Digital ad fraud: The potential threats and how businesses can protect themselves

“To track and stop ad fraud, businesses can select partners who have reliable ad verification tools. This will ensure that the businesses reach real users, ensure the effectiveness of their campaigns and will also prevent the waste of budget on ad fraud,” says Himanshu Nagrecha, Vice President, India & South Asia, TrafficGuard, an ad verification and fraud prevention company. In this interview with Adgully, he throws light on tips on reducing ad fraud risk for companies, the consequences of not using ad-fraud protection for digital marketing agencies, the numerous possibilities for malicious behaviour in the world of digital advertising, etc. Excerpts:

Could you share some tips on reducing ad fraud risk for companies that are just starting with digital advertising?

Digital advertisements have become a crucial part of the marketing agenda for businesses. It has enabled them to explore new avenues and target potential customers, and it has also improved their growth prospects. However, digitalization also has two sides. The risks of ad fraud remain a potential threat for businesses of any type and size. However, not everything is doom and gloom. There are robust ways through which companies can potentially lower their risks.

Primarily, the firm needs to understand their ad fraud type, as it will give them a bigger picture and also aid them in choosing the apt remedy.

Some of the common types of ad fraud are NHT (non-human traffic), click fraud, ad stacking, domain spoofing, viewability, and others. Once a company has a better understanding of these frauds, they can take necessary preventive measures. These measures can include best practices that reduce the susceptibility to ad fraud while also ensuring that advertising campaigns are seen by real people.

Companies select partners (publishers, agencies, and ad networks) on the basis of performance, reputation and track records.  In order to know what works best for them, businesses can always inquire about their partners' configurations, technology, and fraud protection strategies. The wide range of abilities or technology that these partners possess is a crucial factor to take into account when choosing a partner.

To track and stop ad fraud, businesses can select partners who have reliable ad verification tools. This will ensure that the businesses reach real users, ensuring the effectiveness of their campaigns and will also prevent the waste of budget on ad fraud. Additionally, techniques like CAPTCHA and two-factor authentication, as well as steps like limiting the number of ads that can be served on a single page, can be used to prevent click fraud. The placement of the ads can also be managed using whitelists and blacklists, ensuring that only trustworthy websites receive them.

What are the consequences of not using ad-fraud protection for digital marketing agencies, and how can it affect their clients?

The reality is that there are numerous possibilities for malicious behaviour in the world of digital advertising, and there are always scams and frauds around the corner. One thing that all respectable industry businesses despise is ad fraud. It poses a potential risk that could cause significant harm to businesses if they do not have any ad fraud protection. In fact, according to Juniper Research, an advertiser with no detection or protection in place running a $10 million advertising campaign will, on average, waste $2.6 million of this spend on fraudulent activities.

Some of the implications of not having an ad fraud protection are:

Wasted ad spend: On average, one out of every four clicks in PPC is given to fraudsters and bots, implying that the business is paying for clicks that will not convert or are not real users.If we add another layer of other channels, ad fraud tends to drain almost 30% of every new client’s advertising spend.

Impacts of optimisation efforts: Often, we have observed a high click rate but low conversion. As a result, advertisers put in more incremental budgets to see if there was an uplift in conversions. For instance, in mobile campaigns specifically, misattribution has a domino effect on the advertising performance. A single conversion attributed to the wrong source inflates the value of that source not just by one conversion but by all the subsequent events of that converted user. As a result, the lack of an ad fraud solution that looks across all attribution/ full-funnel will impact marketing ROI and efforts. This leads marketers to under invest in the channels that deliver genuine results, limiting their advertising ROI.

Manual work of identifying fraudulent activities: Without proper automation, brands have little or no control over the traffic source. Manual blacklisting is no longer effective at preventing ad fraud and has become outdated. Additionally, it lacks the capacity to scrutinise traffic and avoid erroneously flagging legitimate sources thoroughly. Furthermore, ad networks may not provide the best transparency. Publishers frequently end up on the losing end of the competition for advertisers due to the sheer number of ad networks available today.

Ad fraud is a real issue, and while businesses are aware of its risks, it is very challenging to completely eradicate it.  However, advertisers do not need to worry about these frauds because they use a leading solution that actively weeds out fraudulent traffic and filters between bots and humans on their ads. With a proper partner, they can relax knowing that they are getting real clicks that will lead to actual business.

Could you explain some of the loopholes in the travel industry that allow BOTS to prey on advertisers, and how can companies in this industry protect themselves from ad fraud?

Advertising is being impacted, and hospitality businesses are losing money as a result of bad actors due to fraudsters' constant sophistication growth and a lack of awareness in the sector. Businesses experience significant budget losses as a result of the artificial inflation of website clicks, app downloads, and incentive redemption from erroneous or fraudulent sources. As an alternative, businesses continually increase the amount of money they spend on their digital marketing strategies, which only increases the risk of ad fraud and the harm it does. We've found that 80% of the erroneous traffic experienced by advertisers in the travel industry is generated by bots. This is a blatant sign that nefarious actors are directly threatening the industry.

As a result, it's critical to comprehend the vulnerabilities that these fraudsters exploit and to take the appropriate steps in order to mitigate ad fraud. Some of the loopholes that are often used are:

• Travel is so susceptible to this kind of fraud in part because there are several independent online travel agencies (OTAs). These OTAs work by scraping information from hotel and airline databases, then selling it on behalf of the latter.
• A lot of high-value loyalty programmes exist in the travel industry as well, and these present a tempting target for fraudsters to seize control of.
• Furthermore, performance networks that are paid to promote app downloads typically deliver up to 30% invalid traffic.  This leads to numerous fraudulent installations and the misattribution of post-install occurrences like hotel and flight reservations.

We discovered through research that campaigns without any kind of anti-fraud protection had six times more invalid traffic. Therefore, marketers and advertisers must take extra precautions to make sure that their budgets aren't going in the wrong direction, given that the travel industry is the most susceptible to ad fraud. Hence, adopting ad fraud protection technology into every advertising campaign is the first step.

The addition of ad fraud technology to other cyber security measures should be considered a core protection tool for the travel industry. To stop the spread of fraudulent traffic, marketers and advertisers need to start implementing this technology widely. This kind of adoption necessitates a top-down cultural transformation. Therefore, using third-party verification tools and ad fraud detection technology is necessary to find the issue.

It is critical to remember that advertising fraud cannot be undone and that is the reason it is significant to protect the invested budget. Therefore, organisations should change their perspectives to prioritise ad fraud from day one rather than trying to mitigate it later, when the damage is already done. Ad fraud detection with the appropriate technologies should be implemented from the beginning to ensure that budgets are well-spent and that ads actually reach the target audience.