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What is mobile advertising fraud and how is it impacting the industry?

Picture of Kellie Elmerraji

Kellie Elmerraji

mobile advertising fraudAdweek
recently posted an interesting article on the current state of mobile advertising fraud. But before we get into the findings from Forensiq, it’s important to understand the types of mobile ad fraud that are happening:

Impression fraud–This occurs when publishers stack multiple display ads on the same piece of Web real estate so that only the promo is seen by customers, while all of the advertisers are charged.

Click fraud–This entails bots that generate a massive number of clicks on ads, similar to desktop fraud. On mobile, it can also include obtrusive ads that require someone to click in order to close it and remove it from the screen.

Install fraud–This happens when cyber criminals stimulate downloads of apps that are never actually acquired by a consumer.

A report released by Distil Networks in October revealed that ad fraud is now estimated to cost the industry about $18.5 billion annually, which means that for every $3 spent, $1 is going to ad fraud. Why is it costing the advertising industry so much money? Well, every time an advertisement is clicked on, an advertiser is charged.

So what’s really happening? Well, Forensiq looked at more than 60 million programmatic ad impressions from AppLift during 30 days in the fall. Each impression was scored and placed in either a “high risk” or “suspect” traffic categories.

Here is the breakdown of their findings:

  • 34% of the mobile inventory (banners, interstitial and video ads) was at risk of fraud.
  • 12% were deemed “high risk,” meaning they are most likely fake.
  • 22% of impressions were considered suspicious and couldn’t be verified as fraud or not.
  • CPC campaigns are three times less likely to be fraudulent than CPM campaigns because mobile CPC campaigns typically have more steps involved, like downloading an app, which makes it harder for fraudsters to find
  • Fraud is highest at night. The relative amount of fraud increases during nighttime hours as many fraud tactics are not sophisticated enough to take into account actual levels of app usage.

Adam Epstein, COO of adMarketplace explained, “Fraud thrives when advertisers measure the wrong events like page views, video views — those are events that both a human and a bot can do.”

As the mobile market grows and becomes more effective from an overall market side, the fraudsters are also orienting themselves towards this,” said AppLift CEO Tim Koschella. “The loopholes and tricks that they use to game the system are much more effective than desktop because desktop has been around for a while and most of the market has learned over time how fraud works and how to fight it.”

So what do we do? How can we prevent losing billions of dollars? Agencies have started to become more vocal about accountability. A document titled “Invalid Traffic Detection and Filtration Guidelines” was introduced and is setting the foundation of standardization for fraud in 2016. Besides setting guidelines, it will be important to demand legal accountability for fraudsters.

Only time will tell how this fraud will impact the advertising industry, but it is something we will all be paying very close attention to in the coming year.

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