Ad fraud carries staggering costs for the digital advertising industry worldwide, ranging anywhere from $6.5 to $19 billion annually, according to eMarketer. It’s challenging to pinpoint the exact cost due to the deceptive nature of this crime, however, it’s estimated to rise to $50 billion by 2025, equal to 10% of the value of all digital ads.
This is a major concern for publishers and advertisers alike, which is why it’s crucial to understand how ad fraud works and how to mitigate its effects on your business. In this article, we’ll discuss how media organizations are being harmed by ad fraud today and explore a potential solution to the problem.
How ad fraud works: 3 examples
Exaggerating the quantity of impressions
This can be achieved by using bots to continuously refresh web pages and generate impressions on digital ads, so criminals earn money for the fraudulent impressions.
“Another popular method entails using a mobile app to load webpages containing the ad continuously in background mode. The user would never see the ad, but the publisher would receive credit for showing it,” according to this article by Anura.
Driving up cost per impression (CPM) prices
This tactic involves impersonating devices such as iPhones or Macbooks, which are typically owned by higher income individuals who advertisers view as a lucrative audience. Fraudsters also fudge locations and occupations to appear as wealthy consumers that advertisers will shell out more money to reach with their content.
This is another prevalent ad fraud scheme that involves tricking measurement technology. “Invalid traffic can be marked as valid and unseen content can be marked as viewed,” according to Anura.
The effects of ad fraud on publishers
AdTech giants like Facebook and Google have made it difficult enough for publishers to compete on the digital advertising playing field, offering high volumes of inventory for low costs with the technological infrastructure to support this business model. Ad fraud has only complicated matters further, dealing yet another blow to the thin bottom lines of resource-strapped media organizations.
Fraudulent websites selling digital advertising on ad exchanges have been especially harmful to publishers because of the former’s ability to compete endlessly on price. Since the content on these sites is plagiarized, fraudsters have no content creation costs to make up for and can therefore sell advertising at bottom-of-the-barrel prices.
“Hit with both lower revenue and lower margins, publishers were desperate to sell to more advertisers, so they opened up their inventory to be sold on exchanges as well. What they didn’t realize was that once they started selling on exchanges, fake sites could now pretend to be their legitimate domains—i.e., domain spoofing,” according to this article by Forbes.
Domain spoofing involves fraudulent ads appearing to originate from publishers’ domains. Not only does this practice have the potential to harm you when it comes to pricing your inventory, it can also diminish your credibility in the industry and make your legitimate websites appear to be attracting invalid traffic.
“When fraud detection technologies detected high fraud, they thought it came from the good publishers—after all, it was the same domain that appeared in the placement reports. The good publishers got angry calls from buyers demanding make-goods or refunds,” according to Forbes.
Anticipating and preventing ad fraud in the future
When growth happens in a particular vertical, you can expect fraud to increase in that area as well. For example, eMarketer has estimated that Connected TV (CTV) spend will rise to $18 billion by 2024—up from $8 billion in 2019. Publishers involved in the CTV space should be especially diligent and stay up to date on industry efforts to prevent and identify ad fraud.
Aside from trying to anticipate where ad fraud is likely to occur, media organizations should avoid going all-in on programmatic advertising, which is bought and sold on digital ad exchanges. Focusing your efforts on selling direct to high ticket brands is an excellent way to maintain a greater level of oversight around your ad campaigns, as well as to build stronger relationships with your most valuable customers.
Another bonus to combining programmatic and direct sales is that this approach enables your advertisers to have peace of mind that their ads will appear in a brand-safe environment for a set price.
While selling directly to advertisers has its benefits, this practice is labor intensive and may not be realistic to use across your entire customer base, including lower value accounts. An optimal solution is to invest in technology such as a self-service ad portal that your customers can use for smaller or recurring ad buys.
Leverage self-service adtech
With Lineup’s Ad2order product, you can implement a robust self-service ad booking system in your media business. You’ll have the opportunity to offer your advertising customers personalized branding and ads, templates, automation, upgrades, and packages.
Free up time for your sales team to focus on selling direct to high-ticket accounts and explore Ad2order.