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What is Ad Fraud and What Can You Do About It?

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ad fraud

What is Ad Fraud and What Can You Do About It?

Last Updated on May 15, 2024 by edward jsmm

If your company spends money on digital ad content to attract customers, you should do everything possible to ensure that these hard-earned dollars are not wasted. Ad fraud — from faking clicks to impression scams — is a significant challenge for businesses and marketers. It can eat advertising budgets, inflate advertisement metrics and deceive advertisers into expecting greater ad revenue.

As a digital marketing and advertising agency, JSMM is taking steps to restrict ad fraud by using data-driven targeting, limiting broad keyword targeting, monitoring the quality of leads, adding extra safeguards on client websites to reduce spam, and incorporating Artificial Intelligence (AI) ad tools. 

Advertising platforms like Meta and Google should also take more aggressive steps to restrict robots, malicious actors and fake profiles from consuming paid media investments. We have noticed that media investments have not gone as far since 2023, and the quality of the leads has decreased due to spam. As a result, we have tightened our belts and are monitoring the situation closely.

What is Ad Fraud?

Online advertising fraud, or ad fraud, involves faking clicks, sales or conversion with the intention of financial gain. Scammers utilize fake users and robots to make advertisers believe that their ads are gaining traction and make them pay for false exposure.

Since ads are created to get the attention of potential customers, ad fraud drains ad budgets and skews analytics without providing any real ROI. This deception also makes it challenging for businesses to properly and accurately assess the effectiveness of their advertising strategies. As a result, companies may make misguided decisions based on flawed data, further compounding the financial and strategic impacts of ad fraud on the advertising industry. This incident can also negatively affect brand reputation.

According to Statista, “Apart from advertisers, who are the most obvious victims of ad fraud as their ads do not generate the awareness, traffic, leads or sales they were meant to generate, it is also digital media that suffer the consequences. Very few online publishers can call themselves lucky enough to base their businesses on subscriptions, so ad-based solutions are the most common practice. However, ad fraudsters suppress the value of the ads and drive online media revenues down. That is the reason why even the most respectable online publishers seem to give up more and more of their web space to ads.”

advertising fraud and click bots

What are the Common Types of Advertising Fraud?

Legit advertisers are upskilling, and so are the fraudsters. Their methods have become more sophisticated and have continued to steal revenue from unsuspecting businesses on a large scale. 

Here’s a closer look at some common types of ad fraud targeting different aspects of digital advertising campaigns.

1. Click Fraud

Click fraud fakes the number of clicks, viewers and traffic on an online ad platform to deceive and gain a financial advantage. Scammers usually use click bots to impersonate real people visiting a page. Since this type of ad fraud affects pay-per-click (PPC) ads, cybercriminals manipulate metrics to fake traffic and artificially boost performance data, resulting in advertisers paying for fake interactions and leads that will not convert.

Mechanism: Bots, automated scripts or hired individuals — called click farms — can generate these fraudulent clicks and fraudulent traffic. 

2. Impression Fraud

Impression fraud, or ad viewability fraud, generates fake ad views or video ad impressions without actual human viewers. This type of mobile ad fraud affects billed campaigns based on the number of times an ad is displayed (CPM = cost per thousand impressions).

Mechanism: Imagine that you put a poster on a display board, but someone intentionally puts or stacks another one on top of it. The intended audience will only see what’s on top and not the one that you actually displayed. In another instance, you might decide to put a huge poster up to get the attention of more people. However, someone comes along and shrinks it to the size of a dot so that nobody can actually see what you posted. Instead, they then stuff that original space with other posters. These are similar to what happens in this type of digital ad fraud called ad stacking and pixel stuffing. Sadly, real users don’t see the ads, but these methods still generate impressions.

3. Conversion Fraud

Conversion fraud fakes the number of leads or sales to collect a commission or inflate performance metrics. This not only wastes advertising budgets but can also skew data, leading to misguided marketing strategies. 

Mechanism: This type of ad fraud uses malicious bots or paid individuals to complete forms, sign up for free trials or make purchases using stolen credit card information. 

4. Affiliate Ad Fraud

Affiliate ad fraud is specifically related to affiliate marketing programs, where affiliates are paid a commission for directing traffic or sales to a business. Fraudulent affiliates can generate invalid traffic or fake conversions to earn commissions illegitimately.

Mechanism: Techniques used to engage in this type of fraud include cookie stuffing (putting data on someone’s computer to make it appear that they visited your site), using bots to complete actions required for earning commissions or misrepresenting the source of the traffic to claim that they provided leads.

what is ad fraud and how to prevent it

How Marketers Can Detect and Restrict Ad Scams?

After examining current data, Statista forecasted that “North America will suffer the highest economic losses due to digital advertising fraud in 2028. The region is expected to account for 42 percent of the 173 billion U.S. dollars ad fraud losses forecast for that year.”

