Ad fraud is a problem the digital advertising industry has faced for many years with no clear cut solution. In some way or the other, it affects almost every member in the industry be it publishers, advertisers, ad networks and so forth.
Statistics about ad fraud are scary and floating around everywhere. Just take your pick. Some suggest that for every $3 spent on digital advertising, $1 is supposedly fraudulent and that in 2016 more than $7 billion was lost due to ad fraud.
It’s staggering to think that in an industry with so much sophisticated advertising technology, bidders, ad servers and more, that ad fraud is such a big problem. Recent statistics from eMarketer estimates that ad fraud might even be higher than 2016 results and between $6.5 – $19 billion.
In some industries, it’s worse than others. In OTT advertising, there has been tremendous growth. eMarketer estimates a 40% grow to $2 billion in 2018. However, with that growth seems to come with many fraudsters. A study from Q3 2018 found that over 19% of impressions from OTT were invalid!
In this guide, we’ll cover all the aspects of this sinister section of the digital advertising industry so that you as a publisher can finally understand it.
We’ll also show you how MonetizeMore is playing its part in protecting publishers and their ad revenues (more on that later).
What is ad fraud?
You’ll be surprised at the lengths fraudsters go to scam the digital advertising industry and all the different types of ad fraud that exist. When talking about ad fraud, it’s an umbrella term used for multiple types of fraudulent methods.
Ad fraud is the process of misrepresenting online ad impressions fraudulently to generate revenue. This video from AdWeek talks about the four most common types of ad fraud. We’ve listed them for you below:
Pixel stuffing – this is the placement of an ad in an invisible pixel that’s not seen on a page.
Ad stacking – are ad placements that are layered on top of each other while only one gets seen by the user but multiple impressions are counted.
Misrepresentation/misidentification of a domain – this is where a quality site, in reality, is an illegitimate site made to deceive the ad buyer.
Ad injections – this is where a publisher is not permitted by an advertiser or browser to insert an ad onto a page but does and earns ad revenue from it.
Keep in mind that there are new methods popping up every day as fraudsters continue to find vulnerabilities to exploit in the digital advertising ecosystem. Clearcode goes in-depth about additional variations of fraud with regards to ad placements, malware, adware, and mobile apps.
It’s also important to keep elements such as invalid traffic and bot traffic in mind when talking about ad fraud from a publisher point of view. Both of these illicit traffic sources can ruin a publisher’s business. Invalid traffic or traffic created by bots can lead to fake clicks on ads and cost publishers with hefty revenue clawbacks and even outright bans on their ad network accounts.
That’s any publisher’s worst nightmare. Can you imagine checking your ad revenues only to realize you’ve been banned from AdSense or Ad Exchange? Later in this article, we’ll show you how to combat ad fraud, invalid traffic, and bot traffic as a publisher and protect your ad network accounts.
Who commits ad fraud and why do they do it?
Ad fraud tends to be committed by individuals or organized groups with the necessary skills to set up fraudulent systems. However, why would they do it in the first place?
Firstly, there are huge payouts involved when it comes to ad fraud. The ad fraud market is estimated to be in the billions as previously described. With that, scaling a fraudulent ad campaign is also not that hard. Compare it to other illegal activities such as drug dealing or stealing cars which don’t scale as quickly, ad fraud does.
Once a fraudster gets a payout from an ad network for fraudulent ads they can keep running that operation indefinitely until they get caught, that’s even if they get caught.
The risk of penalty for ad fraud is also murky at best. It falls into a grey area for many jurisdictions, so fraudsters see that as a limited risk once again compared to other illegal activities where penalties are severe and clear cut.
The result is a high paying, endlessly scaling, a low-risk endeavor that cybercriminals flock to.
What effect does it have on the digital advertising market?
On the surface, it’s clear that a bunch of fraudsters stealing money from advertising campaigns and cheating publishers is bad, but what’s the real effect on the market? How does it affect publishers?
Strangely enough, ad fraud is not meant to take down the digital advertising market. Fraudsters need the market to survive and make their money. Its intent is not destructive although it might have that effect.
Their goal is to parasite on an ad network and takes little cuts of ad budgets over a long period of time. However, some cases of ad fraud are specifically aimed at corporate entities to cause maximum damage to their operations.
Yet, as advertisers spend their budgets and money moves through the digital advertising ecosystem, publishers end up getting less revenue due to fraudsters. They steal the money out of publisher’s hands which creates distrust from advertisers, reduced revenue for reinvesting into their business, their reputations take a hit and more.
You can imagine when a fraudster acts if though they are Business Insider when they are not. Advertisers then buy ads from that fake site, and in the end, Business Insider gets a bad reputation for serving fake ads and being fraudulent.
It’s worth mentioning that advertisers lose out as well. Their ads get shown on fake websites or through methods previously mentioned which end up doing almost nothing for them in terms of conversions, sales, brand building, etc.
Blockchain’s role in combating ad fraud
As blockchain technology has evolved and become more popular, it has been presented as a solution to ad fraud on multiple occasions. Many have hoped that distributed ledger systems can solve the ad fraud crisis, but so far it hasn’t yet.
Surely open distributed ledger systems that blockchains can provide would be able to filter and detect fraudulent ad activity? According to eMarketer, a part of the issue is the fact that not enough parties in the digital marketing ecosystem are using it.
To fully combat ad fraud, all parties that take part in a programmatic transaction need to use blockchain. A recent survey has also said that only around 11% of US agencies have tried using blockchain technology. Adoption is very low, and the fact that blockchain is slow to manage media transactions isn’t helping either. Digital advertising requires speeds of 10 milliseconds where blockchain can only deliver 1.5 seconds at best.
However, blockchain technology can help show advertisers exactly where their ad budgets are going and what publishers end up getting paid. This way they can cut out the middlemen and avoid unnecessary vendors with reselling schemes.
Blockchain still has a long way to go before it can solve the ad fraud issue. Be sure to read more about the topic at eMarketer.
How to detect and prevent ad fraud as a publisher
Unfortunately, there isn’t a magic switch you can pull to solve the industry’s ad fraud problems. Fighting ad fraud requires sophisticated technology, artificial intelligence, skills, and expertise.
Although Google recommends tips like not clicking on your own ads, avoiding partnering with untrusted parties, understanding your traffic and more, none of these tips help prevent unintended or invalid traffic attacks. If you follow every one of those points, you are still left vulnerable.
However, MonetizeMore has a way you as a publisher can protect your ad networks accounts from getting banned without it costing you an arm and a leg. That’s precisely why MonetizeMore launched Traffic Cop, to help publisher detect and effectively block all types of invalid traffic.
Traffic Cop uses advanced machine learning with sophisticated fingerprinting algorithms to identify and block ad fraud. This way you can classify, analyze and block many kinds of bot or non-human traffic and keep it away from your ad inventory.
With Traffic Cop you not only get to detect fraud, but you can also use pre-bid analysis to block these ads from serving to fraudulent traffic.
The industry-wide issue of ad fraud probably won’t get solved anytime soon. At least with Traffic Cop, you can protect your ad inventory and keep all those fraudulent, invalid traffic away from your ads. Sign up to Traffic Cop today and never again worry about getting banned from ad networks through invalid traffic ever again!