Ad fraud has emerged as a serious concern that undermines the efficiency and integrity of online advertising technology (Adtech). Ad fraud is a deceptive practice that disrupts the normal functioning of advertising operations, leading to substantial monetary losses for advertisers and diluting the effectiveness of ad campaigns.
The global cost of ad fraud is estimated to reach $100 billion in 2023, up from $81 billion in 2022.Statistica
The intention of defrauding advertisers and publishers in the digital advertising ecosystem. The primary goal of ad fraud is to siphon off advertising dollars for illicit gain. Here’s how the perpetrators of ad fraud typically profit:
- Automated Bots: These are software programs designed to mimic human behavior online. They can be programmed to perform actions such as visiting web pages, reloading pages to increase impressions, clicking on ads, filling out forms, or interacting with page content to simulate genuine user engagement.
- Pixel Stuffing: A form of ad fraud that involves displaying advertisements in an area as small as a single pixel, effectively making the ad invisible to the human eye. However, from a system perspective, these ads are registered as served and viewable, leading advertisers to believe real users view them.
- Ad Stacking: A deceptive practice in which multiple ads are layered on top of each other in a single ad slot. In this scenario, only the top ad is visible to users, while the others remain hidden beneath it. However, the ad server registers each ad as served and potentially viewable, causing advertisers to pay for impressions that users never saw. This tactic enables fraudsters to inflate the number of ad impressions and generate illegitimate revenue.
- Domain Spoofing: A sophisticated form of ad fraud where fraudsters misrepresent a low-quality or fraudulent website as a high-quality, premium website. The goal is to trick advertisers into believing they’re buying ad space on reputable, high-traffic sites, when in reality, their ads are being served on sites with low-quality content or even non-human traffic.
- Ad Injection: Utilizing malware or through site hacks, unauthorized advertisements are inserted into web pages without the consent of the publishers or the users. These ads can take the form of banners, pop-ups, or even replace existing ads on the webpage. The ads are often overlaid on top of the page content or injected into blank spaces on the website. This type of ad fraud can be disruptive and deceptive, often leading to poor user experiences and illegitimate revenue generation.
- Traffic Fraud: Fraudsters may also set up websites with low-quality or stolen content and drive bot traffic to these sites. They then sell ad space on these websites to advertisers who pay for what they believe is legitimate human traffic.
In all these scenarios, the fraudsters manipulate the system to generate revenue from illegitimate sources, which leads to advertisers paying for non-human traffic, misrepresented ad placements, or non-viewable ads, ultimately harming their return on ad spend (ROAS).
Industry Standards for Ad Fraud Detection
The industry has widely accepted and adopted guidelines, protocols, and best practices to ensure a level playing field and maintain the quality and integrity of digital advertising. These standards are developed by industry associations and organizations like the Interactive Advertising Bureau (IAB), the Media Rating Council (MRC), and the World Wide Web Consortium (W3C).
In the context of combating ad fraud, industry standards include:
- Ad Verification and Viewability Standards: The MRC has set guidelines for a viewable impression. For instance, for display ads, at least 50% of the ad’s pixels must be in view for at least one continuous second. For video ads, the standard is 50% of pixels in view for at least two continuous seconds.
- Traffic Fraud Detection: The Trustworthy Accountability Group (TAG) certifies companies that follow stringent anti-fraud standards. This includes guidelines for detecting invalid traffic (IVT), encompassing fraudulent bot traffic.
- Ads.txt: The IAB Tech Lab introduced the Authorized Digital Sellers (ads.txt) initiative to prevent domain spoofing and unauthorized selling of ad inventory. This industry standard allows publishers to publicly list authorized sellers of their inventory, providing transparency for programmatic buyers.
- Video Advertising Standards: VAST, VPAID, and SIMID are standards for video advertising, helping streamline the process of serving video ads across multiple platforms.
- Government Regulations: These are not ad industry-specific, but GDPR and CCPA set privacy and data protection standards in Europe and California, respectively. Compliance with these regulations is crucial for businesses serving ads in these regions.
Adhering to these industry standards is crucial for advertisers, publishers, and ad tech platforms alike to maintain users’ trust, reduce ad fraud, and, ultimately, ensure the effectiveness and integrity of digital advertising.
How Do Advertisers Verify An Advertising Platform Is Compliant With Industry Standards?
Ensuring a platform complies with industry standards is crucial for advertisers to protect their investments, maintain brand integrity, and reach their target audience effectively. Here are some methods advertisers use to verify platform compliance:
- Certification Programs: Advertisers can check if the platform has certifications from recognized industry bodies such as TAG and IAB. These certifications assure advertisers that the platform has passed stringent criteria and adheres to industry standards and best practices.
- Third-Party Audits: Advertisers can rely on third-party audits to verify the platform’s compliance. Independent organizations like the MRC conduct audits to evaluate whether platforms adhere to industry standards and guidelines.
