Understanding Ad Fraud: The Silent Thief of Your Advertising Budget

January 7, 2024
5 min read

Running ads online has revolutionized the business world, creating a more level playing field for businesses of all sizes to gain visibility. However, alongside the benefits comes a lurking threat known as ad fraud or click fraud, a silent thief siphoning money from the digital marketing industry.

Ad Fraud vs. Click Fraud: Unveiling the Differences:

Ad Fraud:

Ad fraud involves fraudulent activities aimed at inflating engagement numbers on pay-per-click (PPC) ads online. Fraudsters manipulate impressions, clicks, or conversions to deceive advertisers into paying for interactions that never occurred. Tactics include using fake traffic, layering multiple ads, or falsifying bid requests.

Click Fraud:

Click fraud extends beyond paid online ads, targeting organic content like links on social media or within apps. Bots and click farms generate fake traffic to click links, compromising marketing efforts, gaining a competitive edge, or profiting from promoted links.

How Ad Fraud Operates:

  • Fake Website Traffic:
  • Fraudsters create a website, apply for a publisher account, and host display ads.
  • Inflated traffic is often generated through bot farms or click farms, leading to undeserved payouts.
  • Hidden Ads:
  • Methods like unviewable ad placements, ad stacking, or displaying ads outside the viewable area trick advertisers.
  • Ad fraud operators collect payouts for ads that users never see.
  • In-App Malware:
  • With over 50% of internet traffic being mobile, ad fraud shifts to mobile apps.
  • Techniques like click spam or click injection create fake clicks, inflating traffic within apps.
  • Falsified Bid Requests:
  • Websites falsify bid requests using existing publisher IDs, collecting payouts for non-existent ad placements.
  • Accounts may be verified but never host the advertised content.

Who's Behind Ad Fraud:

  • Organized Criminal Networks:
  • Networks like Methbot and Hyphbot orchestrate sophisticated ad fraud operations, working with botnets and spoofed websites.
  • Some criminal networks collaborate with ad platforms, amplifying perceived traffic and ad placement value.
  • Black Hat Marketers:
  • Shady marketers use ad fraud to inflate web traffic, impress clients, and boost ad revenue.
  • They may employ deceptive practices to achieve results for paying clients.
  • Casual Ad Fraud:
  • Individuals create websites with minimal traffic thresholds and engage in ad fraud using purchased fake traffic.
  • Low-quality sites, often link farms, attract non-human ad impressions.
  • Ad Networks:
  • Numerous ad networks with inadequate fraud monitoring enable ad fraud indirectly.
  • Some ad networks may engage in fraudulent practices, impacting advertiser budgets.
  • Paid-to-Click (PTC) Sites:
  • PTC sites offer minimal payouts for ad clicks, attracting individuals seeking easy money.
  • In 2020, PTC sites paid out an estimated $12 million, contributing to the broader ad fraud industry.
  • The Fake Web:
  • Non-human traffic from bots, web scrapers, and ad-blocker tools contribute to the ad fraud challenge.
  • The sheer volume of potential invalid traffic continues to grow.

The Impact of Ad Fraud on Businesses:

Ad fraud, defined as a cybercrime, negatively affects PPC advertisers and platforms. Businesses experience financial losses, ineffective ad campaigns, distorted analytics, decreased ROI, uninformed decision-making, missed opportunities, and compromised brand reputation.

Quantifying Ad Fraud's Financial Toll:

  • Research indicates that the Gambling and Gaming sector faces a high 49.1% fraud rate, while Advertising and Marketing experience a lower 7.9%.
  • Between 1 in 4 and 1 in 5 clicks are non-genuine, making it challenging to quantify the exact financial loss to ad fraud.

Protecting Ad Campaigns:

With over $42 billion lost to ad fraud and click fraud in 2021, safeguarding ad budgets is imperative. Tools like Tapper offer industry-standard ad fraud protection, conducting traffic audits to reveal the extent of losses and help advertisers take preventive measures.

In a landscape where ad fraud is pervasive, awareness and proactive measures become crucial to ensure genuine engagement, protect marketing budgets, and foster a trustworthy digital advertising ecosystem.

Want to know how much fake traffic affects your ads?     

Use Tapper's free trial to run a traffic audit and find out exactly how much you’re losing to ad fraud. See for yourself and sign up for a free 14-day trial.

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