Ad Fraud 101: Understanding the different types of ad fraud

Posted by Hannah Jeon on Jun 16, 2017 11:21:22 AM

Topics: Industry News & Trends

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OVER SEVEN BILLION DOLLARS A YEAR. That’s what the advertising industry is losing annually because of ad fraud. The latest figures by ad verification company Adloox are even much higher, indicating up to $16.4 billion losses in 2017.

 

With stakes this high, ad fraud perpetrators are showing no signs of stopping anytime soon. During the first quarter of this year alone, Pixalate’s Quarterly Global Ad Fraud Benchmarks series has reported a 36% spike in mobile in-app ad fraud rate.

 

Ad fraud increases the reputation risks of both publishers and advertisers.

 

Publishers’ credibility and profitability continue to suffer as seen by the increasing use of ad blockers. In its 2017 Global Adblock Report, PageFair, a global authority on ad blocking trends indicated that mobile adblock usage grew by 108 million, reaching 380 million active devices globally from December 2015 to Dec 2016. Desktop ad block usage grew by 34 million, reaching 236 million active devices globally in the same period.

 

At the other end of the equation, advertisers’ brand image and values can be falsely represented, not to mention the billions of advertising money that they are wasting.

 

What is Ad Fraud all about?

Ad fraud scams advertisers by creating fake traffic, leads and ad placement. Advertisers are made to pay for exposure that never happened, or if it did, it failed to reach the intended audience. In short, advertisers lose money by paying for ghost ads.

 

There are two common types of ad frauds – Impression Fraud and Click Fraud.

Impression fraud refers to false measurement of ads that has been seen by its target audience. Or simply put, they fake reports on how many times an ad was seen. From a technical viewpoint though, an impression is not a human being seeing an advertisement once, but a browser requesting for an ad.

Impression fraud can be perpetrated by the following:

 

  • Bot traffic - created by malicious software applications called bots, developed by hackers who hijack devices and artificially inflates statistics. It mirrors human browsing behavior such as clicking on links, watching videos, or simply visiting websites.

    The largest ad fraud discovered was committed by a single botnet, Methbot that stole $3-5 Million a day or $2 Billion a year.
  • App Software Development Kits (SDK) can also create false impressions via device hijacking. 
  • Pop-unders and pop-ups- especially those which are loading simultaneously and are almost unstoppable.
  • Ad stacking- as the name suggests, is when ad units are stacked on top of each other. While only the “top” impression is seen, the rest of the unseen ads will still be registered as an impression and charged to the advertisers.

 

Click fraud has been the bane of advertisers since the beginning of internet advertising. Again, fake traffic is generated to show high click rates.

Indicators of bot traffic include IPs registering high click volume and large click volume from the same device. Pop-unders, pop-ups, auto-directs and ad stacking are likewise pervasive under this type of ad fraud.

 

Pocketmath-PRO-Mobile-DSP

 

Everyone has to do their part to fight fraud in the supply chain

Advertisers should market to real people. Unfortunately, their device IDs or IP address can be faked. That’s why all participants in the supply chain— Publishers, Suppliers, DSPs, and even Marketers, should carry their respective loads in checking ad fraud. Ultimately, fraudsters would never make their way into the marketplace if everyone helps each other counter the negative impact of this global menace.

Pocketmath continues to take our portion of the responsibility by collaborating with partners such as Pixalate, one of the world’s leading fraud protection solutions company. Together, Pocketmath and Pixalate block approximately more than 3 billion fraudulent impressions every day. Another Pocketmath partner, TUNE helps Pocketmath accurately attribute clicks, app installs, in-app events, and other conversion events.

This ongoing effort is essential so that when our clients place their data to run a campaign in our DSP, they will connect to human beings, not machines. With Pocketmath and its partners working hand in hand to address the issue of ad fraud, advertisers can rest assured that they will get more bang for their bucks.

 

Are you not a Pocketmath user? If you're interested, talk to us!

 

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