Everything You Need to Know About Ad Fraud
What is Ad Fraud?
Ad fraud is the process when online ads get fake clicks, impressions, or interactions. It happens when bots or people with fraudulent intentions generate fake engagements on ads without real interest.
Instead of spending ad budgets on genuine traffic, advertisers unknowingly pay for ads that real people haven’t engaged with. This way, ad fraud hurts the effectiveness of PPC campaigns, drains ad budgets, and reduces the campaign’s Return on Investment (ROI).
The risk of ad fraud is present on every platform. Facebook (Meta), LinkedIn, Google, Microsoft (AKA Bing), and even ads on streaming services like Spotify or Netflix can be targeted by ad fraud. Having the ads on these platforms exposed to ad fraud, the integrity and the credibility of the entire advertising industry suffer.
Ad Fraud Statistics 2023
Ad fraud is a growing concern in the digital advertising ecosystem. In a recent research, it’s estimated that in 2023, $100 billion will be lost globally due to ad fraud. This is a significant increase of 19% from 2022, when it was $81 billion.
- For every $3 allocated to digital ads, $1 is lost to digital ad fraud (Invesp).
- 5.9% of paid traffic in 2022 was fake (CHEQ).
- Around 47% of total internet traffic is from bots, up by 5.1% from the previous year (Increditools).
- In 2022, streaming platforms faced the highest invalid rate for paid traffic at 11.1% (CHEQ).
How Can You Identify Ad Fraud?
Identifying ad fraud can be challenging, as fraudsters constantly evolve their tactics to avoid detection. However, there are several common signs and techniques that can help you identify ad fraud.
Keep track of your analytics
- Monitor unusual data patterns
- Watch for sudden spikes or drops in metrics like CTR, conversions, or engagement
Look out for red flags
- Consistently high click counts from the same IP addresses or devices
- Unusually high levels of interaction from non-standard geographic areas
- High bounce rates
Be cautious of misleading indicators
- Increase in conversion counts not matched by corresponding increases in actual sales.
These are all suspicious behaviors that are not typically seen among genuine users and can serve as significant indicators when trying to identify ad fraud.
Block ad fraud within minutes
How Does Ad Fraud Work?
Techniques Used in Ad Fraud
Bots – Bots are automated software programs that simulate human behavior on the internet. In the context of ad fraud, bot traffic is used to generate fake ad impressions, clicks, and engagement metrics.
Botnets – A botnet is a network of bots or compromised devices (like computers or smartphones) infected with malware. Botnets can be massive and produce a huge volume of fraudulent ad interactions simultaneously.
Click farms – A click farm is a place where individuals or bots, often operating on a large number of devices, generate fake clicks and interactions. In human-driven click farms, individuals are paid to manually click on ads, view content, or engage with elements, mimicking genuine user activity. Alternatively, bot-driven farms employ automated scripts or software to simulate these actions. Read more about click farms here.
Why do Fraudsters Commit Ad Fraud?
Financial gain – This is the primary motivation for most ad fraud. Fraudsters make money by selling fake traffic to advertisers, earning revenue from ad impressions and clicks, or diverting ad budgets without delivering real results.
Competitors – Some companies might commit ad fraud to harm their competitors’ campaigns. By generating fake clicks and impressions on a competitor’s ads, they can drain their budget and reduce the effectiveness of their campaigns.
Inflating metrics – Publishers might engage in ad fraud to make their websites appear more popular than they actually are. This way, they attract higher-paying advertisers and increase their revenue.
Data collection – Fraudsters may use ad fraud to collect valuable user data, such as IP addresses, browsing habits, banking details, and more, which can then be sold or used for other malicious purposes.
Impact of Ad Fraud
Ad fraud has far-reaching consequences, impacting advertisers, businesses, and the entire digital advertising ecosystem.
The primary impact is the financial losses that advertisers experience. Often, they are unaware of the extent of the budget lost due to fake ad interactions. If we consider missed opportunities with genuine traffic and potential conversions, the loss is quite substantial.
Consequently, ad fraud ripples into other areas as well. It causes inefficient ad campaigns, poor campaign optimizations influenced by skewed data, and wasted time and resources of the marketing teams.
Additionally, with the extended volumes of bot traffic, genuine users might experience slow website speed and responsiveness, resulting in a negative user experience and potential reputational harm. Ineffective ad campaigns and poor user experience also hurt the reputation and integrity of the advertising platforms.
Types of Ad Fraud
Here are the six most common types of ad fraud:
Hidden ads or ad stacking
Multiple ads are layered on top of each other in a single ad placement. Only the top ad is visible to the user, but the other ads are still counted as impressions or clicks.
Impression fraud
Impression fraud occurs when fake ad impressions generated by bots or automated scripts falsely inflate the number of times an ad is displayed, leading to advertisers paying for impressions not seen by real users.
Cookie stuffing
Cookie stuffing involves dropping cookies onto a user's device without their knowledge, attributing fake interactions or conversions to the user.
Clickjacking
Also known as Clickjacking, this technique tricks users into clicking on a disguised element, leading to unintended malicious actions like downloading malware, stealing credentials, etc.
Domain spoofing
Fraudsters create fake websites that mimic legitimate publishers to deceive advertisers into thinking their ads are being displayed on reputable sites.
Geo masking
This tactic involves faking the actual location of online interactions. Fraudsters manipulate network routes through proxies or VPNs to make ad interactions seem to come from a desired location.
Combating Ad Fraud
With CHEQ Essentials
CHEQ Essentials, the best-in-class solution against digital ad fraud, uses advanced algorithms and real-time detection to combat fake clicks, bots, and harmful interactions. Features like IP blocking, device fingerprinting, and behavior analysis distinguish legitimate clicks from fraudulent ones. It automatically blocks suspicious traffic sources, preserving your ad budget. Protect your campaigns, boost conversions, and optimize resource allocation with CHEQ Essentials.
Frequently asked questions
How Do Bots Drive Ad Fraud?
How Do Advertising Platforms Fight Against Ad Fraud?
Will an ad fraud detection software slow my site?
No, a reliable ad fraud detection software is designed to work efficiently without slowing down your site. It operates seamlessly in the background, ensuring real-time fraud detection while maintaining optimal site speed and user experience.
Can I detect and block ad fraud manually by myself?
While basic manual efforts like monitoring metrics can help, manually detecting and blocking ad fraud is challenging due to the complexity of online advertising. Automated tools, such as specialized ad fraud detection software like CHEQ Essentials, are recommended for more effective and comprehensive protection against evolving fraudulent techniques.