Digital advertising is the lifeblood of marketing across the globe. Digital ad spend reached $333.25 billion last year and seems to be increasing year after year. Developments in ad technology have allowed marketers to buy ad placements that are highly targeted to specific audiences. However, while the spend on ads increases, so do the losses suffered by marketers.
A big reason for such losses is global ad fraud, which is a lucrative business that is predicted to reach higher numbers this year. This means that many marketers are wasting valuable advertising budgets on ads that reach the wrong audience or simply don’t reach an audience at all; instead, ad spend is being pocketed by fraudsters.
Ad fraud is nothing new, as its impact on the marketing industry has been felt for the past three decades. However, in recent years the problem has worsened. As a result of the growing digital ecosystem and the arrival of new stakeholders in the market, the advertising supply chain has expanded – and become more complex. The advertising environment now involves thousands of intermediaries and presents a plethora of dark corners in which fraudsters can hide and others can conceal criminal activity. Of all the activities they seek to hide, the pay-per-click advertising model is the most common one that’s exploited.
A closer look at ad fraud
Ad fraud attempts currently amount to 20% to 35% of all ad impressions, which is not just a lot of impressions lost to fraudsters but also a significant share of an advertiser’s audience not being exposed to valuable inventory. To further emphasize this point, ad fraud reached $42 billion in 2019 – a 21% increase from 2018. And if you single out mobile ad fraud, which has now reached $2.3 billion and is expected to continue to grow. These are staggering numbers by any possible standard.
Traditional approaches to fraud detection have had little noticeable success. This is because the development of this technology has not progressed at the same rapid rate that fraudsters have been evolving their own techniques. The result is an arms race in which fraudsters lead by a mile.
Techniques leveraged by criminals include the use of botnets. These can be weaponized to create fake social media impressions or to behave like users to simulate other activities for monetary gain. Such activities include streaming music to increase royalties, inflating app store downloads or creating fake reviews.
Another form of ad fraud is click fraud, which refers to premeditated clicks on ad content that are not driven by a genuine interest in the ad’s subject. By arranging false clicks on ads, shady publishers take advantage of pay-per-click agreements and charge for clicks with extremely low conversion rates. When performed effectively, this can significantly impact advertising costs and revenue potential.
It is relatively easy for a fraudster to masquerade as a legitimate partner in this ecosystem. Let’s say a brand wants to advertise to a specific demographic in a specific market – teenage, male smartphone users in North America, for example. The brand will send ad content to the ad network or server, which is then published on a mobile application. The brand will be billed on a pay-per-click basis, which would be money well spent if the ads were served to the correct demographic. However, fraudulent service providers can easily (and all too often do) serve ads to a completely different audience (female pensioners in Egypt, for example), and still charge the brand. Fraudsters are also able to pass off low-quality inventory as a high-quality or premium site.
What can advertisers/marketers do to fight ad fraud at the core?
How can advertisers today confidently manage their valuable ads? How can they verify the digital journey of each ad and ensure that it hasn’t been hacked? How can they guarantee that their ads are served to the right people at the right time, and that they serve as the revenue-generator they’re intended to be?
To track the digital journey of ad content and ensure that it reaches its intended demographic, country, city, etc., advertisers need to be able to view ads as if they were that same intended demographic in that same country, city, etc. Such details are revealed by a user’s IP address. However, a brand can’t simply use its own computer network to check and verify ads because fraudsters can spot brand IP addresses. And when fraudsters know when they’re being watched, they will quickly respond by covering their tracks, blocking access to a site or serving misleading content.
On the other hand, having a physical presence (and therefore an IP address) in every city, country etc., where a brand intends to test and then target with an ad campaign is prohibitively expensive and resource-intensive. Yet, failing to detect ad fraud results in significant financial loss for advertisers – as well as potential damage to their brand’s reputation.
Brands therefore need a way of viewing the internet as if they were any one of the millions of consumers being served an ad, anywhere in the world, at any time of day or night, and using any one of a multitude of connected devices that an ad campaign is targeting. The solution is to use a sophisticated data collection network that will allow the brand to track a digital advertising campaign throughout the specific customer journey, allowing them to test links, ad placements, and more – as if they were that specific customer.
What is a sophisticated data collection network?
A sophisticated data collection network leverages real IP addresses from real consumers based in locations across the world, and who have willingly opted in via a landing page. These global consumers usually do this in return for ad-free applications that will improve their user experience. They can also opt out at any given time. These millions of real consumer IP addresses provide a gateway for businesses to browse the internet without being blocked and enable them to view the internet as an individual or consumer would – openly, transparently, and freely.
How does a data collection network tackle and stop ad fraud at scale?
Digital advertising technology is a double-edged sword. It allows for the automated distribution and targeting of ads on a massive scale. However, this technology consequently presents a major challenge for advertisers, tasking them with checking and verifying a massive number of ads. Furthermore, each of these ads may be unique in terms of what/where/when they’re served, and the variables dictating this are changing all the time.
A data collection platform is therefore needed to create a session based on the attributes of a specific user (via his/her IP address), and then test the multiple different ads that might be presented to the user – and which are all competing for his/her attention. Take a social media brand, for instance, which could leverage a data collection platform to split a user session and check all ads served to that particular user at that particular time, simultaneously.
Ad fraudsters have developed multiple methods to identify a business’s advertising “soft spot” and exploit its revenue chain. The investment in digital advertising is huge, and every business is a potential target for ad fraud.
Fraudsters can execute criminal campaigns very quickly and on a massive scale; the same proactive approach must now be taken by brands. However, this can only be achieved via an effective data collection network, leveraging the real IP addresses of consumers who have willingly opted in to the network. With such a network, brands can ensure that their ad journey is reliably protected, does not feature any broken links, and is not compromised by hackers. In short: Your ads will be seen by the right people, in the right places, and at the right times – and you’ll get the right level of return on your ad spend, always!
Written by Or Lenchner, CEO at Luminati Networks