Data-driven Targeting and Analytics

Data-driven targeting uses data analytics to fine-tune advertising efforts, ensuring that ads reach relevant audiences. Our team meets with the client to define the target audience and craft buyer personas and buyer journeys. This method allows us to target ads to users based on their interests and behaviors, so there’s less wastage of impressions that are unlikely to convert. We also create geofencing ads that specifically target customers within a specific location.

This precision reduces opportunities for fraudsters to generate revenue through fake impressions or fake clicks, as ads are less likely to be served in environments where fraud is rampant. We also compare our ad metrics to industry benchmarks, allowing us to detect unusual traffic and fraud. 

Our marketing success with JW Telluride Group highlights this data-driven marketing using buyer persona, maintaining social media precision, applying geofencing innovations and comparing metrics with industry benchmarks.

Limiting Broad Targeting on Keywords

Fraudsters usually target high-volume and high-competition keywords. By focusing on niche-specific keywords, we make the ads less appealing to scammers. 

With a specific audience in mind, we also set clearer expectations of user behavior. Unusually high click-through rates or a sudden spike in traffic from a specific source can be red flags for ad fraud since deviations from these expectations are easier to spot. 

Monitoring the Quality of Leads

Our approach focuses on quality — how genuine and valuable the leads are — rather than quantity. We monitor the leads generated from online advertising efforts to identify patterns or spot the characteristics of fake or low-quality leads. Monitoring allows early detection of anomalies such as many leads with gibberish information, identical details submitted multiple times, or leads from regions outside the target market. 

Adding Extra Safeguards on Client Website

We also implement more stringent criteria for lead generation, like CAPTCHA challenges, to prevent bots from submitting fake information. 

Our technical team regularly updates client website security systems, plugins and web applications to limit vulnerabilities that fraudsters could exploit. Routine security audits and penetration testing also uncover potential weaknesses and allow timely mitigation before any scammer can manipulate them.

Incorporating Artificial Intelligence Ad Tools and Apps

Incorporating AI ad tools is a forward-thinking approach to combating different types of online advertisement fraud, leveraging advanced machine learning and pattern recognition to detect and mitigate fraudulent activities in real time. 

AI tools can continuously monitor ad traffic to identify patterns and behaviors indicative of fraud, such as irregular click patterns, suspiciously high engagement rates from certain sources or abnormal user behavior. By analyzing vast amounts of data in real time, AI can detect anomalies that would be impossible for humans to identify manually.  

It’s important to note that we cannot prevent all ad fraud from happening, but we do exhaust every effort to ensure our clients stay safe and protected. 

Tamer Hassan, CEO and Co-founder at White Ops says, “Fraud will always follow the money. As spending moves into new ad frontiers like CTV, it is increasingly important for marketers to stay vigilant and to recognize that fraud is a cybersecurity problem, not merely a measurement challenge and cannot be handled as such.”

Maintaining Our Ethical Compass

JSMM’s response to ad fraud mirrors our unwavering stance on the responsible use of technology. Challenged by the complexities of ad fraud, our philosophy remains unchanged: to test, adopt and responsibly utilize new technologies to drive success for our clients. 

At JSMM, we have always been careful in managing, monitoring and testing technology. An early adopter of social media since 2005, we have a history of A/B testing and staying on top of it. We’ve always had strong research development — presenting ideas to clients, putting conservative budgets behind these tests and knowing when to pivot quickly. We always spend time internally at the agency, rolling things out and analyzing the metrics. Then, we help our clients manage these changes by examining what works and talking through it together. 

Our approach has always been data-driven. By providing our clients with measurable, actionable insights, we’ve helped them make informed decisions that propel their businesses forward.

To build and maintain client trust, we uphold the highest standards of quality and ethical marketing for our clients, a commitment that has been the cornerstone of our longstanding relationships. 

Embrace the Future with Confidence with JSMM as your Digital Marketing and Advertising Agency

The fight against ad fraud is ongoing, but we can face these challenges effectively with a strategic approach and a dedication to ethics. At Jenning Social Media & MarTech, we are committed to leading our clients through these turbulent waters to ensure that their marketing investments are protected and their campaigns are successful. 

Our forward-thinking team remains vigilant against these ad scams, diligently studying market dynamics, consumer behaviors and emerging technologies. We apply innovative strategies give each client a competitive edge in the ever-evolving digital landscape.

Our mission remains clear as we look to the future: to deliver secure, transparent and effective digital marketing solutions. Contact us today to learn more about ad fraud and how we can help your business generate genuine leads through digital advertisement.

Written by

Valerie Jennings, founder and CEO of Jennings Social Media & MarTech (JSMM), is a trailblazing entrepreneur who established her agency in 2003 at just 24 years old. A pioneer in leveraging social media for marketing since 2005, Valerie has transformed JSMM from a niche PR firm into a globally recognized digital marketing powerhouse. Her strategic foresight and commitment to innovation earned her accolades such as the Top Women in Media Honoree and Marketing Executive of the Year by the Stevie Awards. An advocate for AI in marketing, Valerie holds an AI Certification from Coursera, led by Andrew Ng of Stanford University.

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