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Advertising Fraud Meaning, Prevention and Detection

Ad fraud costs advertisers billions of dollars every year. Get key details including common types of ad fraud, how to prevent ad fraud and how AdTech platforms can limit ad fraud with DeviceAtlas.

James Farrelly - 01 Sep 2020
4 min read

Advertising Fraud Meaning, Prevention and Detection Image | Device Intelligence

Online ad revenue reached $189 billion in 2021. Unfortunately, such high revenue inevitably attracts criminal activity and research suggests that by 2023, ad fraud will account for an estimated $100 billion in losses worldwide for the digital advertising industry. Below, we look at advertising fraud, including the most common types and methods of prevention.

What is Advertising Fraud?

Typically, advertising fraud is committed by creating illegal or fake traffic. The growth of search engine marketing and lack of security protocols created a favourable environment for scammers to develop click fraud, with video, mobile and website ads all a breeding ground for fraudulent activity. The rise of programmatic purchasing and the blind inventory available via real-time bidding (RTB) exchanges has led to an enormous amount of ‘fake traffic’ visiting websites.

Common Types of Advertising Fraud

Advertising fraud can manifest in many ways, but the most common types are crawlers, bots, and automated clicking. Click spamming is one type of bot-driven ad fraud that simulates a high number of clicks, which come from real devices. Click injection is another method that generates fake clicks during the installation of apps.

Bots or Botnets

Bots are software apps or programs hosted on unsuspecting computers which perform a wide range of activities online. Botnets are groups of bots that are hosted on different computers that can do human-like activities. For instance, scammers use these programs to artificially increase website traffic and click on links.

Scammers use bots to attack specific sites by overloading its servers, specifically to the point of failure. In general, this is known as a Denial of Service (DOS) attack. They can even be used for conversations in chat rooms. Bots and Botnets are sophisticated software programs that can be used for click-automation to generate income for fraudsters.

Domain Spoofing

Domain spoofing is a technique commonly used in ad fraud. This is where a company’s domain is closely imitated with the intention of selling low-quality advertising inventory as premium inventory. Advertisers pay for, and believe, that ads are appearing on a premium website but unfortunately, this is not the case.

Ad Stacking

Ad stacking is another fraudulent activity used by scammers to generate ad revenue. It involves fraudsters stacking multiple ads on top of one another. The viewer only sees the top ad, and the impression counts for the served ad and hidden ads in the stack. Ad stacking is another network trick used to deceive advertisers.

Ghost Websites

Ill-intentioned ghost sites are prevalent in advertising fraud. Usually, these are real sites with real content stolen from legitimate websites. The purpose of the site is to defraud advertising companies.

Site owners create and make them available through advertising networks and exchanges, which participate in RTB environments. Website owners hire botnets to visit their sites to generate a large volume of ad impressions. Advertisers then bid on and buy this “inventory” from the auction environment.

Image of people using phones | Advertising Fraud - Bot Detection

Mobile In-app Ads

Advertising companies using in-app ads also come across the difficulty of quantifying the real value of impressions and conversions. It is an advertising fraud to defraud publishers and advertisers by exploiting mobile technology, such as SDK spoofing, click injection, and click spam. Mobile ad fraud comes in different forms, from fake impressions to fake installs to click spams.

Ways to Prevent Advertising Fraud

Advertising fraud is significantly impacting the digital world, costing billions of dollars to the industry every year. With scammers continuously sabotaging the digital advertising ecosystem, efforts have been made by security companies to develop programs that can prevent ad fraud. Some of the best ways are:

Anti-Click-Fraud Software

Anti-Click-Fraud software or tools are sophisticated programs that detect, migrate, and report on digital frauds before they hit a company’s advertising budget. Sitting within the ad journey, anti-click software analyses and reviews impressions, clicks, and conversions to mitigate advertising fraud in its earliest detection.

Today, we find a wide range of anti-click-fraud software that keeps performance data clean and helps businesses optimize their ads confidently. Some of the most popular anti-click tool providers are Adjust, FraudScore, Perform[cb], Singular, and Interceptd.

Work with Trusted Demand-Side Platforms

A Demand-Side Platform or DSP is an advanced system that allows advertisers to manage different ad exchange accounts from a single user interface. A DSP adds an additional layer of security and verification to prevent ad fraud, and may also provide refund programs if ads are served to invalid traffic.

For instance, Google offers media-back credits and refunds to customers when the company’s DSP buys fraudulent media from exchanges. Google currently works with over 100 ad exchanges and offers refunds to advertisers in the event of ad-fraud.

AdTech Platforms Can Limit Ad Fraud with DeviceAtlas

Primarily a source of real-time, rich and actionable device insights, DeviceAtlas’s bot detection also allows for the identification of known bot traffic, enabling these clicks and visits to be treated differently to that of a human user.

Having an up-to-date, accurate and real-time bot identification capability gives AdTech platforms a technical and competitive advantage.

DeviceAtlas is used by major players in the AdTech space, such as Adjust and SpotX. Learn more about DeviceAtlas’s bot detection here, and its mobile advertising and targeting solution here.