What is Ad Fraud? How to strategize and reduce risk factors

Online advertising is huge. And advertising fraud too.

The fact is, the world of digital advertising is riddled with leeway for malicious activity, with scams and crushing busts virtually around every corner. Ad fraud is probably something universally despised by any respectable worker in the industry.

What is Ad Fraud?

Ad fraud is a type of illegal activity that deliberately exploits various types of advertising technologies and takes advantage of their flaws.

It's not like it just came out of nowhere: ad fraud has always been around, but with the rise of ad tech and the massive adoption of real-time bidding models, the problem that was once rather a pesky nuisance has turned into a dangerous threat capable of seriously harming businesses.

First, let's talk about the basics.

Types of Ad Fraud

There are several common types of ad fraud:

Print fraud: This is more common in mobile fraud. Users do not see an advertisement per se, but advertisers are forced to pay for it through manipulations. Click fraud: Click fraud involves inflating cost-per-click (CPC) statistics via bots and ghost sites. Companies use click fraud software automation to collect data, identify fraudulent click activity and notify advertisers. Conversion Fraud/Action Fraud: A more elaborate use of bots designed to mimic a full cycle to conversion, but with no actual results. Pixel stuffing: This involves slight manipulations with ad slots (in case the pixel stuffing ads are invisible but present on the page). Technically, they are charged but remain invisible. Nevertheless, the advertiser pays. Ad Stacking: Stacking is placing ads on top of each other. During a visit, an impression is still counted, although an ad remains invisible. Ad injection: where paid ads are replaced by other ads, hitting both advertisers and publishers. Cookie stuffing: Attaching multiple cookies to user consent. This is mostly a coincidence, but it strongly affects affiliates who do not receive their share. Domain Spoofing: Selling ad inventory on irrelevant websites that are misrepresented as relevant.

Unlike other types of digital fraud, which have the luxury of being clearly defined, ad fraud is more of a scam than anything else. Ad fraud is not about stealing money directly from an advertiser's pocket. Instead, it manipulates an advertiser into spending the advertising budget wrongly so that the fraudster benefits.

Why is this possible? Real-time bidding is a messy process with many moving parts and not the most transparent statistics from all parties involved.

For this reason, it's unclear who pays what, even without an ad fraud factor: the numbers always fluctuate one way or another. This means that, in some way, ad technology is prone to ad fraud.

Ad Fraud vs Click Fraud

Because click fraud is a type of ad fraud, they can often be confused.

Ad fraud is a form of online advertising in which criminals use deceptive tactics to steal digital advertising revenue. With ad fraud, an advertiser pays for a website visitor who has never seen the publisher's website, resulting in the publisher receiving payment for the false impressions. Ad fraud can ruin the media and...