customer types, including brands and agencies. However, with its focus on top-of-funnel impression fraud and brand safety, IAS is mostly suitable for large, enterprise-level companies -- for example, those that deal in fast-moving consumer goods (FMCG) or operate in the automotive industry and invest heavily in video and impression-based advertising.

Human

Human is an ad fraud prevention solution built for ad tech platforms, media owners, and device providers and detects bots and impression fraud at the top of the funnel. The solution also provides important brand safety features for large organizations.

Human’s MediaGuard solution uses a multilayered detection methodology that extracts technical evidence to prove the presence of impression fraud. The solution does not, however, protect against ad fraud elsewhere in the advertising funnel.

Human’s ideal clients

Human offers solutions for very large companies and the public sector. Amongst other industries, it has built solutions for enterprise-level companies in the digital advertising and streaming and media spaces.

Like IAS, Human is also a good choice for larger companies investing in video and impression-based advertising.

PPC Protect

PPC Protect is a click fraud detection solution for pay-per-click (PPC) campaigns. The solution analyzes clicks in real-time to ensure their validity and can analyze website visitors to build detailed profiles to identify fraudulent behavior.

Since the solution only detects ad fraud in PPC Google campaigns, PPC Protect does not provide cross-channel or full-funnel detection services to help organizations detect ad fraud across all of their campaigns.

PPC Protect’s ideal clients

Since PPC Protect only provides PPC detection functionality, its ideal clients are small advertisers that only invest in PPC campaigns.

What should I do after detecting ad fraud?

Without a long-term solution in place, your ads will continue to be targeted and exploited by fraudsters and your campaigns squandered.

Here are the three steps you should take when you’ve detected the presence of ad fraud in your campaigns.

1. Claim a refund using data

Many advertising platforms have mechanisms in place that enable advertisers to claim refunds for campaigns affected by ad fraud.

For Google Ad campaigns in particular (despite the fact that Google monitors traffic closely, ad fraud can still seep into your campaigns), you’ll need to do several things before you can claim a refund.

First, you’ll need to gather the right data and information as evidence that you’re eligible, provide a detailed explanation of the issue, and attach copies of your tracking data or weblogs. We explain how to navigate the process in our guide to claiming a Google ads refund.

However, the process is lengthy and time-consuming, and you can only raise a claim once every 60 days, which makes it impossible to report every instance of ad fraud. This brings us to our second point.

2. Reconsider or cancel further investments in certain channels and/or partners

Perhaps you’ve identified high volumes of ad fraud in certain channels or while working with certain partners. As well as demanding transparency from your media partners, you might consider reinvesting your resources into more credible partners to avoid ad fraud and get the biggest bang for your buck.

However, how long can you realistically spend jumping from channel to channel and partner to partner in order to avoid ad fraud?

3. Implement an ad fraud detection and prevention function

Ad fraud is a massive issue that affects all advertisers and marketers everywhere. Detecting ad fraud and then retroactively preventing it is a sticking-plaster solution -- to be an organization completely free of ad fraud, you need to prevent it from the get-go.

Ultimately, the only way to protect against ad fraud is by building a solid detection and prevention function within your organization. And with Opticks, the tried-and-tested ad fraud detection and prevention solution, you can rest easy knowing that your organization is totally safeguarded against fraud.

Our holistic, end-to-end solution is dedicated to preventing fraudsters from destroying your ad campaigns and draining your budgets. Since Opticks provides cross-channel and full-funnel support, all your advertising efforts are protected from day one.

To learn more about how the expert team at Opticks can detect ad fraud before it becomes a problem, contact us and schedule a free demo today.