As if we didn’t need another thing to worry about when it comes to eCommerce. 2020 has thrown a lot our way and unfortunately, there is a growing market of folks who take advantage of those that are trying to make an honest day’s work.

I’m talking about ad fraud. In a recent poll by Advertiser Perceptions, 37% of respondents said that fraud was one of the worst aspects of programmatic ad buying.

In this blog, we’ll take a look at the various forms of ad fraud, how to combat it, and how performance marketing may be a great deterrent for your ad fraud woes.

Table of Contents

  • What is fraud in advertising?
  • Types of ad fraud
  • What is the cost of ad fraud for merchants?
  • How do you combat ad fraud?
  • How does performance marketing deter ad fraud?
  • Final thoughts

What is fraud in advertising?

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Advertising fraud can come in many different shapes and sizes, but low-down on ad fraud pertains to any intentional manipulation or fabrication of advertising outcomes in order to generate revenue.

Types of ad fraud

There are several common types of ad fraud:

  • Traffic sourcing – Let’s say your goal is to reach a certain number of impressions. But what happens if the publishers you’re working with don’t have enough organic traffic (coming from search, social, etc)? The publishers will buy traffic from a third party source, usually from other websites, and send them to the publisher’s site.This often leads to audiences that aren’t interested in your content, services, or product — or worse, they could be bots.
  • Bots/non-human traffic – Bots are created to simulate user behavior on the publisher’s site or the advertiser’s ads. Bots can lead to fraudulent impressions, clicks, or in some cases even conversions.
  • Domain spoofing – This is the act of disguising sub-par inventory for premium inventory space causing your DSP to bid for placements on those sites instead. Placements on these non-premium sites are often filled with bots resulting in millions of dollars lost.
  • Cookie stuffing – This is a fraud typically associated with affiliates. When an affiliate program influences a sale, that affiliate gets paid. Cookies are text files that contain information on visitor’s browsing behaviors. The fraud takes place when these cookies are hijacked and filled with false information allowing the affiliate to steal credit for a click or sale.
  • Click injection – Sometimes called “click farming,” this is the act of generating fake clicks in an advertising scenario. Fake clicks occur in the background without the user knowing. This results in inflated click numbers that the advertiser is ultimately paying for.Similarly, click spamming produces dishonest clicks but does not use code-injection to achieve this. Many fraudulent clicks occur in the hopes that one of them will lead to a conversion.
  • Ad stacking – This is, quite literally, stacking multiple ads on top of one another. Imagine you’re walking through a grocery store aisle and you see your favorite item on a shelf — there’s likely quite a few of the same item behind that “display” item. Essentially this is when the fraudster takes credit for multiple impressions when the user is only seeing one ad.
  • Pixel stuffing – Potentially much worse than ad stacking, pixel stuffing is displaying an ad in a 1×1 space — or a pixel. The ad is invisible to the user, but the impression is still counted. Think of how many ads you could fit into the thousands of pixels on a webpage above the fold alone.

These are just some of the types of common advertising fraud methods. Other methods of ad-fraud include Ghost Sites, SDK Spoofing, Ad Injection, and Geo Masking. Any of these, or a combination, can lead to a lot of lost $$$ for advertisers.

What is the cost of ad fraud for merchants?

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Looking at the numbers can be quite shocking when you realize just how much ad fraud there is. A study by Adobe showed that nearly 28% of web traffic comes from non-human sources while MarTech Advisor puts the levels of click injection at 57%, click spam at 24%, SDK spoofing at 11%, and fake users/bots at 8%.

Nearly $28.33 billion was spent on digital advertising for retail in 2019 which is up 19.1% from the previous year (eMarketer). With so much at stake, advertisers are looking to maximize their ROI and protect their spending.

It can be difficult to track the actual monetary value that is lost due to ad fraud even for seasoned professionals. It’s quite easy for a thief to target digital ads, and since nearly every web page, app, and even social features ads, it becomes harder to track down and eliminate fraudulent activity.

