Blog , 15 Jun 2022

Digital Ad Fraud: What is it?

Isla Sibanda,

Content Creator

Let us ask you a few questions:

Do you have a hobby? 

We know you do, and is it hiking? 

Have you searched for a hiking backpack or walking first aid kit?

digital ad fraud representation

If you do, you will be bombarded with ads for buying hiking equipment, you will click on those weird-looking ads while reading this, being redirected to a different website that has nothing to do with hiking, and maybe, an app was downloaded to your device. Oh, sorry, you’ve been tricked.

But this is just the tip of the iceberg. As seen from a digital advertising space, the market is becoming overcrowded. Advertisers are under more pressure to improve their online presence while being aware that internet advertising has costs, losses, and damages. 

Because of the frequency of advertising fraud, dollars are spent online, and advertisers must accept that with more advertising, the amount lost to the fraudulent online activity will likewise rise.

Let’s dive in more and break down digital ad fraud in detail

We’ll explain digital ad fraud in as little technical jargon as possible. We will see what it looks like and how the situation could evolve throughout 2022.

What Is Digital Ad Fraud?

Digital Ad Fraud includes any fraudulent activity surrounding the use or creation of digital advertisements, including pay-per-click (PPC) advertising, banner ads, video ads, and much more.

In a broad sense, ad fraud involves attempts to deceive users or, more commonly, advertising platforms and agencies. The activity tricks advertisers into thinking that activity on an online network is actual user behavior to gain money.

In many cases, it is carried out by bots, automated computer programs, or algorithms that mimic user behaviors or otherwise trick network scanners. In terms of marketing campaigns, it disrupts how advertisements are delivered to the intended audience.

Ad fraud is very serious and will likely become more complex and dangerous over time. It is estimated to cost businesses over $44 billion by the end of 2022. Advertisers and other organizations need to know how to spot ad fraud and counteract it if they want to minimize its impact on their operations.

What type of advertising frauds are there?

To fully understand and learn how to spot digital ad fraud, you need to know the different types of ad frauds your business might be exposed to.

types of digital ad fraud
  • Click Fraud: is typically carried out by bots and refers to the active targeting of pay-per-click ads. Bots simulate clicking on those ads and waste the budget of advertisers. 
  • Click Injection: it occurs when users install a free app with a virus or bot hidden within and involves hijacking user apps to simulate fraudulent consumer activity. This type of fraud is more common with mobile apps
  • Fake App Installation: Many mobile applications these days have ads shown on the sides or bottom of the screen. Therefore, it’s no surprise that click farms or other fraudulent advertisers manually install apps many times over. They then interact with the ads within those apps by performing whatever necessary actions to register an ad click.
  • Domain Spoofing: it’s where malicious actors present unsafe and low-quality websites as reputable and legitimate publishers. This technique aims to hide the real site from advertisers and trick them into paying more money for ad space.
  • Cookie Stuffing: it occurs when affiliate marketing advertisers use cookies to track different affiliates. Affiliate marketing can be affected by criminal activity through ad fraud. With cookie stuffing, a fraudster sends lots of affiliate tracking cookies to a target website visitor’s browser. All these cookies are sent at the same time.
  • Pixel Stuffing: it’s a 1×1 pixel area for an ad display. Normal people aren’t expected to see the small pixel area. But within that area, cybercriminals display up to hundreds of ads on a webpage. Then, when visitors view the small pixel area, the fraudster gets credit for ad impressions.
  • Ad Stacking: this is very similar to pixel stuffing. The goal is to put extra ads in front of website visitors to create false impression numbers. However, rather than making very small, near-invisible ads, ad stacking means stacking several ads on top of each other in a visitor’s web browser.
  • Geo Masking: can impact advertising campaigns with different ad spend amounts for various regions. Fraudsters hide lead locations when they generate leads for their advertisers. They typically do this by spoofing IP addresses to make them look more valuable than they really are.
  • Ad Injection: involves leveraging malware, plug-ins, and browser extensions to put ads where they should not be. 
  • Viewer Fraud: automated bots watch video ads on platforms like YouTube, generating impressions for advertisers. Of course, those impressions are false since the videos are being “watched” by bots rather than real people.

Is Digital Ad Fraud Illegal?

For many years, digital ad fraud was illegal, but there was not clear-cut. 

These days we can say, yes – it is illegal. In the first place, even before coming to court, cases were settled and clarifying the actual matter is becoming hard and even not clear.

However, even for businesses with a significant problem with ad fraud, establishing how it happened is becoming more difficult as botnets grow in size, and cybersecurity skills are more required to untangle the complicated facts. 

For example, in click fraud, it can be challenging to prove that a click occurred and to demonstrate the mechanics of how it happened.

How Digital Ad Fraud Affects Your Brand

Digital ad fraud can negatively affect your brand in several major ways.

Firstly, ad fraud can make it difficult or impossible for your advertisements to reach the intended audience members. This negates the money and effort you put into those advertisements by nullifying their effectiveness.

Secondly, ad fraud can make you think that your ads are working well while they have subpar performance. Over time, this performance can cause your marketing team to create poor-quality ads. Whenever a real user views an ad, it might not connect with them, and your marketing team won’t know what’s wrong. This long-term consequence can seriously impact your marketing effectiveness for years to come.

Thirdly, digital ad fraud can cause you to waste money, draining your marketing budget and requiring you to take dollars away from other aspects of your business.

In short – ad fraud costs your business money and does not result in your business gaining any as it should. That’s a major downside for every business, regardless of industry or niche.

Ad Fraud Landscape: 2022 Predictions

As the digital landscape evolves, ad fraud will certainly evolve with it. Digital fraud could become more complex and dangerous throughout 2022 in several ways.

Increased Ad Fraud Sophistication

For example, ad fraud could become more prevalent and dangerous due to increased sophistication. As automated bots and similar cybercriminal tools become more powerful and complex, they could become harder for advertisers or companies to detect and stop. Even with secure cloud-based systems, ad fraud may continue to evade cybersecurity efforts.

More Ad Fraud Bots

Furthermore, fraudsters are increasingly using greater and greater numbers of ad fraud bots. The more bots there are in circulation, the harder it is for advertisers to differentiate legitimate viewers or impressions from fake ones.

Shift to Other Forms of Marketing

Most importantly, the rise of increasing ad fraud could lead digital advertisers to shift more toward other forms of marketing, such as influencer-based marketing or personalized advertising campaigns. Digital and clickable ads could become advertising tools of the past if ad fraud continues to be a major problem.

Conclusion

Digital ad fraud isn’t going away anytime soon. However, knowing how to detect fraudulent activity is the first step toward counteracting ad fraud and saving your business lots of marketing money. Over the coming weeks, we’ll break down more about ad fraud and how you can protect your business from this growing issue.

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