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  • May 1, 2024
  • By Linda Pophal, business journalist and content marketer

Tips and Technologies for Reducing Ad Fraud

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Chris, a digital marketer, was excited to launch a digital campaign for a new line of products. After careful research into the target audience and the competition, Chris partnered with a prominent ad platform to get ads in front of the right audience based on a range of metrics. While eagerly anticipating results, Chris was disheartened when results began to come in, almost immediately noticing some red flags. For instance, while click-through rates were very high, conversions were very low. Digging deeper into the numbers, Chris discovered that a number of these clicks were coming from odd-looking IP addresses.

Could it be that the results weren’t real, after all, but the result of an ever-growing number of digital fraudsters leveraging bots and click farms to siphon money away from legitimate advertisers while overinflating the results of their campaigns?

Yes. In fact, the odds are very much stacked against legitimate digital marketers like Chris today.

The advent of digital media initially resulted in new opportunities and significant savings for companies of all types and sizes as they shifted advertising dollars from traditional to online channels where they could more readily (and, many believed, more accurately) see the sources of leads, inquiries, and sales. But, inevitably, bad players identified opportunities for personal gain, and ad fraud and waste began to emerge and then explode.

The impetus behind digital ad fraud is to generate revenue fraudulently, inaccurately indicating that traffic or impressions have been legitimately generated when that’s not the case.

THE IMPACT OF AD FRAUD

Dan Jahn, cofounder and CEO of Probability, a promotional marketing (sweepstakes, contests, and games) firm based in New York, has seen the impact of digital fraud firsthand. “The screening technology we used on a recent sweepstakes promotion found more than 220,000 fraudulent entries out of about 239,000 entries,” Jahn shares. “That’s enormous, and it’s indicative of the kind of fraud that marketers are up against daily. But by investing in [artificial intelligence] technologies, the industry can effectively weed out huge tranches of bad customer data, ensuring that the leads they’re marketing to are actual leads.”

Of course, sweepstakes are just one element of digital marketing that can be subject to fraud. In fact, every digital interaction holds the potential for fraud, and the bad players are getting increasingly sophisticated in how they carry it out.

“Ad fraud and waste have become pervasive issues within the digital advertising landscape, significantly diluting the [return on investment] of digital marketing campaigns,” says Cache Merrill, founder of Zibtek, a software development consultancy based in Draper, Utah. “These practices not only skew analytics and decision making but also drain advertising budgets, undermining the trust in digital platforms.”

According to Spider AF, a company that helps advertisers fight digital ad fraud, it can take a variety of forms, including the following:

  • Hidden ads, which aren’t visible to users but that still register as impressions.
  • Auto-refresh ads, which refresh automatically, increasing impression counts without actual user interactions.
  • Domain spoofing, or misrepresenting low-quality websites as high quality to sell ad space at higher costs.
  • Click farms, populated by groups of people who are actually paid to click on ads to inflate engagement numbers.
  • Ad injection, where unauthorized ads are inserted into web pages.
  • Install hijacking, or taking credit for app installations that did not actually occur.

The impact on advertisers, of course, can be significant. In fact, the estimated cost of ad fraud, according to Juniper Research, was $85 billion in 2023 and is expected to rise to almost $100 billion by the end of this year. “Twenty-two percent of the total value of global spend of digital advertising in 2023 will be lost to ad fraud,” it says.

Bots are generally behind these malicious actions. They are “programmed to imitate real user activities with the objective of repetitively clicking on advertisement links,” according to Juniper. Fraudsters use a network of connected bots, called botnets, each with a different IP address that makes it hard for them to be detected.

“Not all digital channels are equally susceptible to ad fraud,” says Marshal Davis, president and owner of Ascendly Marketing, a digital marketing agency and consultancy based in the Woodlands, Texas. “Email marketing and social media platforms that are equipped with strong authentication processes experience somewhat lower fraud rates, he says. “Increasing investment in these channels could represent a valid strategy to steer clear of the most common issues of digital advertising waste.”

But even these channels are subject to varying levels of fraud as bad actors are continually seeking ways to break through barriers to generate revenue in non-legitimate ways. Fortunately, just as technology can be used to perpetuate digital ad fraud, it can be used to minimize or eliminate it.

DETECTING AD FRAUD

Will Yang is head of growth and marketing at Instrumentl, a grants platform for nonprofits based in the San Francisco Bay area. “Companies can leverage technology and data analytics to tackle this issue,” he says. “Advanced algorithms can identify patterns that may indicate fraudulent activities. Machine learning can help in detecting unusual traffic patterns that could be indicative of click fraud. Data analysis provides insights into which marketing channels give the best return on investment and thus help to minimize waste.”

Just as ad fraud is big business, so, too, is ad fraud detection. Straits Research valued the global fraud detection and prevention market at $34.3 billion in 2022 and expected it to reach $45.6 billion in 2023. The company expects the market to rise sharply to $254.93 billion by 2031, at a compound annual growth rate (CAGR) of 24.2 percent.

“Fraud can be identified and prevented in two ways: automatically and by combining computer and human labor,” says Anshu Sharma, a data analyst at Straits Research. “Automatic intervention only occurs when there is substantial evidence of fraud, as false alarms may have disastrous effects. Remember that fraud detection systems consider millions of accounts, occasionally even tens or hundreds of millions. On a customer base of only one million accounts, a daily false-alarm rate of even 1 percent would result in 10,000 false alerts each day.”

