Inside ad fraud - everything marketers need to know

What is ad fraud and how does it work?

Ad fraud is the practice of generating false interactions with any digital asset for the sole purpose of earning money. Ad fraud isn't just conducted by humans (e.g. click farms) or malicious bots, there is a wide range of high-tech methods fraud organizations practice to capitalize on unsuspecting advertisers.

Ad fraud is cybercrime

Ad fraud might not make headlines very often but make no mistake, ad fraud is considered cybercrime. In fact, sophisticated ad fraud organizations use the same tactics as financial or political cybercriminals. Such as the development and distribution of malware, covertly installed in computers or mobile devices. The infected devices report to a command-and-control server that in the case of ad fraud, clicks on ads, drives up impressions or fills out forms. Basically, anything the server is programmed to instruct, the infected computers or mobile devices will execute within milliseconds.

How to know if ad fraud is affecting your campaigns?

When marketers observe abnormally high numbers of clicks but little conversions, their digital campaigns might be infected with ad fraud. Businesses want legitimate customers clicking through their ads and filling out a form, subscribing to a newsletter, or making a purchase. Not clicking on ads and exiting the funnel right after.

In an ideal situation, conversions should proportionately increase with click volume. More customer visits equals more chances of converting. However, marketers should be aware that sophisticated ad fraud can generate high amounts of bogus conversions, making unsuccessful campaigns appear profitable.  

A bounce is a single-page session on a website. It's what happens if a potential customer visits a website for a short moment and then exits. Marketers calculate the overall bounce rate by dividing single-page sessions by all recorded sessions.

To know if high bounce rates are related to ad fraud, marketers should analyse high click-through rates on ads and pair them with high bounce rates on their pages. This is due to bots or human click farms clicking through ads, arriving on landing pages, and then immediately exiting. Forcing businesses to pay for fake and fruitless clicks.

To know if a digital marketing campaign is compromised, marketers should dig into traffic data. Traffic data can reveal critical details that help uncover an underlying fraud problem. Details such as outdated browsers or unpopular devices, multiple clicks coming from the same IP address or surges of traffic coming from countries outside of target parameters are definite red flags.

How does ad fraud affect campaign data and metrics?

Good digital marketers rely on data and metrics to make decisions. Data allows marketers to identify profitable campaigns, channels, and partners, as well as craft long-term digital strategies. Without data, online marketing would be reduced to uneducated guesswork.

Fraudulent impressions, clicks, leads, and acquisitions pollute data and skew marketing analytics, making a marketer’s job impossible; affecting testing, and often heavily depleting the digital advertising budget.

How does ad fraud deplete your ROI?

The digital advertising industry is expected to lose up to $42 billion to ad fraud in 2020 and $87 billion by 2022. A study by Forrester found 69% of brands spending $1 million per month reported that at least 20% of their budgets were being lost to digital ad fraud. As fraudulent organizations become more sophisticated, the financial cost of ad fraud will only increase.

Marketers should consider their monthly digital ad spend. Then subtract 20-30 percent, and pause to imagine how much ad fraud depletes their ROI.

Fraudulent traffic drives no business and depletes your digital marketing budget

Unfortunately, digital marketers tend to indulge in metrics that make reports look favorable. Sophisticated ad fraud takes advantage of this and often lurks behind high click rates or conversion rates. These in turn generate zero long-term value and deplete the digital advertising budget.

Marketers can protect their data and budget from ad fraud. By being proactive, understanding the signs, and adding a layer of protection.

Adding a layer of protection helps businesses reach real users and block malware, bots, and human-generated ad fraud. Get your free ad fraud consultation today by booking an Opticks demo with one of our experts.