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What is Digital Ad Fraud, and How Can We Fight It?

The dark world of Digital Ad Fraud, from malicious bots to intrusive malware. Read on to find out what digital ad fraud is and what can be done about it.

What is Digital Ad Fraud?

A malicious bot, committing digital ad fraud by seeming almost human.
A Malicious “Bot”.

Digital Ad fraud can come in many forms but is loosely defined as “any deliberate activity that inhibits an ad from reaching its intended audience or coming to its intended place in the digital ecosystem”. Online fraudsters usually do this by setting up fake websites and using “bots” to increase ad impressions, taking a proportion of pay from advertising transactions. “Bots” are intelligent pieces of software that have been intentionally programmed to view ads, click on ads, and watch videos – essentially acting like humans.

What are the main types of Digital Ad Fraud?

CPM (cost per thousand impressions) and CPC (cost per click) digital adverts make up approximately 90% of all digital ad spending. As a result, these two areas are the main targets for digital ad fraudsters. Advertisers assume that these campaigns ensure their ad is being seen or clicked on by their target demographic. Instead an increasing number of these “customers” are sophisticated bots designed to act like humans. This digital marketing fraud often goes unnoticed until the victims carry out an audit of their database of leads and invalid traffic. Even after this, 43% of respondents to a survey carrried out by Human Security claim they cannot estimate what proportion of suspicious traffic on their websites originates from bots.

What are the costs?

Due to the difficulty surrounding digital ad fraud detection, it is hard to pin down exactly what impact it has on the digital marketing industry. With brands in the UK spending an estimated £23.6bn on digital advertising, IAB UK estimate that fraud represents 1% of this spend. This estimate means that potentially £23 million of this spend is being channelled to fraudsters. As digital ad fraud grows and becomes more sophisticated, estimating these costs becomes an even greater challenge.

Human Security’s 2021 survey highlights how the digital marketing industry is currently spending at least $300bn annually on digital ad fraud, with this number expected to grow considerably in the wake of the Covid-19 pandemic. There has also been continued advancements in digital ad fraud, with bots now operating off the devices of legitimate end users via malware. By using the owners browsing history and web activity they can appear more authentic. Some fraudsters have even incorporated machine learning techniques into their bots.

The same survey also found that businesses can now expect that between 1-40% of their traffic originates from bots and other forms of ad fraud. It is forecasted that the worldwide cost of digital ad fraud will rise to $44bn in 2022, more than doubling the $19bn cost in 2018. The current rate of growth in the digital advertising industry and increased spending on digital media will contribute to extrapolating these figures over the next 10 years.

How can Digital Ad Fraud be prevented?

A digital ad fraudster in action, programming his malicious bots.
A Digital Ad Fraudster in Action.

Ad fraud prevention technology is the primary tool for retaliating against these fraudulent bots, with optimised-against-fraud campaigns being 10 times less likely to be targeted than those who have not taken these protective measures. Another method of prevention can be through making the digital media supply chain more transparent. A lack of transparency and multiple stakeholders being involved in the buying and selling of digital ad inventory has allowed it to become a breeding ground for complications.

Blockchain technology has many other uses, but could be the key to solving these issues associated with the digital ad supply chain. These smart contracts act as a binding digital agreement between two parties, with the data of that agreement being recorded securely. The unique nature of these contracts would allow any stakeholder that has been granted access t actively monitor and check the recorded data.

“Blockchain’s unique ability to serve as a decentralised, neutral ledge for all fees and summary ad fulfilment data, as well as a platform for verifying identity, make it an effective solution for the problem of wasted ad spend”.

Chad Andrews, global solutions leader for advertising and blockchain at IBM.

The advent of this new technology could allow advertisers to only pay for what they can guarantee at the time of delivery to be a high-quality, legitimate impression or click.

If you would like some further readings on maliscious bots and their various activities, check out our article on bots wreaking havoc on Google Analytics!