Ad Fraud: The Digital Crime Gaining Awareness

It is alleged that $84 billion of ad spend was wasted due to ad fraud, according to Forbes. That would account for almost 14% of the global digital ad spend in 2023, essentially saying that over 1 in 10 ads paid for by an advertiser were not real or were affected by ad wrongdoing. 

Earlier this month a global publisher was accused of having “made for advertising websites.” Specifically selling premium ad placements to brands such as American Express, Disney, Mercedes Benz and Oracle.

Ad fraud involves various deceitful tactics employed by individuals or groups to falsify ad impressions, clicks, conversions, or other engagements in online advertising. These schemes aim to deceive advertisers into paying for interactions that never truly occur or for ad placements on sites that either don’t exist or fail to reach authentic audiences.

The Types of Ad Fraud

Click fraud

This involves repeatedly clicking on ads with no genuine interest, often perpetrated by bots or individuals to inflate click counts and deplete advertisers’ budgets.

A publisher may set up a website with ads on it, but instead of having real people click on the ads, they can hire bots. The bots will then click on the ad, charging the advertiser and ad network, who will have to pay the publisher for the click generated.

So click fraud does not only disadvantage the ad network, but it can also harm businesses. If a person disagrees with a company’s operations or ethics, they can target websites that the company advertises on, either with bots or clicking on the ads continuously themselves. This can cost a business and marketers financially, while not producing any genuine results for the business.

Click Fraud illustration

Impression fraud

In this type of fraud, impressions (ad views) are fabricated, typically by bots, to create the illusion that ads are being seen by real users when they’re not.

This is very similar to click fraud in terms of functionality, however it is slightly simpler. Impression fraud does not require bots to complete any action, but more observe the ad, as it will still incur a charge to the advertiser for an impression. Impression fraud also has similar negative effects on advertisers and ad networks to click fraud.

Conversion fraud

Fraudsters may fabricate conversion events (such as sign-ups, downloads, or purchases) to earn commissions from affiliate programs or to deceive advertisers into believing their campaigns are more successful than they are.

Another similar type of ad fraud to impression and click fraud. However conversion fraud could be said to have higher financial repercussions compared to the other two types. The main goal of any business is to convert a visitor, but manipulating such statistics affects the financial statements and operational aspects of the business.

Domain spoofing

This occurs when fraudsters misrepresent the websites where ads are displayed, making them appear to be on legitimate and high-traffic sites when, in reality, they’re on low-quality or even fake sites.

Domain spoofing is used to sell high-quality or high-cost traffic to advertisers, as they believe the website is from a well-established publisher that has sold them premium ad space.

The domain will often be similar to a very well-known publisher, however with slightly different characters hidden in the domain, possibly a 3 replacing the E. It could be said that an example of such type of fraud is that of an alleged publisher selling ads on a subdomain, instead of selling what originally was thought to be premium ad space on their main website.

Domain spoofing illustration

Ad stacking

Multiple ads are layered on top of each other within a single ad slot, allowing only the top ad to be visible while recording impressions for all ads. This is not common in major publishers, however it is common for smaller more dodgy sites.

The publisher monetising their website will charge advertisers and ad networks for multiple ad impressions, when in reality only one was shown as all ads are placed in the same ad space.

Bot traffic

Automated bots visit websites to generate fake ad impressions or clicks, creating the impression of genuine user engagement when none exists.

This almost groups impression, conversion and click fraud all into one. Bots are the tools that most criminals use to carry out ad fraud. It can be incredibly easy to generate bot traffic, usually for cheap. Some also estimate that almost 30% to 40% of all traffic is from bots, and hence it can be assumed that almost 30%-40% of actions generated by ads are false.

Ad fraud remains a significant challenge in the digital advertising industry, resulting in substantial financial losses for advertisers each year. It undermines the trust within the digital advertising ecosystem. Countermeasures against ad fraud include the use of fraud detection algorithms, implementation of verification measures, and advocacy for greater transparency in the industry.