How Can Ad Fraud Detection Save Your Marketing Efforts?
Marketing | July 13, 2023
Ad fraud detection is a critical component for marketers that want to run successful and efficient online ad campaigns.
In fact, ad fraud is a serious issue that’s been a thorn in marketers’ side since the very beginning of the online advertising industry.
Just to picture the importance of this issue, it is predicted that in 2023 it will cost businesses an astonishing $100 billion globally. The fact that this number is a significant increase from $35 billion in 2018, just 5 years ago, only proves how escalating this threat is.
In this article, we’ll delve into the world of ad fraud detection, shedding light on its significance and exploring the methods employed to protect the digital advertising ecosystem.
What is ad fraud?
Ad fraud happens when bots or malware simulate a human-like activity on online ads. They drive fake ad clicks, impressions, video views, or even conversions.
In simple terms, it’s like a con artist tricking advertisers into paying for interactions that aren’t genuine. They manipulate the online advertising ecosystem on a large scale.
No platform or type of paid online campaign can stay immune to such malicious activities. Ad fraud can impact ads on platforms like Google Ads or Microsoft Ads and social media platforms such as Facebook, Instagram, TikTok, or YouTube.
Now you might be wondering, what’s the motive behind ad fraud? Naturally, most of the time, it’s either a financial gain for the fraudsters or an unfair advantage for competitors. Which, anyway, brings a financial benefit to the competitors in one way or another.
For instance, a competitor might aim to take down your ad sooner by generating fake clicks. This would drain your ad budget quickly, preventing your ad from reaching your intended audience, and ultimately, lowering your ROI (Return on Investment). As a result, the competitor’s ad would receive more genuine traffic, potentially leading to higher sales for them.
The good news is that advertising platforms provide refunds for ads impacted by ad fraud. So if you notice fraudulent activity on your Facebook ads or Google ads, you can claim a refund from the platform.
Simply provide evidence of the fake interactions, and the platform will investigate it to determine if a refund is warranted.
The impact of ad fraud on the digital advertising industry
Ad fraud is like a sneaky thief that infiltrates the digital advertising industry, causing significant damage along the way. Its impact is multifaceted and can have far-reaching consequences, and as such, it should be taken really seriously.
One of the major consequences of digital ad fraud is undoubtedly the financial loss it inflicts. In the blink of an eye, fraudulent clicks and impressions can drain your precious advertising budget.
These fake, bot-driven interactions are wasting your resources without delivering any real value. It’s like paying for a fancy dinner, only to find out it was served to an empty table.
But the consequences of ad fraud go beyond mere financial losses. They can erode your marketing investments in various ways.
Fraudulent activities artificially inflate crucial metrics, such as click-through rates (CTR) and conversion rates. This deceptive manipulation misleads you into believing that your campaign is performing well when, in reality, it’s not even reaching genuine audiences.
As a result, ad fraud throws your optimization efforts out of whack. When fraudulent activities generate false engagement signals, such as clicks and conversions, you may unknowingly allocate resources and optimize your campaigns based on misleading data.
And needless to say, it becomes challenging to determine which strategies are effective and which ones aren’t.
So, to sum it up, the financial loss caused by ad fraud is not just the amount of money that was consumed by non-human activity on your ads. Moreover, you’re spending time, effort, and resources on something that is not delivering real results.
How much can ad fraud cost your business?
To talk numbers, if you are running an unprotected paid digital marketing campaign, like Pay-Per-Click (PPC) or display campaign, chances are you’re losing an average of 5.9% of your investment due to fake ad traffic.
This number varies across industries. For instance, in the Telecommunication industry, the percentage of paid traffic that is fake reaches 7.9%.
On the other hand, if you’re coming from the Healthcare industry, for example, 5.7% of the budget allocated for paid campaigns will be lost.
Considering these numbers and how much businesses rely on paid ads, the extent of saving that effective ad fraud prevention can secure becomes clear.
CreditFix, for example, one of CHEQ’s clients, managed to save £2.76m on ad spend. By blocking over 220 million threats and invalid users, they have allocated this budget toward real users that can actually result in conversion and higher ROI.
Check this case study to learn more about how this was achieved and how you can protect your ad budget too.
What is ad fraud detection?
Now that we know what ad fraud is and the level of damage it can cause to your marketing efforts, let’s explore more about how it can be detected.
Ad fraud detection is the process of identifying and preventing fraudulent activities from interacting with your online ads.
Leading ad fraud detection companies, like CHEQ, for example, employ cutting-edge algorithms, data science techniques, and machine learning to effectively detect and mitigate these fraudulent activities in real-time.
By leveraging these advanced technologies, their systems are capable of detecting the malicious intent behind actions, such as a bot being instructed to click on your PPC ad. Once identified, the system promptly blocks the fake user, ensuring that it won’t even access your ad.
How does ad fraud detection work?
Ad fraud detection tools use a diverse range of techniques and approaches to detect and block ad fraud in real time. Let’s explore some of the most prominent ones:
The software solution monitors IP addresses associated with ad clicks or conversions to identify suspicious patterns. Multiple clicks or conversions originating from the same IP address are common signs of fake traffic.
Most often, this traffic is generated in bulk from click farms. They are places with a bunch of devices that, either automatically or controlled by low-paid click farm workers, deliver fake clicks or views on paid advertising links.
