The truth about ad fraud in Best Publisher Practices Ep.3
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. Ad fraud is an umbrella term used for multiple types of fraudulent methods.
Ad fraud is 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 is the placement of an ad in an invisible pixel not seen on a page.
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Ad stacking – 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 is where a quality site, in reality, is an illegitimate site made to deceive the ad buyer.
Ad injections – this is where an advertiser or browser does not permit a publisher to insert an ad onto a page but does and earns ad revenue from it.
Remember that new methods are popping up daily as fraudsters continue to find vulnerabilities to exploit in the digital advertising ecosystem. Clearcode goes in-depth about additional variations of fraud with regard 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’s 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 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. As previously described, the ad fraud market is estimated to be in the billions. 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 and 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, 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, low-risk endeavor that cybercriminals flock to.
What effect does it have on the digital advertising market?
On the surface, it’s clear that many fraudsters stealing money from advertising campaigns and cheating publishers are 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 take little cuts of ad budgets over a long period. 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 moving through the digital advertising ecosystem, publishers get less revenue due to fraudsters. They steal the money out of the publisher’s hands, which creates distrust from advertisers, reduces revenue for reinvesting into their business, takes a hit to their reputations, and more.
You can imagine when a fraudster acts like a 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 previously mentioned methods, which end up doing almost nothing for them regarding conversions, sales, brand building, etc.
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