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Ad Fraud: Everything You Need to Know and How to Prevent It

programmatic digital advertising managed service ad fraud

Ad fraud has become a key issue in the digital advertising industry, as its costs are expected to increase in the coming years. Between 2018 and 2023, global expenses associated with digital advertising fraud were estimated to escalate from 35 billion to 100 billion dollars.

The digitization of advertising has opened vulnerabilities to fraud. This is why understanding ad fraud and implementing preventive measures is crucial. Our blog explores ad fraud's causes, impacts, and techniques, offering actionable insights to protect businesses’ digital advertising investments.

Fortunately, ad fraud can be easily prevented with the proper tools and partnerships. Join us in exploring the ins and outs of ad fraud and ways to safeguard your brand.

 

Table of Contents

 

What is ad fraud?

 

Ad fraud, also known as advertising fraud or digital ad fraud, is a deceptive practice aimed at manipulating the advertising ecosystem for financial gain.

It involves various malicious activities conducted in the online advertising space. The primary objective of ad fraud is to mislead advertisers into believing that fabricated activity is genuine user behavior.

One common method of ad fraud is the use of bots. These automated software programs simulate user engagement by generating fake impressions, clicks, or conversion data. By artificially inflating these metrics, scammers can deceive advertisers and ad networks into paying for non-existent or ineffective ad placements.

 

What Are common ad fraud prevention tactics?

 

Various technologies and industry initiatives have been developed to combat ad fraud. These include fraud detection systems, traffic verification tools, and industry standards like ads.txt (Authorized Digital Sellers) that improve transparency in programmatic advertising by allowing publishers to identify who is authorized to sell their inventory.

Utilize varied tactics for brand integrity and optimized marketing efforts, such as:

  • Ad Verification Services
  • Real-time Bidding (RTB) Filters
  • Human Review
  • Device and IP Filtering
  • Viewability Metrics
  • Geolocation Targeting
  • Campaign Monitoring
  • Collaborative Efforts

On top of these tools, many advertisers find that relying on a hands-on partner allows brands and agencies the confidence to safely adopt digital advertising practices.

A hands-on managed service provider is crucial for deterring ad fraud. With expertise in real-time monitoring, fraud prevention strategies, supply path optimization, data analysis, and transparency — collaborating with such a partner empowers advertisers to protect their brand, optimize campaigns, and achieve genuine engagement with their audience.

 

What is CTV Ad Fraud?

 

CTV fraud is a specific type of ad fraud that we at Strategus specialize in thwarting.

Spoofing involves false activities concealed as legitimate sources, commonly used to deceive marketers and divert ad spend. Put simply, spoofing disguises fake traffic and impressions.

One of the most notorious examples is the ICEBUCKET operation that tricked advertisers into thinking real people were watching their CTV ads. Instead, the sellers of the ad inventory were bot herders who received payments in exchange for running the ads – but the ads didn’t reach any human eyeballs.

With all that said, CTV ad fraud is less common when compared to non-CTV digital ad fraud.

 

What Are common CTV ad fraud prevention techniques?

 

CTV advertising stands out as a premium environment with significantly lower chances of fraudulent ad activity compared to other digital platforms.

Moreover, it preserves the viewing experience, fostering the same consumer trust found in TV advertising.

While developing and deploying your CTV strategy, consider the following:

 

Choose Inventory Vendors Carefully

When selecting inventory vendors for advertising, it is essential to prioritize working with known inventory sources and establish a robust supply path process. Rather than vetting specific platforms like Roku, Samsung, or Amazon Fire, focus on partnering with reputable inventory providers. 

Implementing a stringent process allows you to assess inventory sources and promptly restrict or block those that fail to meet your standards of quality and safety. This approach ensures a more secure and effective advertising strategy while maintaining control over the inventory sources you engage with.

 

Know Your Audience and Apply Good Sense

For effective CTV ads, understanding your audience and their behaviors is essential. Match peak user activity times for relevant displays, and detect any deviations. Align ads with demographics and platforms, setting clear expectations.

 

Stay Informed on CTV Industry Standards & Measure Performance

Industry standards play a critical role in combating ad fraud. These standards encompass fraud detection methodologies and best practices, empowering advertisers to implement effective prevention measures. 

