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A Guide to Understanding and Defending Against Ad Fraud

Published: June 20, 2017

Author: Mike Thomas

It should be of no surprise to anyone that the digital marketing industry is facing a huge fraud issue. Business Insider estimated that in 2017 alone, ad dollars wasted on bot traffic and fraudulent inventory could reach 16.4 billion, which is more than double the predicted losses of 2016.
While it is impossible to record actual losses, given that so much of fraud goes undetected, it’s evident that fraudulent activities have greatly impacted the digital marketing industry and will continue to do so. While ad spend continues to move to programmatic channels, and as more television advertisements become digital, ad fraud is on the rise – and that’s not going to change.

Who Is Responsible?

“The digital ad industry’s open supply chain is the source of our innovation and the source of our risks”
– IAB President and CEO, Randall Rothenberg

via mediaocean.com

With so many players in the game, and a high profit rate, it’s easy for some advertisers to turn a blind eye to oddly high KPIs. It’s also easy to point the finger of blame at others involved in the digital marketing chain, but the reality is that all companies in the industry are negatively affected, whether it directly impacts their top line or not.
The more advertisers hear about the possibility of a portion of their ad dollars being wasted on fraudulent traffic, the more digital marketing will continue to receive a bad reputation, and the more likely companies will look elsewhere to spend their marketing dollars. Additionally, when artificial supply floods the market, ad rates are negatively impacted. Companies that take a step back and realize the implications of simply ignoring ad fraud should be inspired to develop a defensive strategy.
Surprisingly, not all industry players have currently weighed in on fraud –   that needs to change. For those who have, it’s a great step in the right direction, but further steps in discussing what is being done to prevent ad fraud need to be taken. Some companies have only adopted the simple solution of a retroactive block list, but this is not enough nor is it a sustainable solution. This current game of whack-a-mole has proven not to work. Instead, the industry needs to be proactive and work to create a more secure and transparent marketplace. In order for this to happen, the entire lumascape, from advertiser to publishers, needs to take responsibility.

“Fraudsters capitalize on complexity and use the cracks in the system to inject their poison”
– mobile economist at TUNE, John Koetsier

Ways to Help

In order to get everyone involved, it’s important to outline the key steps companies can and should take:

  1. Educate yourself and your team: Learn about the various types of ad fraud out there and what can be done to help detect, prevent and react to fraud. There are countless incredible resources out there that outline the many types of fraudulent activity, so if you are interested in learning more about the tactics, please search around, or read this great comprehensive article by the team at Tune, TUNE Fraud Series: Types of advertising fraud.
  2. Develop a strategy: This could mean very different things to different companies in the industry. Whether you have built out your own proprietary traffic or ad scanning methods, or work with third-party fraud or attribution vendors, it’s important that some form of cross check is in place. Even with proprietary tech checks in place, having a second or third opinion via a third party allows for more eyes on the process and might track down issues that could have otherwise gone undetected.
  3. Ask questions: Learn more about your partners. Whether they are ad networks, DSPs, technology providers or vendors, SSPs, exchanges, etc., work to gain transparency about their traffic and what type of relationships they have with their own partners. By building close relationships with your partners, you can hopefully gain a better understand of their business models, and work to encourage and promote overall industry transparency.
  4. Monitor all KPIs: Instead of just tracking the one or two KPIs you are most concerned about to ensure ROI, monitor all KPIs so you understand the whole story. Post-install KPIs (e.g. purchases, subscriptions and other engagements) are much harder for fraudsters to fake than ad views, clicks, video completions, etc. So even if you are only buying off of a CPC model, monitoring other KPIs can help you better understand if the clicks you are paying for are legitimate.
  5. Humans + machine learning: While building out or working with superior machine learning technology is great, having an actual internal or external team working to monitor traffic, ads, KPIs, etc., can help catch abnormalities and issues that AI might have missed.
  6. You get what you pay for: Premium inventory for premium prices tends to equal less fraud. Setting up direct deals, PMPs (private marketplaces), and managed buys across premium inventory makes deals more exclusive and helps exclude fraudsters. While these services tend to come at a higher price tag, the reassurance that you’re reaching your desired audience, while also avoiding fraudulent activities, may be worth it.
  7. Discuss goals with fraud in mind: Have discussions with partners about their campaign goals and what is realistic. Asking too much of a partner could lead them to rely on one of their partners that is only brought in to “improve” metrics. Obviously we should always be optimizing for great performance, but be practical, so partners can remain honest. Also make sure to ask questions throughout the life of the campaign.
  8. Discuss fraud before it happens: Fraud can and probably will happen, so having conversations about how to handle it when it does will help make sure all parties are prepared. Outline who will pay for fraud in your IOs, given there is evidence, so that parties are held accountable. That way, if fraud does happen, the resolution has already been addressed. This also helps companies to be less vulnerable.
  9. There is no ‘one size fits all’ solution: Understand that not all fraud detection methods work for all platforms (e.g. a desktop solution might not work for a mobile app). App fraud is more difficult to track than mobile web (e.g. there are issues surrounding measurability and javascript versus ad server tags). Working with an agency like 3Q can help educate advertisers as well as help create a strategy to combat fraud that works for your media plan.
  10. Stay up-to-date: Fraud will continue to evolve and advance, so working to stay up-to-date on all the new fraud techniques and the ways to combat them is important. Here at 3Q, we understand that there are a lot of aspects to take into account when investing spend across digital marketing channels. We are here to help make sense of it all, keep you in the know, and help you execute your strategies – so contact us today!

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