By: Lakshmi Jayakumar -- Principal Analyst, Indirect Services
30 July, 2019
An estimated US$16.4 billion of advertising expenses was lost due to ad fraud in 2017. This is being greatly driven by a rise in digital marketing spend. It has been observed that over 64 percent of all video ads played on the Internet are fraudulent. Close to 10 percent of the total digital marketing budget is lost to fraudulent buys that can be avoided.
2 Main Points
A brief description of the different types of ad fraud that impacts advertisers. Insights on how ad fraud impacts the ad budgets of companies.
Guidelines to avoid major impacts of ad fraud and protect client interests.
Ad fraud was not such a huge issue in the era of traditional advertising channels like TV, radio, and so on. Then, marketers could access only a limited target audience, yet had 100 percent control over their campaigns, which reduced the chances of fraud. However, the digital era has shifted the advertising landscape to where the marketer is no longer the key controller of the campaign. Campaigns on digital media can be impacted in many ways, which is sometimes out of the control of brand owners.
Ad fraud is one major challenge that is currently faced by marketers. This has a negative impact on campaigns as segmenting real customer activities from fraud become a huge constraint while defining upcoming campaigns. Programmatic technology is one of the most preferred automated technologies used by marketers for promotions as well as purchase and sale of various product lines due to its ease of obtaining buyer behaviour and campaign preferences. However, fraudulent users can act as a barrier to this since fake website visits, impressions, and clicks can change the results of the analytic tools used to measure campaign impact. This results in marketers diverting their budgets to the wrong campaign.
Identifying and mitigating ad fraud may become a challenge, but understanding the various types and models of this could help to minimise the impact of these so-called bots. This will help marketers recognise their signs and activities and improve overall business outcomes, so marketers can distinguish fraudulent activities from real customers’ activities and allocate their marketing budgets effectively.
1. How Does Ad Fraud Work?
Marketers create ads to impact their end consumers. However, when such ads do not reach the end consumer but instead appear on fake sites, it becomes ad fraud.
Ad frauds are categorised based on four major types of ad spend on digital media:
Of all the main types of fraud, most occur through impressions and clicks, which has led to the creation of fake websites as well as fake users.
Key Ingredients of Fraud:
1.1 Types of Fraud Bots
There are three major classifications of bots based on the level of sophisticated behaviour.
These bots are so well programmed that such impressions, clicks, and traffic are difficult to detect on the analytic platforms of ad agencies and marketers, which impacts their marketing spend.
1.2 Role of Mobile Phones in Ad frauds
Mobile phones are one of the most commonly used devices in which marketers heavily invest due to the increasing time consumers spend using them. They also present the ability to offer customised ads based on consumers’ history and live location.
However, this environment has also been tapped by bots to commit ad frauds by making use of fake mobile devices and simulators made at data centres. These simulator apps are capable of launching apps, creating fake location data, as well as interacting.
However, software development kits can lower the rate of fraud in the mobile devices where good and bad apps can be easily identified.
2. Role of Marketers/Ad Agencies to Track Ad Frauds
Although it is difficult to mitigate the activities of bots, marketers and ad agencies can monitor them to some extent using sophisticated analytic tools to understand these fraudulent activities. Consequently, they can invest their budgets in campaigns where only genuine human traffic is detected.
2.1 Usage of Technology to Detect Bots
Fraud can only be detected using advanced technology that can continuously monitor, track patterns and URLs from which the behaviour was observed, impressions, and clicks from bots for different campaigns. Such technology helps in tracking the real impact that campaigns have on consumers, differentiating it from bot activities.
There are three major areas where fraud detection can be performed to ensure better results:
2.2 Action Plan for Effective Marketing Budget Allocation
Although mitigating the negative impact may be a huge challenge considering how wide the digital platform is, marketers could look at investing in big data methods that would help them to reduce outcomes of fake visits, clicks, and impressions. This would lead to drastic alterations in the analytic reports generated to define campaign success.
Some of the action plans that marketers could focus on are:
These steps may not mitigate the overall impact that ad frauds have on the campaigns, but will minimise fraudulent behaviour to a huge extent to ensure that marketers have more unbiased results regarding the campaign. This will help them plan where to invest their money with the support of the advertising and channel partners.
Ad fraud is not something that can be completely mitigated by marketers due to increasing technology that is empowering fraudsters to become stronger in the digital world. Marketers need to prioritise their brands and ensure better consumer experience to ensure that there is less negative impact created by the growing number of ad frauds.
A key approach should be to invest in the right technology, such as the use of marketing tools and analytics that can identify and distinguish fraudulent activities from that of human behaviour. Marketers should also work with a team of experts who can monitor the variations in the results and identify fraudulent activities, which will show the ad agency and marketer genuine activities as opposed to those of bots. Investing in simple marketing tactics such as feeds will also let them view user responses, which will help in identifying fraudulent behaviour on the platform.
Although ad fraud is only going to increase in the coming years, taking actionable measures that can reduce the impact will help buyers understand how to use their marketing budgets effectively, thus strengthening brand value and shaping a positive image in their end consumers’ minds.