Common Types of Ad Fraud—Advice for Protecting Your Advertising Budget
Updated · Oct 07, 2022
When people think of “fraud” and “advertising” in the same sentence, they often think of false advertising, where a business bamboozles consumers into buying bunk products.
While that’s always a concern, businesses can just as easily be hoodwinked and end up paying thousands to illegitimate advertisers.
That’s why we prepared this guide on ad fraud.
In it, we’ll go over various types of fraud and provide a couple of tips so you can protect your budget.
What Is Ad Fraud?
Ad fraud encompasses many moving parts.
Among other things, it involves publishers, ad networks, or affiliates inflating traffic and clicks, or imitating other sites, in order to be paid more for adverts without actually generating leads for the business that’s advertising.
This is done in a number of ways, and the culprit can range from unethical networks to third parties messing with the process from afar.
Types of Digital Ad Fraud
Let’s look at some specific types of fraud.
Domain spoofing is a type of fraud that occurs when publishers imitate high-traffic websites in order to charge more for advert placement or to trick internet users into providing ad impressions.
These sites can go beyond advertising malpractice and be used for phishing. If your adverts appear on these sites, besides the ads being wasted, it can also create a negative brand association.
Pixel stuffing is a type of fraud that occurs when unscrupulous publishers stuff their web pages with pixels, which are basically invisible ads, in order to inflate their ad impression numbers.
If businesses suffer marketing fraud by having their ads stuffed into pixels, they’re paying for impressions they aren’t actually getting.
This tactic is all the more damaging when combined with stacking and bot traffic, which we’ll discuss soon.
Cookie stuffing is when a third-party website inserts unauthorized tracking cookies into a user's browser.
While cookie stuffing can be used for many things, in terms of ad fraud, these cookies are affiliate cookies. The third party will stuff cookies into users' browsers, despite not advertising businesses.
Users can get rid of them, but businesses don't have an easy way out.
If the user happens to buy something from any of these businesses, the third party will get a commission fee, despite having done nothing for it.
Cookie stuffers tend to take a “shotgun” approach and stuff cookies from as many sites as possible in the hope of users buying from at least one.
Stacking is the practice of placing multiple advertisements on top of each other on a single web page.
Only the top ad is shown, but all ads load, meaning they count as impressions.
When combined with pixel stuffing, fraud advertising parties can pack tons of ads onto a webpage, losing businesses a lot of money in the process.
Bots are tools that automate processes. When deployed with malicious intent in mind, bots are used to imitate people.
Scammers can use bot networks to click on ads thousands of times per day or generate false impressions and defraud advertisers out of millions of dollars.
In fact, Uber reportedly lost a combined total of $100 million on bad advertising. Quite a blow, even if the company is worth billions.
This broad type of advertising fraud sees criminals doing things like injecting legitimate ads with redirects to phishing sites or attempting to install malware through adverts.
While this can affect users and use legitimate adverts for illegal activities, it’s also harder to detect because honest networks can be compromised.
SaaS and app companies can be affected by this when criminals use bait apps to install the companies’ software on users’ devices forcibly.
They’ll end up paying scammers for downloads user’s didn’t want, risking backlash from the users and tarnishing their reputation.
How to Detect Digital Advertising Fraud
Unfortunately, as with many illicit activities, these fraudulent behaviors are hard to detect, but there are a few things you can do.
For starters, keep an eye on your ecommerce metrics. More specifically, compare the number of impressions you’re getting to users actually answering your call to action.
If impressions are incredibly high, with little or no clickthrough, your ad has likely been pixel stuffed.
You must also pay attention to large spikes in activity that may indicate bots or look for dramatic dips that could imply malicious redirects.
By keeping a close watch on these indicators, you can get an early warning sign of potential fraud and take steps to mitigate the risk.
Tips for Avoiding Digital Ad Frauds
While it can be difficult to eliminate the risk of fraud completely, there are steps that businesses can take to try and mitigate the damages.
By taking these precautions, you can reduce your exposure to fraud.
One of the most important things that businesses can do is to budget carefully for their online advertising campaigns.
By being mindful of how much money is being spent on ads.
It’s a good idea to set a spending limit.
This way, even if you are hit by fraud, you can mitigate the damage rather than be hit with a bill for thousands.
Focus On Quality
Choose reputable ad networks and place your ads on trustworthy sites with a history of offering high-quality traffic, and no evidence of ad click bots.
This will involve a bit of research.
In short, you need to find out if a particular network has a shady track record.
Vet Affiliates Thoroughly
Finally, when working with affiliate marketing, you must vet affiliates to ensure that they are legitimate and that their traffic is coming from where they claim it is.
You can also opt to pay commissions instead of paying for impressions or clicks.
This way, you're only paying after you’ve generated a sale.
Be Cautious of Certain Countries
In recent years, click farms have become a growing problem for businesses that rely on online advertising.
Click farms are facilities that pay workers to do impression fraud and generate fake clicks on ads. These clicks can then be sold to businesses that want to inflate their traffic metrics.
The idea is to then inflate the value of sites for advertising and allow the site to be paid for fake clicks.
Click farms are often located in developing countries, where labor is cheap, and the regulations are lax. As a result, many businesses have unwittingly been used by click farms, resulting in wasted money and inflated traffic numbers.
Limiting your adverts to your own country or excluding known click farm countries can help guard against this. This is harder if you do cross-border ecommerce.
We covered the basics of what ad fraud is. A simple definition can hardly be given as there are various schemes that serve different purposes and harm different parties.
Indeed, there are many different types of ad fraud, a lot to look out for, and even more must be done to stay safe. However, online advertisement is often essential.
By approaching it carefully and doing your research, you can ensure the best ad spending for your business.
Garan is a writer interested in how tech reshapes the environment, and how the environment reshapes tech. You'll usually find him inoculating against future shock and arguing with bots.