Programmatic advertising is a multi-billion dollar industry, so it is no surprise that fraudsters will try to benefit from it. According to Statista.com by 2022, the estimated costs of digital ad fraud worldwide will be $22 billion.
In this article, we are going to explain what digital ad fraud is, what are the most common types, and what publishers can do to prevent it.
What is ad fraud?
Digital or programmatic ad fraud is fraudulent online activity in order to gain financial benefits. Scammers and hackers are the ones who use bots to fake traffic, clicks, ad impressions, ad inventory to steal publisher’s ad revenue.
Victims are website owners, users, online advertisers, and ad networks. All the activities are known as malvertising attacks.
How digital ad fraud impacts:
- Users: If the user clicks on an ad created by a scammer, there is a chance that the computer can get infected with viruses. The worst thing is that the user might not be aware that he was a victim of the malware. Users can get redirected to another site when clicking on the ad.
- Publishers: Usually, publishers experience ad fraud as invalid traffic, fake clicks, or fake ad impressions on ads. This can cause a loss in ad revenue and getting banned by Google and Ad Networks.
- Advertisers: They can end up paying for fraudulent ad impressions, fake audiences, fake traffic, bidding on fake inventory, and losing money. Dishonesty from the publisher’s side regarding fake clicks forces advertisers to pay more. They can lose potential clients due to redirects to a different site, which might be infected with spyware.
- Ad networks: Possibility to lose relationships and trust with advertisers and publishers, which can lead to unexpected costs.
Ad fraud is still one of the major challenges in the programmatic advertising ecosystem. According to the latest statistics by 2023, there will be a $100 billion loss in digital ad spending.
Types of ad fraud
How do ad fraudsters make money? There are four most common types of ad fraud.
1. Pixel stuffing
Pixel stuffing means that more than one ad is placed into one single 1×1 pixel area. Usually, when fraudsters use this type of ad fraud, they make money on ad impressions from this pixel ‘ad’.
The worst thing is that it’s not even necessary for users to see the ad because it will still count as a viewed impression. Furthermore, this sort of action can be repeated more than once on a single webpage.
Picture credit: Funmobility.com
2. Ad stacking
Ad stacking is quite similar to pixel stuffing. This means, that multiple ads are placed in the same area on the page, but with ad stacking user only sees the ad, which is on the top.
Since ads are put on top of each other, ad impressions still count for all ads even though they weren’t visible.
3. Domain spoofing
Domain spoofing is when fraudsters fake their real URL and pretend to be premium publishers.
This means that they are not only tricking users, advertisers but also the publisher who owns the premium domain. This is definitely one of the biggest threats for publishers.
Domain spoofing allows fraudsters to sell other publisher’s ad inventory for how much they want, leaving the publisher without any revenue.
4. Ad injections
Ad injections mean that the ad is displayed on the publisher’s website without any permission.
This type of ad fraud can affect existing ads by replacing them with fraudulent ones, or just displaying ads on the publisher’s website if previously there was none.
One of the examples of ad injection happened in 2014 when Walmart’s website displayed Target’s ad (image below). Walmart would never put its competitor ad on its website, but fraudster would.
This case brought massive press attention, so imagine what could happen if a low-quality or inappropriate ad had appeared? It could cost them a lot of money, and Walmart’s brand credibility would be damaged.
How to prevent ad fraud?
- Implement a verification solution– it can help to identify non-human traffic and avoid serving ads while providing transparency to the demand sources.
- Implementation of ads.txt and sellers.json files– ads.txt file confirms ownership of the publisher’s domain and indicates that partners who buy ad inventory are authorized to do so. Sellers.json file provides a clear picture for publishers of all legal entities, who are involved in the selling process.
- Use anti-malvertising software– it will improve user experience and prevent malvertising attacks in real-time.
- Work with trustful monetization platforms– for example, Setupad, who has powerful tools and knowledge about how to take care of publishers’ ad inventory and users. This service comes at no extra charge.