The digital marketing challenge for banks: How to fight ad fraud

Authored by Himanshu Nagrecha, Vice President - India & South Asia, TrafficGuard.

According to the “Internet in India Report 2022”, produced in collaboration between IAMAI and Kantar, the number of active Internet users in the country is projected to increase from 692 million to over 900 million by 2025. Since consumers spend more time and money on social networking sites, digital marketing has opened the gateway for businesses to reach audiences more effectively. This is where social networking has sparked a revolution in the digital marketing landscape, and it has emerged as the most preferred method of advertising. Nonetheless, technological improvements have also revolutionised various industries, with finance and banking sectors being no exception. Ever since banking has shifted to digital platforms several challenges have come to light and the one major concern that has significantly impacted the industry on a whole is ad fraud.

Ad fraud is an intentional and deceptive practice that exploits online advertising systems, resulting in unnecessary advertising expenditure and reduced effectiveness of marketing efforts. In the banking sector, ad fraud impacts several aspects, including online advertising campaigns, customer acquisition, brand reputation, and overall return on investment (ROI). This is where numerous traditional providers have been pushed to adjust their marketing approach to reach their audience and gain revenues, as simply having a physical space is no longer an option for banks to stay ahead of the competitive era.

Let’s delve into some challenges of Ad-Fraud in the banking space:

Wasted Marketing Dollars: Ad fraud leads to a significant misallocation of advertising budgets within the banking sector. Here fraudsters employ diverse techniques, such as click fraud, impression fraud, and bot traffic, to generate invalid clicks, leading to misattributions on conversions. More often than not, clients are not even aware that they are subject to invalid traffic and ad frauds, this results in them scaling up on wrong partners based on incorrect or polluted data. According to Finextra Research, due to fraudulent activity and invalid traffic, high-street banks have been victims of this trend and are losing a startling $2 million each month. As a matter of fact, rather than wasting this money, it can be used for appropriate marketing initiatives or to reinvest in the company.

Diminished campaign effectiveness: The banking industry is heavily regulated to ensure consumer protection and maintain the financial system's integrity. Compliance with regulations such as KYC (Know Your Customer) add complexity to digital marketing efforts. In this scenario, ad fraud distorts campaign metrics, making it difficult for banks to gauge their digital marketing endeavors' efficacy accurately. Furthermore, fraudulent activities can skew click-through rates (CTRs), conversion rates, and other engagement metrics, making it challenging to evaluate campaign performance precisely.

Impaired brand reputation: Building trust is crucial for establishing a positive brand image in the banking industry. However, due to digital advancements, customers often face concerns about security and privacy when using online services. These concerns create challenges for banks as they strive to cultivate trust, and one significant threat that creates disruption is ad fraud. When fraudulent ads appear on untrustworthy websites, they can negatively influence consumer perceptions of the bank's credibility, resulting in a loss of trust. A Bain & Company survey shows that “data privacy and security concerns” are a significant barrier to cloud adoption in financial services. In fact, 80% of respondents in banking and insurance cited “reputation for security, reliability, and availability” as among their top criteria in selecting a provider.

Strategies to Combat Ad Fraud in Banking

Ad fraud prevention tools: To minimise the detrimental impact of ad fraud on marketing campaigns, banks should prioritize investment in robust technologies specifically designed to detect and prevent fraudulent activities. These advanced tools utilise algorithms and machine learning techniques, enabling them to instantly and swiftly identify and block suspicious activities instantly and promptly. Therefore, banks must invest in robust ad fraud detection and prevention tools to effectively identify and filter out fraudulent activities in real-time.

Publishers with transparency and verification: One of the most effective ways to negate the ad fraud menace is by roping in the services of tech-friendly publishers that are open to third-party integrations, fostering transparency and verification. By implementing third-party ad verification solutions, publishers can effectively monitor their advertising campaigns and identify suspicious or fraudulent activities which, in turn, can help the brand in optimising ad spending. Similarly, by harnessing the power of new-age ad fraud protection solutions, publishers can correctly evaluate ad placement, delivery and interaction, enabling organisations to reach authentic users. Consequently, banking firms must also demand transparency from their advertising partners regarding the sources and placements of their ads. This can go a long way in enhancing brand reputation and customer trust.

Analysis of user behaviour and foster awareness: Banks can leverage user behavior analysis to identify abnormal patterns and anomalies that may indicate fraudulent activities. Therefore, by examining metrics such as user engagement, session durations, and conversion rates, banks can detect discrepancies and take appropriate action to mitigate ad fraud risks. In addition, by fostering a culture of awareness and educating their marketing teams, banks can empower their staff to promptly identify and report suspicious activities.

Continuous monitoring and optimization: Continuous monitoring of key performance indicators (KPIs) and verifying ad placements on a regular basis have appeared as one of the important strategies for banks to proactively identify and handle possible ad fraud issues. As a result, brands can use analytics tools to spot anomalies or questionable tendencies in order to monitor KPIs and identify inconsistencies in ad performance.

In a nutshell, by implementing these strategies, banks can mitigate the challenges posed by ad fraud in their digital marketing efforts, protect their ad budgets, maintain brand reputation, and further provide a safer online experience for their customers.

All Things Considered

There’s little doubt over the transformation and exponential growth of the banking sector by virtue of digitalisation, but it has also brought a number of modern-day challenges such as ad fraud to the fore. The threats posed by invalid traffic and ad fraud have significant consequences that are impactful for marketing teams, the C-suite, and customers alike. Therefore, the onus is on enterprise businesses operating in the banking sector to leverage preventative tools that are credited with stopping invalid traffic before affecting the company’s budget to enhance resource efficiencies and curb ad spend.

The banking firms of today need to find a reliable industry partner in their bid to balance transparency, automation, and accuracy to relieve the manual reconciliation burden from the financial service provider and focus on critical areas that require immediate protection across all paid marketing channels. Partnering with the right ad fraud prevention solution providers can also help businesses redirect their ad budget to real users and enhance the brand's ad spend ROI, helping marketers gain a competitive edge over their counterparts.