What is Ad Fraud?
by Matt Gillis, on Mar 1, 2020 4:03:00 PM
Ad fraud is the multi-billion dollar shadow business of the digital ad ecosystem. Learn more about ad fraud to protect your business, customers, and revenue.
The digital ad ecosystem is like the Wild West – it’s a new frontier with a lot of opportunity for financial gain, with difficulty regulating criminal behaviors.
The digital ad market is expected to reach $1.4 billion this year and increase to nearly $1.8 billion by 2024.
With this amount of money at stake, digital advertising has become an attractive target for fraud. Adding to this is the complex, evolving nature of the digital ad ecosystem and technological advancements that are being leveraged to make ad fraud more difficult to detect, track, and prevent.
Types of Ad Fraud
There are many different tactics that are included in the category of ad fraud. From human to bot, phishing to malware delivery – the variety and breadth of approach that can be used to perpetrate ad fraud only makes the problem harder to pinpoint and manage.
Types of ad fraud include:
Ad stacking occurs when several ads are layered on a website. Only the top ad is displayed to the user, but if the user clicks on it, it registers as a click for all the ads layered underneath, even though they are never seen.
This drains the revenue of advertisers whose ads are layered beneath – in a Pay-Per-Click scenario, the advertiser is charged for a click on an ad that was never seen. It also artificially inflates the value of ad space on a website, by skewing the click rate.
Fraudsters can insert ads to a publisher’s page without permission, to divert authentic ad traffic and revenue or to install malware on the user’s device. Injected ads interrupt the user experience, and put the security of the website and the user at risk.
Domain spoofing refers to when a low-quality website is presented as a high-quality website, for the purposes of collecting ad revenue fraudulently. Advertisers purchase space at premium prices, but their ads end up on a low-quality or suspicious website. This impacts the reputation of the advertiser and of the website that was spoofed, as well as diverting revenue from the authentic site.
Forced redirects occur when a user visits a website intentionally, and a pop-up appears, directing the user to an unknown site: either to install malware or collect personal information (‘phishing’). Forced redirects interrupt user activity on the site, increasing bounce rate, and eroding brand reputation.
Fraudsters drop a bunch of cookies into a user’s browser, indicating that they have visited sites that they haven’t – that’s cookie stuffing. These cookies are used to calculate the commission to affiliate marketers; therefore, falsifying cookies fraudulently increases the money paid to affiliate sites.
Bots are small pieces of code that mimic the activities of human users. In ad fraud, click bots generate revenue by clicking on ads or links on a website. The advertiser is charged for inauthentic clicks, wasting advertising spend, and skewing data analytics.
Click farms also generate inauthentic clicks, for which the advertiser is charged. However, instead of automated bots, click farms use humans to click on specific sites or ads. The result is similar – wasted spend and skewed analytics – but click farms are even harder to track, as humans don’t exhibit the same behavioral tells as a bot.
Pixel stuffing occurs when a complete ad – designed for a 1,024 x 480-pixel display, for example – is crammed into a single pixel within another ad. A user couldn’t possibly view a single pixel, but the advertiser is charged for the ad display anyway.
Learn More: What is Malvertising?
Ad fraud can appear in other forms as well – these are just some of the most common. Moreover, fraudsters are constantly changing their approach to ad fraud, to improve their income and evade detection.
Impact of Ad Fraud
Ad fraud impacts players in the digital advertising ecosystem in different ways. Advertisers can be defrauded of the funds in advertising budgets, diverting spend from authentic, quality websites to fraudulent, suspicious, low-quality websites. They can be made to spend ad dollars on clicks that aren’t real, or ads that are never actually viewed.
Publishers suffer from diverted advertising revenues, increased bounce rate, and a negative impact on users and brand reputation. And users suffer from a bad experience on a site, which they then associate with the brand; and their privacy, data security, and device integrity can be put at risk.
Ad fraud is a widespread problem. Consider a recent study¹, which found:
- More than 10% of all digital display ad impressions are fraudulent
- More than half of all traffic purchased by publishers to drive USVs is fraudulent
- 20% of retargeted ad impressions are fraudulent
- 2/3 of fraud comes from the hacked or hijacked devices of regular consumers, who are unaware
Ad Fraud Prevention
What can be done, to address ad fraud at your organization? There are two basic approaches: in-house ad fraud prevention, and third-party solutions.
In-house Ad Fraud Prevention
To address ad fraud with an internal, home-grown process, be sure to dig into the data. Use the tools at your disposal to distinguish bots from human, and fraudulent activity from authentic. This may include tracking IP addresses, or other user signals that point out differences between the two.
In-house ad fraud allows the organization a high level of control over the process, but it is likely inefficient and less effective than a purpose-built, third-party solution.
When considering a third-party ad fraud solution, ask yourself these questions:
- Is this solution effective at preventing the type of ad fraud your organization encounters?
- Is this solution automated, eliminating the need for manual tasks or ongoing configuration and management?
- Is this solution scalable, to respond to increasing advertising volume or a large-scale attack?
- Is this solution adaptive, remaining effective even in the face of rapidly changing tactics?
This will help you to narrow down third-party ad fraud prevention solutions to the one that will have the greatest positive impact on your organization.
Get Started With clean.io
Whether your site or app is actively being attacked by malicious ads or you want to have a solution in place for preventative measures, clean.io’s exceptionally easy-to-implement anti-malvertising platform is available to protect digital advertising revenue and visitor user experiences.
Using behavioral analysis, clean.io minimizes the impact and profitability of ad fraud and yields fewer false positives and false negatives, so you can make the most of your ad monetization.