Five common questions about ad fraud

At NS8, we help companies make the most out of their digital advertising campaigns and reduce the impact of ad fraud. We also get frequent questions about what advertising fraud really is and how it works. Many people have heard the term but find the whole concept confusing. To help with the confusion, we’re going to discuss answers to some of the most common questions we hear about advertising fraud and what you can do about it.

Is Ad Fraud Really a Problem?

Short Answer: Yes. 

However, estimates on how much of a problem it really is differ significantly depending on who you ask. Some estimates suggest that 2019 will see about $5.8 billion US lost to ad fraud worldwide. Others suggest losses could be as high as $30 billion US this year. It’s hard to tell exactly how much money ad fraud consumes because much of it goes unnoticed by the companies affected.

Sometimes it can be difficult to determine the cause of poor campaign performance. Often, fraud simply gets written off as an unsuccessful campaign. In fact, a lot of companies have no way of knowing if fraud is affecting their campaigns other than relying on ad networks to self-report when impression or click fraud has occurred.

Because of this, every ad fraud report is simply an estimate. Complicating things further, every company that creates a report uses different metrics and data to create their estimates because there is no set standard for what constitutes advertising fraud. Companies like the Internet Advertising Bureau (or IAB) often report lower ad fraud estimates than security companies and generally use different criteria to determine what is ad fraud. Some estimates show ad fraud continuing to thrive in the years ahead while others show it declining as tools become more readily available to fight it.

Despite the disagreements over the size of the issue, though, it is generally accepted that advertising has become a major problem that digital advertising will need to solve.

Who Is Affected by Ad Fraud?

Short answer: Anyone who advertises online. 

Because there is no standard way of recognizing ad fraud when it occurs, nearly every advertiser has been affected by it at some point whether they realized it or not. But that doesn’t mean that every company is impacted by it in the same way or to the same degree. 

Like with many other things, different companies will have varying levels of risk they are willing to take on for different campaigns. Additionally, some types of campaigns are more prone to fraud than others. 

A few years ago, click fraud was a huge problem for advertisers. It was easy to write code that directed bots to click on advertisements and increase a bad publisher’s advertising revenue. Companies ended up paying for clicks that generated no revenue and started choosing other advertising methods. This caused ad networks to finally take notice of the problem, though it still continues to be a problem. 

More recently, referral fraud has been a common issue. Cookies are planted on devices when consumers download certain apps or updates. These cookies fool campaigns into paying referral fees for additional downloads and purchases that are unrelated to the original download. Some progress is being made towards a solution for this issue, but there’s still a long way to go. 

How Do I Know If I Have an Ad Fraud Problem?

Short Answer: Analytics and prevention software.

There are several ways to recognize ad fraud when it happens, but you’ll need the right tools in place to do so. Though some ad networks provide basic tools, advanced analytics are the best way to see how much ad fraud is costing you. You can also find companies, like NS8, that help you recognize and prevent it.

If you’re doing it on your own, you’ll need detailed analytics and data. Get a report for your campaigns that breaks down traffic over time as well as referring sites, exit pages, and other important metrics. Look for unusual patterns or things that don’t make sense. Examples include:

  • High traffic from a specific referral site coupled with an unusually high bounce rate
  • Most traffic following a specific navigation pattern (all exiting on the same page)
  • Spikes in traffic that occur at the same time every day

Unnatural patterns and trends that don’t make sense often indicate the existence of ad fraud. Additional tools may be needed to confirm fraud, but in general, it’s a good idea to change or remove campaigns that have these attributes.

Why Is Ad Fraud So Widespread?

Short Answer: It’s easy and profitable with few consequences.

You may have heard about a few different large-scale ad fraud schemes like Methbot and 3ve as well as the recent crackdown from Google and Microsoft on apps that include fraud and malware. While hearing about the shutdown of these enterprises may seem like steps in the right direction, the truth is that it can take years to find and remove these schemes.

Because digital advertising is global, fraud can come from anywhere in the world. That means law enforcement needs to work within various jurisdictions and must be mobile enough to follow these issues as they cross borders. In addition, many countries simply don’t have laws that address ad fraud. Most crimes end up being punished for how they move money rather than the ad fraud itself.

To compound these issues, it takes little time, money, or skill to set up an ad fraud operation. That makes it easy to set up and shut down a basic operation. When one is discovered, the fraudster often simply abandons that option and moves on to the next. The sheer abundance of digital advertising allows them to find a new target quickly.

Can I Stop Ad Fraud?

Short Answer: Yes and no.

Because of the lack of regulations as well as the issues with the digital advertising industry, each company is left to handle ad fraud on their own. It is possible to reduce and block some forms of ad fraud and keep your campaigns relatively clean. However, it takes time, dedication, and resources to stay ahead of the curve on ad fraud. 

Choosing the right prevention tools and ad networks can make a huge difference in how effective your digital advertising will be. Since most eCommerce companies dedicate significant resources to these campaigns, that means staying well informed and investing in education and tools for your team. Consider carefully which campaigns are most cost-effective for your specific brand and target audience and make sure to audit the results regularly looking for anything that may point toward fraud. By simply understanding how pervasive ad fraud really is, you’re ahead of the curve in dealing with it. 

Ad fraud can be an incredibly confusing topic, but you can fight ad fraud by looking for transparency from your ad networks and agencies as well as finding the right management tools. The Addons Marketplace has several options that can help you reduce the impact of ad fraud and make the most of your digital advertising campaigns. For additional questions, our Client Success team at NS8 is always happy to answer questions and give personal recommendations for eCommerce companies.


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