Digital marketers need to be constantly vigilant and take proactive steps to minimize the odds that their well-planned, well-financed, and expertly targeted campaigns don’t fall prey to fraud.

“Before any ad goes live, it’s crucial to run it through strict verification processes,” Davis says. He points to tools like DoubleVerify that can be used to check the authenticity of ad placements and the legitimacy of audience engagement. “If an ad meant to target teenagers in New York starts getting clicks from a different country, the tool flags it immediately,” he says. “This immediate action stops ad spend from leaking into fraudulent areas.”

Human review and intervention is an important part of the process. Spot checks can help detect unusual activity. The larger the campaign and its results, though, the more challenging it becomes for humans to detect fraud on their own. That’s where technology can come into play; marketers have seen significant advancements in technology in recent years.

“Advanced technologies, including AI and blockchain, are at the forefront of combating these challenges,” Merrill says. “AI algorithms excel in detecting unusual patterns that may indicate fraudulent activity, while blockchain technology offers transparency and traceability in ad transactions, making it harder for bad actors to manipulate the system.”

In addition to leveraging technology to help identify and thwart ad fraud, there are other steps that digital marketers can take to combat it. They include the following:

A focus on local optimization. Steven Morse, owner of SEMbyDesign, a search engine marketing firm based in Bella Vista, Ark., recommends focusing on local optimization and legitimate local directories. “By submitting our clients’ businesses to reputable local directories and ensuring their Google My Business profiles are accurately optimized, we reduce the risk of ad fraud,” he says. “This localized approach guarantees that the business ads are displayed to a genuine audience actively seeking their services within a specific geographic location, significantly minimizing the opportunity for fraudulent interactions.”

Using detailed tracking and analytics. Implementing detailed tracking and analytics across all advertising campaigns can also help identify ad fraud, Morse says. “By setting up stringent monitoring systems, we’re able to identify and analyze patterns of user behavior in real time,” he says. “If we notice an abnormal bounce rate or an inexplicably high number of clicks from a suspicious IP address, we can quickly take corrective action, such as blacklisting these IPs or adjusting our ad targeting parameters.”

This level of vigilance, he says further, “allows us not only to optimize ad spend but also to safeguard our clients against the ramifications of ad fraud.”

Fostering relationships with trusted platforms. Choosing the right technology provider is obviously critical for ensuring protection against ad fraud. “It’s essential to partner with those that demonstrate a clear commitment to transparency and fraud prevention,” Merrill says. He recommends looking for providers “that offer detailed analytics and reporting tools that allow you to track ad spend and performance closely.” In addition, he says, “inquire about their fraud detection capabilities and the measures they take to ensure the quality and authenticity of traffic.”

Morse agrees that fostering relationships with trusted platforms is an important best practice. “By selecting platforms that prioritize ad verification and transparency, such as Google Ads and Bing Ads, we ensure that our clients’ budgets are invested in secure environments,” he says. “These platforms have stringent policies and advanced technologies in place to detect and prevent fraudulent activities, offering an additional layer of protection.”

Integrating these technologies with a focus on local optimizations and in-depth analytics creates a comprehensive approach to combat ad fraud and maximize the impact of every advertising dollar spent, Morse says. “This multidimensional strategy emphasizes the importance of local knowledge, technological vigilance, and platform integrity in creating a fraud-resistant advertising ecosystem.”

The providers digital marketers choose are obviously key to minimizing the impacts of digital ad fraud. There are many, many options available today, meaning both that the choices can be overwhelming and that digital marketers can be selective when choosing the right vendors.

SELECTING PROVIDERS

When choosing providers, essential aspects to consider include transparency and controls over the advertising process, Yang suggests. “Providers should not only offer detailed reports on the progress of the advertising campaigns but also grant control over parameters such as audience targeting and budget allocation,” he says.

Yang further recommends asking providers about their readiness for ad fraud, their mitigation plans, and their record in handling such situations. “Having clear communication and well-defined protocols with the provider will pave the way for trustful relationships and effective campaigns,” he says.

Advertisers and their agencies should also demand transparency from their suppliers, Davis stresses. Your provider, he says, “should be able to provide clear, easily accessible reports on what they do, how, and when, and who sees their ads.” Only work with vendors that offer advanced analytics and real-time monitoring, he says.

Finally, of course, check out the track record of the vendors you’re considering. Ask for case studies and references and explore them thoroughly. Ask references for additional people to contact. Reach out to colleagues and industry peers as well.

In addition to careful vendor selection, Merrill suggests some other key best practices for digital marketing leaders:

  • Regularly audit and monitor ad campaigns for discrepancies and irregularities.
  • Allocate budgets across a diverse mix of channels to mitigate risk.
  • Stay informed on the latest trends and threats in ad fraud to adapt strategies proactively.

And while nothing is completely foolproof, every effort should be made to address the risk. While ad fraud and waste pose significant challenges to the digital advertising ecosystem, a combination of advanced technology, strategic provider selection, and vigilant campaign management can help companies safeguard their investments, Merrill concludes. 

Linda Pophal is a freelance business journalist and content marketer who writes for various business and trade publications. Pophal does content marketing for Fortune 500 companies, small businesses, and individuals on a wide range of subjects, from human resource management and employee relations to marketing, technology, healthcare industry trends, and more.

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