White Ops and the ANA projected that $5.8 billion was lost to fraudulent activity in the digital landscape. This was down from $6.5 billion in 2017, giving some signs that the trend may be slowing according to this report.

Other studies have shown much larger figures. Juniper Research has shown the total amount lost due to fraud in digital advertising could be closer to $19.5 billion. This of course represents more than just the retail industry, but these numbers are staggering.

For every $5 spent on advertising, more than $1 is lost to advertising fraud — with some estimates at 1 in 3 ad dollars lost — it’s no wonder that advertisers want to take every precaution possible to thwart this activity.

How do you combat ad fraud?

TrafficGuard/Juniper estimates that advertisers who run campaigns without protection stand to lose 26% of their investment to fraud.

There are many strategies you can use to help avoid ad fraud from the get-go. Here are six ways you can immediately begin combating fraudulent activity.

  1. Work with ad verification providers. When manually monitoring your advertising efforts proves too much, you can work with 3rd party platforms These service providers capture all your ad-spend data and provide easy-to-use dashboards to evaluate the information.
  2. Study your analytics and KPIs. Monitor your data and pay attention to any unusual patterns (like spikes in impressions, clicks, or click-through rates). These spikes that do not increase to your bottom line could be an indication of fraudulent activity.
  3. Work with premium inventory. Blacklist low-quality sites that are driving traffic without related conversions. Low-quality sites are often notorious for bots and non-human traffic — create a whitelist of inventory that you want to focus your ad efforts on.
  4. Utilize machine learning. Machine learning uses data to continually improve matching your ads to high performing platforms. Machine learning’s rules can help identify the characteristics associated with ad fraud and block traffic or the traffic source.
  5. Use ads.txt file protocol.  The ads.txt file (Authorized Digital Sellers) helps combat domain spoofing by making sure each web page ads a file to its root domain ensuring the correct data is passed from the SSP to the publisher.
  6. Measure conversions instead of clicks. Impressions and clicks can be easily faked by bots to inflate the numbers. Instead, focus on metrics that make an impact — like signups or sales.

How does performance marketing deter ad fraud?

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One of the most effective ways to combat ad fraud is to measure your ROI based on actions that move the needle. Performance marketing does just that.

Performance marketing is an online marketing and advertising practice, in which advertisers pay marketing companies when a specific action is completed, such as a sale, lead, or other defined action.

Simply put, this means, as a brand or retailer, you’re not paying unless a specific action is taken. This is very beneficial as a brand for a few reasons.

  1. It’s trackable and measurable. We mentioned that one of the ways to combat ad fraud is awareness. Performance marketing makes it easy to measure direct performance. We’ll use a successful sale as our metric — you’re only paying when that sale is made. Instead of putting money upfront and not knowing if those ad dollars resulted in a sale, you can easily link that sale to the platform.
  2. You eliminate paying for impressions and clicks. With performance marketing, you pay only for your desired success metric. If your success metric is a sale, you can be sure that you’re not paying for any fraudulent activity surrounding impressions or clicks.
  3. The risk is transferred. Your performance marketing partner is only getting paid when you get paid. That means they’re going to work extra hard to make sure the campaigns are successful and are shown to an interested verified audience.

Final thoughts

Ad fraud is unfortunately not going away. As advertisers, it’s increasingly important to make sure you’re maximizing your ROI. And with a hefty chunk of your ad-spend potentially going to fraudulent activities you want to make sure you’re employing some of these strategies to help combat ad fraud.

Changing the way you measure success in your campaigns, specifically with performance marketing, is a great way to ensure that your advertising efforts are moving the needle when it comes to your bottom line.

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About Klickly:

For those who are new to Klickly, we are an invite-only 100% commission-based advertising platform that allows eCommerce merchants to lock in their returns by choosing their own commission. Klickly, then, advertises your products across 25Million+ premium online destinations (like the open web, apps, games, etc) only charging when we help make a sale.