Ad Fraud

Billions of advertising dollars are lost each year due to ad fraud. Because programmatic advertising is open to publishers and advertisers of all sizes with little requirements to entry, it is easy for bad actors to join the fray and damage the ad tech ecosystem. Various industry reports have claimed that ad fraud can account for 40-60% of all ad tech traffic. Ad fraud is a serious problem that is plaguing our industry. The good news is that we are taking steps to fight against it.

What constitutes ad fraud?

An ad is considered fraudulent if it has one or more of the following characteristics:

Nonhuman traffic (bots)
Zero chance of being seen
Intentional misrepresentation

Essentially, an ad is fraudulent if the sole purpose of it being there is to generate revenue with no intent of ever being visible to the user.

What are the different types of ad fraud?

This can be broken down into two separate sections – human fraud and nonhuman fraud. Although the industry generally refers to nonhuman fraud, human fraud is also a large concern that must be addressed.

Nonhuman Fraud

Simple bots. These are simple bots that run from another server. They generally have a static ip and user agent, and are easy to block.
Sophisticated bots. These bots are a lot harder to track as they mimic normal human mouse behavior as well as CTRs. On top of that, they switch ip addresses and user agents from time to time.
Botnets. The fraudster can overtake many unsuspecting users’ computers and run the bot program in the background. Because the fraudster generally infects many computers through a botnet and uses very little processing power for each one, it’s very common that the infected users never even become aware of this.
DOS Attacks. AKA denial of service attacks. Fraudsters can also infiltrate websites by overloading the servers with so many bots that the servers fail.
Ghost Sites. Fraudsters falsely produce or steal websites from legitimate content creators. They then can utilize bot traffic to monetize these fake sites.

Human Fraud

Pixel Stuffing (Iframe Stuffing). A 1×1 pixel is placed on a site that the user visits. An advertisement is loaded through the pixel but the user does not see anything. The seller will still generate revenue from this.
Ad Stacking. One or more ads is hidden behind the first ad. Imagine a publisher ad slot for a 300×250 creative that has 2 other 300×250 creatives loaded right behind them. The publisher generates revenue for all 3 creatives, but the user can only see the first creative.
Domain Spoofing. The fraudster can fake a no-name domain so that it looks to the buyer that it is a premium domain, such as businessinsider.com.
Arbitrage. Shady publishers can purchase shady traffic to their websites and monetize for a profit. At a low enough purchase price, one can be almost sure that the purchased traffic is comprised of bots. The publishers then can go around and monetize this traffic at a higher cpm compared to what they bought it at.
SDK Overlap. SDKs are not designed to work together. If multiple SDKs are used in one mobile app, it could be the case that multiple impressions are delivered but only one is viewable by the user.
Click Farms. Real life people are paid to work from home and create meaningless clicks, conversions, etc.
Cookie Stuffing. An affiliate marketing scam where the user makes a purchase and the hidden cookie allows the fraudster to receive a commission for “helping” to generate the sale.

Why is ad fraud so rampant?

Ad fraud is technically not illegal. For someone that knows what they’re doing, ad fraud is a much more attractive way to make money that another form of crooked behavior, such as stealing from a store. Whereas stealing from a store is high risk, medium reward, ad fraud is low risk and high reward. It is a white collar crime that does not yet have the proper penalties assigned to it.
There are low barriers to entry. It is very easy for any publisher or buyer to conduct a transaction through the programmatic marketplace.
The ad tech model rewards volume, not performance. Because so many partners in the ad tech chain receive a percentage cut of the total ad spend, these partners are incentivized to generate as much activity as possible with not as much of a focus on performance.

According to ad fraud prevention company pixelate, ad fraud ran most rampant in the OTT/ Connected TV category.

What can our industry do about ad fraud?

Publishers can ensure that ads are served to real humans by monitoring traffic sources.
Suppliers can vet all publishers on their platforms.
Ad-buying platforms can proactively monitor and block low-quality inventory.
Marketers can utilize their own tools and 3rd party partners for ad safety.

How can you protect yourself against ad fraud?