Fraud is a growing problem in the world of digital advertising. Right now, ad fraud accounts for one out of every three dollars spent by digital advertisers – and unless a dramatic change is made, Forrester predicts that the industry stands to lose $10.9 billion from fraudulent advertising. Since ad fraud is a growing concern among marketers, it’s important to understand exactly what it is.
On its most basic level, ad fraud is when organizations or agencies pay for advertisements to appear on fraudulent sites, or when data is skewed from advertising initiatives with illegitimate clicks from bots or click farms. Unfortunately, ad fraud is not easy to detect, and is very easy to falsify. This is because online ads are often not directed at a single person, while the expansive nature of the internet makes your target market seem limitless.
This means that ad fraud doesn’t just have immediate financial consequences – it can also be hugely detrimental to your overall online strategy. Read on to learn more about how ad fraud works, and how to prevent it.
The Types of Ad Fraud
Not all ad fraud is identical – making it even harder to detect and monitor. While this is not an exhaustive list, here are the primary ways that ad fraud occurs on digital mediums:
- Click fraud – This is the most basic, well understood version of advertising fraud. This type of fraud involves generating fake traffic through either automated clicking platform, or by running click farms. While this boosts the clickthrough ratio of online ads, they will never result in a sale.
- Ad stacking – This type of fraud often occurs with programmatic ad placements. This is when a publisher sells multiple ads on a website – but they’re all stacked on top of each other! This causes your advertisements to gain impressions, even though the advertisement is obscured by another ad.
- Pixel stuffing – This is similar to ad stacking. Advertisements are placed within pixels on the webpage, but they are functionally invisible to customers. This means that your brand is paying for impressions when there’s no chance of the advertisement actually being seen.
- Domain spoofing – By pretending to be a reputable domain, less savvy sites will receive payment for your advertisement, while never reaching the intended market.
- Location-based ad fraud – This is a growing type of fraud which occurs when fraudsters exploit location-based marketing by spoofing devices being in or around a specific location, causing your brand to deliver an advertisement. This is a huge problem for industries like retail, quick-serve restaurants, and automotive.
With fraudulent activity occurring in so many different ways, it’s growing increasingly difficult for marketers to minimize instances of ad fraud. This doesn’t just cause financial losses for marketing departments, it directly harms initiatives to optimize marketing spend.
How Ad Fraud Effects Media Spend Optimization
Ad fraud causes huge disparities when measuring the success of campaigns. This is difficult to overcome for two main reasons – one of which is unintentional, and the other being more intentional.
First, many marketers are unaware of how strongly they are being affected by ad fraud. This means that any insights gained from these campaigns are ultimately tainted, causing campaign statistics to become hugely skewed. For example, if an ad receives many impressions but few clicks due to tactics like ad stacking or pixel stuffing, marketing teams may assume their messaging is ineffective. Then, they may spend time workshopping the advertisement to get more clicks and conversions. However, the original ad may have been effective on its own – and marketers may mistarget their future campaigns as a result of this.
On the other hand, some marketers are more aware of the impact of ad fraud on their campaigns. However, these marketers may be influenced by structural conditions that tend towards valuing vanity metrics – which make marketing teams look good, but don’t necessarily contribute to the bottom line. If the C-Suite is asking marketers how many clicks and impressions they receive rather than how they directly impact sales, marketers may welcome fraudulent activity that makes their growth steadily increase. Or, perhaps they’re not comfortable admitting that being a victim of ad fraud has caused their department to cost the organizations thousands, or even millions of dollars.
Overall, ad fraud can have a huge impact on the performance of marketing teams – resulting in a lack of efficacy across the entire organization. However, if we understand how ad fraud harms media spend optimization, it becomes possible to resolve these problems in a well-informed manner.
Overcoming Ad Fraud with Better Measurement
Although ad fraud is undoubtedly a pain point for organizations that engage in digital marketing, they certainly should not abandon or scale down their efforts. Instead, organizations should examine the overall mechanisms that are used to measure the success of marketing teams. If the success of a marketing team is being measured by vanity metrics, then it’s best to enact a top down initiative to approach data from a quality, not quantity perspective.
This requires measuring campaigns against actual business outcomes. By changing your organization’s focus in this regard, your marketing team’s efforts will be grounded, and they will be able to better identify how ad fraud is impacting their online strategy.
- Lagging indicators – After a campaign is finished, lagging indicators can be used to measure exactly how successful the campaign was. This includes recording information such as cost per acquisition, or sales data following the campaign. In all, 72 percent of marketers report that value-based metrics like leading indicators help them make better strategies.
- Leading indicators – These metrics are used to identify a customer’s propensity to take action after viewing an advertisement. For example, seeing the likelihood that opening an email will eventually lead to a sale.
- Diagnostic metrics – This shows how campaigns are impacting the overall performance of your organization’s marketing. For example, ask if launching the campaign improved open rates or overall time spent on the site.
While a single one of these metrics can’t prevent ad fraud all on its own, using a combination of all three in your media spend optimization
efforts will help your organization cut through the noise caused by ad fraud. Not only that, but changing your focus towards quality metrics will remove any motivation for marketers to misrepresent their performance for the purpose of showing continued growth.
Ad fraud is a growing problem in the world of marketing – but it’s not impossible to overcome. Through changing your organization’s approach towards marketing measurement, ad fraud will have less of an impact on the performance of your marketing teams. To ensure that this data is being used to its fullest potential, be sure that your organization is leveraging a modern marketing analytics platform to process data and metrics in an insightful, grounded way.
By using a data-focused approach to ad fraud, marketing teams will use their budget more effectively – resulting in greater success in the long-term.