The click fraud can be generated through individual bots or humans, like competitors with malicious intentions. Anyways, the ad fraud detection tools have the capacity to detect their IP address despite their attempts to mask it. Once detected, the algorithm blocks them right away, leaving them with no access to your ad.
You can block or blacklist certain IP addresses manually as well. If you’re aware of some specific IP addresses that might drive ad fraud, you can exclude them from your ad settings.
Irregular patterns or outliers in the data can indicate fraudulent intentions. Ad fraud detection tools analyze large pools of data to identify such anomalies.
As soon as they detect a potential fake interaction, it is blocked, and they can’t access your ads.
This is a technique that identifies unique characteristics of devices accessing ad campaigns.
Parameters such as user-agent strings, screen resolution, operating systems, and installed fonts can suggest whether it’s a legit user or not.
Proxy and VPN Detection
Proxy servers and VPNs are commonly used by fraudsters to hide their activity. However, some bot detection solutions have found a way to deal with them.
They use proxy and VPN as just another piece of information that reveals the true origin of the traffic or clicks. The advanced tracking models allow the software tool to identify whenever a fraudster is trying to mask or change the IP from the same device.
In addition to this, they maintain a list of known proxy and VPN IP addresses and compare incoming traffic to identify potential fraud.
Click Verification is a technique used to verify that a click on an ad is genuine and not fraudulent. The process includes tracking the user’s session, referrer analysis, and time-based validation. By cross-referencing multiple data points, the tool can determine whether a click is genuine or fraudulent.
With this technique, ad fraud detection tools measure factors like ad placement, visibility on the screen, and time spent in view. The algorithms then analyze all these pieces of information and determine whether the ad was seen by a human, or it’s just a fraudulent impression.
Pattern recognition algorithms are used to analyze large volumes of data, including ad impressions, clicks, conversions, user behavior, and other relevant metrics. Based on this data, they detect irregular patterns such as abnormal click rates, click farms, bot traffic, or suspicious conversion patterns.
By continuously monitoring and analyzing data, pattern recognition models can learn from historical patterns and adapt to new fraud techniques.
Why is ad fraud detection important?
Considering the exponential growth in financial losses caused by fake activities, you can tell how vital the role of ad fraud detection is when it comes to paid ads.
It acts as a safeguard against financial loss that businesses and marketing teams face, and by identifying and preventing deceptive practices, it ensures that your ads are consumed by real users only.
Imagine this scenario: You have crafted an advertising campaign, carefully selecting target audiences and allocating a substantial budget. However, without you can even notice, a significant portion of that budget is being siphoned away by fraudulent activities.
While you believe that your campaign is running smoothly, there is a hidden threat: the presence of bots that consume your ads. These bad bots exploit your ad budget, giving you a misleading perception of your campaign’s success.
Once you become aware of the full extent of this threat, you will be more vigilant to take proactive measures to protect the performance of your digital advertising.
An effective ad fraud detection solution works in real-time, blocking fraudulent sources before they get the chance to click or view the ad.
By doing so, it protects your ad spend, ensuring it will be used to generate genuine human traffic only. This optimization of your ad budget ensures that your advertising resources are utilized optimally, reaching the intended audience and maximizing the ROI for your online campaigns.
Stop ad fraud before it’s too late
If you’re running ads, whether it’s on Google Ads, Facebook Ads, or Microsoft Ads (also known as Bing Ads), you must be cautious of the damage ad fraud can cause. The malicious bots, click farms, or competitor clicks all have the tendency to vanish your ad budget and leave you with no real results.
The good thing is you can take things into your own hands. You can eliminate bad and invalid traffic from accessing your paid search ads, display ads, or social media ads, and you can do this completely automatically.
CHEQ Essentials paid marketing protection suite detects and blocks fraudulent activities in real-time. It ensures that your paid marketing budget is allocated toward real paying customers, bringing higher ROI.
To get started, explore the volume of fake traffic on your ads by taking advantage of CHEQ Essentials’ free trial. It will give you valuable insights into the extent of money you lose due to these malicious interactions with your ads.
… and take control of your advertising efforts to pave your way to effective ad fraud detection.
How ad fraud affects my marketing efforts?
Ad fraud happens when bots or malware simulate a human-like activity on online ads. They drive fake ad clicks, impressions, video views, or conversions.
As a result, ad fraud causes your advertising budget to be drained more quickly, resulting in decreased genuine human traffic to your ads and a lower return on investment (ROI).
How can ad fraud detection protect my ads?
The purpose of ad fraud detection is to identify and prevent fraudulent activities from interacting with your online ads.
Your ads will be free of fake and invalid traffic, helping you make smarter optimization decisions. The overall effectiveness of your campaign will increase, ultimately bringing more real traffic, conversions, and higher ROI.
How much can an ad fraud detection solution help me save in terms of costs?
The latest research conducted by the University of Baltimore and CHEQ shows that, on average, 5.9% of paid traffic in 2022 was fake. This means that approximately 5.9% of your ad budget can be saved if you use an ad fraud detection solution.
This number varies across industries. Have a look at The State of Fake Traffic Report to find out more about fake traffic and ad fraud for your industry.