In addition to staying informed about these standards, marketers need precise attribution measurements to ensure a clear understanding of CTV campaigns to distinguish real engagements from fake ones.

 

TYpes of Advertising Fraud

 

Above all, ad fraud is not solely limited to bot-driven activities. Scammers use other techniques to fool advertisers into paying for fraudulent activity, even involving real human activity.

These methods often include the following practices:

  • Ad stacking: Layering multiple ads on top of each other within a single ad placement. While only the top ad is visible to users, all ads hidden beneath the primary ad are counted as impressions, leading to inflated metrics and fraudulent billing.

  • Pixel stuffing: Similar to ad stacking, this involves placing ads within a pixel so small that it’s practically invisible. An entire webpage could have numerous ads stacked in the invisible pixel to generate fake impressions.

  • IP address spoofing: Attackers are masked as specific computer IP addresses to create fraudulent traffic. Referring back to the ICEBUCKET operation, these fraudsters impersonated the IP addresses of 2 million devices in over 30 countries, when 99% of the traffic came from just one country.

  • Device spoofing: This technique is where bad actors manipulate the identity of their devices to appear as different devices. Typically, a large number of clicks coming from a single device would signal fraud. But the fraudulent activity can be difficult to track by obscuring the actual device across mobile phones and browsers.

  • Server-side-ad-insertion (SSAI) spoofing: SSAI has created a seamless CTV ad experience for customers as ads are essentially stitched into streaming videos. SSAI spoofing happens when fraudsters distribute millions of ad requests from data centers pretending to be CTV devices. In actuality, audiences never saw the ads.

  • Click fraud: Also known as pay-per-click fraud, is fraudulent actions that artificially boost traffic data for online ads. In the pay-per-click model, advertisers pay for each click on their ads expecting potential customers. Perpetrators of click fraud use automated clicking programs to create the illusion of clicks from real people. However, these clicks rarely result in any profit for the advertiser.

Regardless of the specific methods employed, the consequences of ad fraud are harmful to the advertising ecosystem. 

Advertisers waste their budgets on ads not seen by the intended audience, resulting in poor returns on investment. Legitimate publishers may also suffer reputational damage, as their ad spaces are utilized for fraudulent purposes.

 

Why and How Does Ad Fraud Occur?

 

Ad fraud occurs to take advantage of vulnerabilities within the digital advertising ecosystem. Here are some main reasons for why and how ad fraud occurs:

  • Financial gain: Ad fraud is driven by the financial gains of fraudsters. Illegitimate activities, such as generating fake clicks or impressions, allow them to exploit advertisers' budgets and earn money through deception.

  • Lack of transparency: The complexity of digital advertising creates murkiness, making it difficult to trace fraudulent activities. This lack of transparency allows fraudsters to manipulate ad campaigns undetected.

  • Incentives for high metrics: Advertising success is based on metrics like clicks, impressions, and conversions. The emphasis on achieving high numbers can inadvertently encourage fraudulent practices, as fraudsters exploit the demand for impressive performance metrics.

  • Automation and bot traffic: Automating digital advertising processes has opened avenues for using bots and automated scripts. These programs mirror user interactions, such as clicking on ads or visiting websites, to generate false engagement and inflate metrics.

Tackling ad fraud requires a collective effort from advertisers, ad tech providers, publishers, and industry organizations. More importantly, promoting best practices mitigates the impact of ad fraud on digital marketing.


CTV Ad Fraud Statistics

 

Connected TV (CTV) has proven to be an effective medium for advertisers, offering immense potential to reach target audiences. Last year, CTV advertising spending in the US was valued at over 20 billion dollars. 

CTVs ads are a growing trend combining the digital capabilities of online advertising with the reach of TV. However, CTV is still evolving with best practices, regulations, industry standards, and more crucially, expertise.

It is estimated that total digital ad fraud accounts for around 10.3% of digital ad spend. However, when we focus on CTV ad spend, the percentage of CTV ad fraud significantly reduces, falling within the range of 1.2 to 1.4%.

 

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It's crucial to understand the magnitude of the problem and its impact on CTV advertising:

 

How is Ad Fraud Detected?

 

Ad Fraud can be detected through various methods, primarily by analyzing relevant data such as conversion rates and closely monitoring any irregularities. 

