Ad fraud remains a major problem for marketers in 2022. Ad fraud costs are projected to reach $100 billion by 2023.
Marketers can improve advertising performance, return on investment and overall sales by reducing or eliminating ad fraud.
In this article, we’ll explain what ad fraud is, how it’s impacting your campaigns, and tips on what you can do to eliminate it.
What is ad fraud?
Ad fraud is malicious activities with the sole purpose of generating revenue from advertisements that are primarily never seen or clicked on by humans.
Most ad fraud is performed by bots or large groups of individuals that can perpetuate ad fraud quickly and at scale.
For example, a fraudster can create a bot that clicks on digital ads across the web. Each “fake” click generated by the bot earns a commission, paid unbeknownst by the advertiser. The fraudster can also serve dozens of “hidden” ads in the background of their website or stacked beneath other ads, yet they charge the advertiser on a common cost-per-impression basis (CPM).
Ad fraud bots can be difficult to detect since they mimic human behavior and are hard to track since advertisers often run millions of ad impressions across a large network of sites.
Types of ad fraud
Here are some of the most common types of ad fraud today:
- Malicious Bots: Computer programs that automatically generate clicks on ads, often without the advertiser’s knowledge.
- Hidden Ads: Ads that are not visible to the user but are still counted as an impression. This can be done by placing the ad in a hidden area of the webpage or by using malicious code to redirect the user’s browser when they click on the ad.
- Click Farms: Large, coordinated groups of real people who are paid to click on ads or download apps repetitively and at scale. Click farms are widespread in countries where labor is cheap, such as India and China.
- Install Hijacking & Click Injection: These types of malware hijack or inject illegitimate clicks into an advertiser’s campaign. For example, install hijacking is when a user is tricked into installing a malware program that then generates fake clicks on ads. Click injection is when a user is redirected to an ad after clicking on a legitimate link.
- Click Hijacking: A user is redirected to an ad after clicking on a legitimate link. For example, if someone clicks on a link to a news article, they might be redirected to an ad for a different news article instead.
- Fake App Installation: Click farms often target ads within applications, installing apps thousands of times and interacting en masse. This reduces the efficiency of advertising campaigns driving application downloads, as a larger proportion of downloads are fraudulent and will not result in consumer spending.
- SDK / Traffic Spoofing: Installs with data of real devices that appear legitimate but do not contain any actual installs. In this type of fraud, scammers build genuine installations that resemble the real thing in order to steal a company’s advertising dollars.
How common is ad fraud?
Ad fraud is far more common than most marketers understand, primarily because it’s challenging to detect. A recent study by Juniper Research estimates that ad fraud will reach $68 billion in 2022, up from $59 billion last year, and the country with the most significant amount of fraud was the United States, with 35% of all losses in 2022.
Another survey among PPC advertisers found that 74% of all respondents reported seeing ad fraud representing five percent or more of their ad traffic (see table below). Many of those respondents saw greater than 25% of their traffic as fraudulent.
Ad fraud impacts all industries, but the most vulnerable are those with high cost-per-clicks (CPC), such as in legal, finance or insurance. In some cases, a single click can cost over $200 (read more about the most expensive Google keywords).
How does ad fraud impact marketers?
Ad fraud can have several negative impacts on businesses, including:
Decreased ROI: Ad fraud can reduce the ROI of an advertising campaign by inflating the cost-per-click (CPC) or cost-per-thousand impressions (CPM). This is because businesses are paying for ad impressions that real people are not seeing.
Wasted Ad Spend: Ad fraud can also lead to wasted ad spend, as businesses pay for ads not seen by their target audience. This is especially true for hidden ads, which the user cannot see but are still counted as impressions.
Damage to Reputation: In some cases, ad fraud can damage the reputation of a business. For example, if a user clicks on an ad and is redirected to a malicious website, this could reflect negatively on the business that placed the ad.
Manipulated Data: Fraudulent clicks make it harder for marketers to identify which ads are most effective and which should be killed off. This means marketers spend more time optimizing non-performing campaigns, or worse yet, they mistakenly invest their budget into ads that aren’t showing up on screens at all.
What can businesses do to fight ad fraud?
Here are a few recommended steps businesses can take to help fight ad fraud:
- Educate yourself and your team about ad fraud: The first step to fighting ad fraud is understanding what it is and how it works. This way, you can be on the lookout for telltale signs of fraud in your own campaigns.
- Implement an ad fraud detection solution: There are a number of independent software solutions that can help you detect ad fraud. These solutions offer a variety of techniques, including bot detection, IP and fingerprint analysis, and automated blocking.
- Work with trusted partners: One of the best ways to fight ad fraud is to partner with companies you trust. This way, you can be sure that your ad spend is going towards genuine impressions.
- Avoid using an ad broker: While brokers may be necessary when working with large networks that don’t want to deal directly with publishers, they can also charge higher fees and manipulate the analytics. Uber sued and won one of their former ad networks for fraudulently reporting more clicks than actually occurred.
- Keep an eye on your data: Keep track of your campaign data, and look for any unusual patterns or spikes. This can help you identify potential instances of ad fraud.
- Use a Honeypot: A “honeypot” is a method of tricking bots into identifying themselves on your website. A standard practice is providing a “hidden” field on a lead form that only bots can see since they only read the HTML on your web page.
Already have ad fraud? Here’s how to get a refund
Google Ads provides refunds automatically for any invalid clicks they detect on their network. You can view those in your primary Google Ads dashboard.
However, if you believe you’re seeing additional fraud in your ad campaigns beyond what Google already detects (perhaps you’ve received several fake leads), you can apply for an additional refund.
To request a refund, complete Google’s Click Quality Form and provide details of the invalid clicks you’re seeing. Filling out the form doesn’t guarantee you’ll receive the refund, but it’s worth a shot. Also, if you’re using separate software that helps detect ad fraud, they can provide information on the IP addresses or traffic to help support your claims.
Ad fraud is a widespread problem that can significantly impact your marketing performance. You should be proactive in your efforts to prevent fraud by educating yourself, using ad fraud detection tools, and constantly monitoring your traffic to help ensure that your campaigns are maximizing their sales potential.
The opinions expressed here by Guest Contributors are their own, not those of Rise Marketing.