If you run online ads, you’ve probably had some experience with ad fraud.
The proliferation of online advertising has revolutionized marketing, but it’s also created a shadow industry of fraudsters and bad actors profiting from fake ads. And the money is good: ad fraud netted criminals over $42 billion in 2021 alone.
So how can marketers fight back and reclaim their ad spend and their funnels? In this blog post, we’ll cover a few basic ways marketers can detect ad fraud coming to your websites, or through your campaigns.
What is Ad Fraud?
At its most basic, Ad Fraud is any activity that aims to benefit financially from defrauding or deceiving advertisers and digital advertising networks. Frequent targets of ad fraud include search engine campaigns, banner advertisements, video ads, sponsored content, and affiliate marketing programs–basically, anywhere money is made online. Ad Fraud is frequently carried out by scripts programmed to mimic humans by clicking ads, but can also be carried out manually by individuals or, increasingly, by organized groups operating click farms, where groups of low-paid workers are employed to rapidly click on ads on fake sites set up by their employers.
Alternatively, ad fraud can work by deceiving real users into clicking fake ads, or by setting up stacked or transparent ads to generate accidental clicks, a technique known as clickjacking.
How Ad Fraud Hurts Go-to-Market Organizations
At a surface level, the impact of ad fraud is obvious: it steals your advertising budget and wastes it on fake impressions. And of course, if you discover ad fraud and go to your ad network for a refund, that’s what you’ll be refunded for. But the damage caused by ad fraud goes far beyond wasted ad spend. Let’s dive into the impact of ad fraud, starting with the most obvious:
Wasted Advertising Budget and Wasted Opportunities
As noted above, when a fraudster clicks on an ad, they are essentially stealing a piece of your ad spend and shrinking the useable budget for real potential customers. For many advertisers, the numbers at play may seem small, but for advertisers in high CPC industries, the cost can be massive. For example, if the typical CPC for that campaign is $8, every fraudulent click is $8 wasted. Now extrapolate that across a targeted ad fraud campaign generating thousands or tens of thousands of clicks. Things start to add up quickly. And the opportunity cost is enormous: while there’s no guarantee that a fraudulent click would have been replaced by a real conversion, you can bet that the budget wasted on 10,000 fake clicks would have yielded some conversions. You’re not just losing ad spend, you’re losing the lifetime value of potential customers.
Polluted Audiences and Bad Optimization
While publishers like Google and Facebook do a decent job blocking invalid traffic, a large number of fake clicks find their way to websites, and inevitably, into marketers’ data and metrics. From that point on, those metrics are tainted with bad data.
For example, if a pre-targeting audience segment includes fake users, that campaign will likely convert very poorly, leading the marketing teams to waste valuable time attempting to fix it, whether through new content, new creatives, or any other measure to drum up performance on a campaign based on bad data. And, if you’re building audience segments best on bots, you could end up standing up look-a-like audiences built to attract bots… not an ideal position for your conversion rate.
Five Warning Signs that Could Indicate Ad Fraud
So knowing what ad fraud is, how can we find it? And what can we do about it? A dedicated go-to-market security platform is the best practice, but if you’re in a pinch, there are some ways to detect ad fraud with some dedicated analysis and a bit of time.
The following are some warning signs you of ad fraud activity you should watch for on your website and in your ad networks:
Poor conversions relative to other campaigns
When a campaign performs abnormally poorly, the tendency is to look inward–we must have messed up. But while it’s important to strive to improve campaigns, an inexplicable lack of performance for an otherwise routine campaign is a common warning sign for ad fraud.
For example, if you’re running the same campaign, with the same offer, landing pages, and CTAs, on Twitter, Facebook, and display ads, and your display campaign produces no conversions, while the other channels do well, that’s a good sign you should investigate your display ad placements, and possibly request a refund.
Fishy on-site analytics
Another sure sign of fraud can be found in your on-site analytics. If a campaign is producing a high CTR, but all of the referrals are showing abnormally high bounce rates and short session durations, there’s a high likelihood that those users are actually bots. Marketers should look out for spikes paid traffic that happen at unusual times or follow unusual patterns. Traffic arriving at odd hours or from locations you aren’t targeting is a good indication of click farm activity.
Data Center IP addresses
You should also take a look at the IP addresses of your campaign’s clickers. A data center IP address is a major red flag for ad fraud, as it means that the user is actually originating from a server in a data center and is very, very, unlikely to be human.
Spiky or unusually high CTRs
Unrealistic click-through rates (CTRs) are another dead giveaway for ad fraud. The average CTR for display ads is very low–around 0.1%. If you’re seeing specific placements deliver CTRs two, three, or even ten times that, you probably aren’t bucking the trend. More likely, your ad has become the target of click fraud. You’ll want to investigate whether incoming clicks are showing any of the other warning signs on this list, and potentially notify your ad network.
Repeated Site Visits
Repeated site visits from the same IP are another indicator that something is amiss. Humans don’t tend to repeatedly click on similar search or display ads. If you take a look at the site visits arriving from certain ad campaigns and determine if a single site visitor appears to be visiting over and over, that’s a good cause to investigate that campaign in further detail. Looking broadly at unique site visits versus overall site visits can help give you an idea of this metric at a glance. If there aren’t many unique visitors from paid ads, but there is a substantial increase in overall site visits – that could be a cause for concern.
Prevent Fraud with Go-to-Market Security
With over $42 billion lost to ad fraud and in 2021, marketers can’t afford to leave their campaigns open to fraud and theft.
That’s why many marketers are leveraging go-to-market security like CHEQ Paradome to protect their entire marketing organization, from paid traffic, to on-site visitors, and even customer data.
With CHEQ Paradome, you can create exclusion lists automatically and generate dynamic advertising audiences made up of fake users and invalid traffic to exclude across all paid media channels. So you can be sure you only pay for clicks that have a high probability to convert.
Within two months of partnering with CHEQ Paradome, the UserWay team reduced their unqualified traffic by 56% and redirected their ad spend towards real businesses seeking solutions for digital accessibility.
To learn more, and find out what’s real (and what’s not) in your funnel, get started with a demo of Cheq Paradome today.