Additionally, partnering with trusted ad fraud detection companies is vital in identifying and preventing fraudulent activities. By combining data analysis and leveraging specialized expertise, advertisers can effectively combat ad fraud and safeguard their campaigns.

 

Ad Fraud Detection Companies

 

Protecting your advertising campaigns against the threat of ad fraud is paramount. 

In this section, we’ll cover industry-leading platforms that offer advanced tools and insights to help advertisers detect, prevent, and mitigate the risks associated with fraudulent ad interactions.

 

Integral Ad Science (IAS)

IAS is a prominent provider of ad verification and optimization solutions. Their comprehensive suite of tools ensures the quality and safety of ad placements. 

The IAS Threat Lab actively monitors campaigns to detect fraudulent activity, while improving ad placements to maximize performance and ROI.

 

Peer39

By analyzing the content and context of web pages, Peer39 provides accurate and granular insights into the suitability and safety of ad placements.

Peer39 plays a crucial role in the fight against ad fraud by assessing the context in real-time, ensuring ads appear in brand-safe environments to minimize the risk of low-quality or harmful content. 

Moreover, they verify ad viewability, guaranteeing that ads are genuinely seen by human audiences, and offer valuable insights into visibility and engagement metrics for ad placements.

 

Moat by Oracle Data Cloud

Moat is an industry-leading ad analytics and measurement platform that empowers advertisers with comprehensive insights into the effectiveness and validity of their digital ad campaigns.

Moat's robust suite of tools takes care of difficult-to-detect situations that require advanced analytics, multipoint coordination, or significant human intervention to analyze and identify.

 

DoubleVerify

DoubleVerify is constantly working to make the digital advertising ecosystem stronger, safer, and more secure. Their extensive range of services encompasses ad verification, viewability measurement, and brand safety monitoring. 

What’s more, DoubleVerify analyzes over 2 billion impressions daily, identifying comprehensive fraud and invalid traffic — from hijacked devices to bot fraud and injected ads.

 

While many advertisers partner directly with ad verification services to prevent ad fraud, at Strategus, we take it one step further with hands-on monitoring. 

Why do we do this? Because the best brand safety insurance possible requires putting human eyes on your campaigns.

We go beyond just partnering with all the ad fraud detection companies listed above to protect our customers. We take it a step further by assigning a dedicated in-house ad ops campaign manager to every campaign, ensuring personalized attention and proactive measures to safeguard against ad fraud and optimize campaign performance.

 

How Strategus Provides Ad Fraud Protection

 

Fraud is an inherent challenge in the dynamic world of AdTech. However, with the right tools and collaborations, it is easy to combat fraud and enhance the effectiveness of your CTV advertising campaigns. 

This is where Strategus, the premier option for CTV advertising, stands out.

Our expertise and advanced technologies work alongside industry-leading ad fraud protection services. From start to finish, advertisers are empowered to reach their exact customers and deliver impactful campaigns that drive real results.

We employ a three-pronged strategy that ensures your campaigns are safeguarded and optimized for success:

  • Strategus provides a 24/7 reporting dashboard, offering real-time insights into your CTV campaigns. You can monitor key metrics easily and take immediate action when needed.

  • Our team of experts is dedicated to running your full-funnel CTV campaigns. With a deep understanding of the CTV landscape, they continuously monitor campaigns to navigate potential fraud risks and make data-driven optimizations.

  • Strategus has established strong partnerships with the industry leaders mentioned above. These partnerships allow us to leverage the tools provided by trusted ad verification services and audience data management platforms. 

By combining our expertise with these partnerships, we deliver comprehensive fraud prevention capabilities.

 

Prevent Ad Fraud and Optimize CTV Campaigns With Strategus

 

With Strategus, you can have our commitment to protecting your CTV campaigns from fraud. 

Our three-pronged approach, encompassing granular reporting, expert campaign management, and strategic partnerships, sets us apart as a trusted and knowledgeable partner in CTV advertising.

At Strategus, we maintain a CTV-first approach, emphasizing premium content on living room TVs. This strategic focus significantly minimizes the chances of fraudulent ad activity right from the start, establishing unparalleled consumer trust in our ad campaigns.

Trust us to deliver effective and trustworthy advertising solutions, and contact our team to explore the possibilities of your next CTV campaign.

 

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Posted by Andy Dixon

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