Ad fraud has been a major concern in the digital advertising industry. According to data from Fraudlogix gathered across 35 million ad impressions in Q1 2022, bots and ad fraud make up 15.6% globally. In terms of the value of ad spending lost to fraud, it’s expected to reach $68 billion globally in 2022, compared to $59 billion in 2021. Juniper Research identified that 5 countries account for 60% of global losses: the US, Japan, China, South Korea, and the UK. But ad fraud is an issue with global implications and companies everywhere are taking measures to combat it.
This article takes a closer look at ad fraud and examines recent trends in fraud detection and mitigation.
What is ad fraud?
Ad fraud is any attempt to mislead advertisers into believing that fake online activity is real. This is commonly done using bots but may include other methods. Ad fraud obstructs ads from being delivered to the actual target audience. Scammers deceive advertisers into paying for this fake activity, therefore skewing KPIs and misleading marketers. Common ad fraud indicators vary from unusually low performance and low conversion rates to sudden spikes in CTR or impressions.
Types of ad fraud
There are different kinds of advertising fraud across web, mobile web, and mobile apps, such as:
- Click fraud – Fake clicks generated using bots or click farms (teams of low-wage workers).
- Click injection – A type of mobile ad fraud where the user has a fraudulent app on their device. When a future app download occurs, a click is generated right before the new app is fully installed. Thus, the fraudster will report the click and wrongfully take credit for the app installation.
- Fake app installation – People in click farms installing apps en masse, or server farms where apps are ‘installed’ on simulated mobile devices. Scammers may even generate fake post-install activity within the app.
- Click hijacking (or clickjacking) – An attacker steals a click meant for one element (or ad) and redirects it to another one. For example, by disguising the element or overlaying malicious content over a legitimate page. This could be achieved using malware that infiltrates the user’s system or by hacking into a publisher’s website.
- Search ad fraud – In order to make their websites rank higher in search engine results, fraudsters use keyword stuffing. Using popular keywords tricks advertisers into buying ad space on these fake websites.
- Hidden ads – This includes methods such as ad stacking and pixel stuffing. Ad stacking involves stacking several ads on top of each other so that only the top one is visible to the user, but all ad impressions are counted nonetheless. Pixel stuffing means an ad or multiple ads are served in a 1×1 pixel on the page. While they’re invisible to the user, an ad impression is still registered upon page load.
- Domain spoofing – A form of phishing where an attacker impersonates a company or person by using their website domain or email address. For example, they could use a URL that closely resembles the official company website.
Fraudsters are creative when it comes to bypassing new regulations and defense mechanisms and developing new ways to gain profit.
2022 Ad Fraud Trends
As mentioned above, rising ad fraud rates have been a global challenge affecting a large share of digital ad tech. This calls for fraud protection measures to guard return on ad spend (ROAS). Forbes goes as far as saying that combatting ad fraud might be companies’ best marketing investment in 2022. Some of this year’s ad fraud trends include:
- Fake vs. real users – As the online advertising industry is slowly recovering from the pandemic, we’re seeing a shift from ad fraud related to fake users (e.g. farms and bots) to attribution hijacking focused on real users.
- Enlisting ad fraud detection solutions – Companies partner with leading anti-fraud solutions to monitor metrics and detect automated bots and fraudulent activity. Research and Markets estimate that the global ad fraud detection tools market will grow at a compound annual growth rate of 17.1% during 2021-2028, from $252.92 million to $762.89 million.
- Increased scrutiny on partner companies – Publishers and advertisers also place a heavy focus on the ad tech providers they work with and the transparency and safety they provide.
- Continued use of ADS.txt and Sellers.json – Introduced by IAB several years ago, these two methods are an effective way to improve transparency and reduce ad fraud in programmatic ads. They allow publishers to define who is allowed to sell their inventory, cross-validate ad requests, etc. A report from 42matters AG states that as of March 2022, 512 unique authorized digital sellers were discovered via sellers.json. Between July 2021 and March 2022, there was a 29% increase in the number of Google Play apps using the app-ads.txt standard. On the Apple App Store, that increase was 22%.
In 2022, the ad tech industry continues to fight against the high levels of ad fraud as actively as ever. As fraudsters develop new and advanced attack methods, companies focus on ad fraud detection, strict verification, and trustworthy partnerships to counterbalance the negative effects of ad fraud.