- Ad Verification Services: Advertisers use third-party ad verification services to validate ad quality and viewability. These services also verify that ads are served in safe and appropriate contexts, free from fraud. Ad verification tools can monitor viewability, brand safety, ad placement, geographical targeting, and fraud detection.
- Direct Communication and Agreements: Advertisers can directly discuss with the platform about their compliance with industry standards. This includes clear contractual agreements stipulating adherence to standards, viewability requirements, fraud prevention measures, data usage policies, and other important aspects of digital advertising.
- Transparency Tools: Industry initiatives like ads.txt, app-ads.txt, and sellers.json allow advertisers to verify that they’re working with authorized sellers or resellers (see below). These tools improve transparency in the programmatic advertising ecosystem, helping advertisers ensure their ad spend reaches legitimate and compliant platforms.
Publishers place a text file on their web servers that list all the companies authorized to sell their digital inventory. Advertisers and demand-side platforms can then crawl this file to ensure they purchase inventory from legitimate sources.
The ads.txt file helps to prevent unauthorized inventory sales and domain spoofing, where fraudsters misrepresent low-quality ad space as being from a premium publisher. By using ads.txt, advertisers can be confident that they’re buying genuine inventory.
An extension of the ads.txt initiative, designed specifically for mobile app and OTT video environments. Developers upload a file on their web server that lists authorized digital sellers of their app’s inventory, similar to how ads.txt works for web-based inventory.
By checking the app-ads.txt file, advertisers can verify they are buying app inventory from authorized sources, reducing the risk of ad fraud in the mobile app and OTT environments.
Another IAB initiative complementing the ads.txt and app-ads.txt specifications. It provides a mechanism for demand-side platforms to understand the entities who are direct sellers or intermediaries in the selected digital advertising opportunity for purchase.
Supply-side platforms host a JSON file on their web server, which provides information about the identities of the sellers and resellers within the supply chain, including their name, domain, and seller ID. This helps bring transparency to the supply chain and enables buyers to verify the entities they transact with.
By using these methods, advertisers can verify a platform’s compliance, ensuring their campaigns are handled securely, effectively, and transparently.
How Ad Platforms Combat Ad Fraud
To fight ad fraud, ad platforms use various techniques and tools:
- Traffic Analysis: Ad platforms use advanced analytics to monitor traffic patterns. They look for signs of bot activity, like repetitive clicking or browsing patterns that deviate from normal human behavior.
- Fraud Detection Technologies: There are specialized tools designed to detect fraudulent activities. They use machine learning and AI to identify suspicious patterns and block fraudulent impressions or clicks in real-time.
- Ad Verification Services: These third-party services verify ads’ proper placement and viewability, ensuring real people and not bots see them.
- Blacklists and Whitelists: Blacklists are lists of sites where advertisers don’t want their ads to appear, often due to high levels of fraudulent activity. Whitelists, on the other hand, are lists of safe sites where advertisers want their ads to be displayed.
- Ads.txt and App-ads.txt: These initiatives aim to prevent domain spoofing. Publishers list all authorized sellers of their inventory in a publicly accessible file on their website, allowing advertisers to verify the seller’s legitimacy.
What Brands Can Do to Combat Ad Fraud
While ad platforms play a crucial role in combating ad fraud, advertisers can also take steps to protect their investments:
- Use Trustworthy Ad Platforms: Utilize ad platforms that have robust fraud detection measures in place. Look for platforms that follow industry standards and proactively combat ad fraud. Don’t take their word for it; review and verify their certifications.
- Implement Ads.txt and App-ads.txt: If you’re a publisher, implement these measures to protect your domain against spoofing and unauthorized selling.
- Monitor Campaign Metrics: Keep a close eye on your campaign metrics. Unusual spikes in impressions or clicks, extremely low engagement rates, or abnormally high or low bounce rates can be signs of fraudulent activity.
- Update Blacklists and Whitelists Regularly: Regularly update your blacklists and whitelists based on the performance of your ads across different sites.
- Employ Ad Verification Services: Employ third-party ad verification tools to ensure your ads are placed correctly and viewed by real humans. Here are some of the leading ad verification platforms:
- Anura: Anura offers real-time results and detailed reporting to help businesses ensure that genuine human users see their ads, thus protecting their advertising investment. The Anura solution is designed to work across different channels, including display and programmatic advertising, email marketing, affiliate marketing, lead generation, and more.
- Oracle Moat: Moat provides a comprehensive suite of ad verification tools. They offer solutions for measuring viewability, attention, brand safety, and IVT detection and prevention tools.
- DoubleVerify: DoubleVerify offers tools for verifying ad quality and effectiveness. They provide solutions for viewability, brand safety, fraud protection, and performance measurement tools.
- HUMAN: Formerly White Ops, HUMAN offers protection against sophisticated bot attacks and ad fraud.
- Integral Ad Science (IAS): IAS provides a range of solutions to help advertisers ensure that their ads are being seen by real people, in safe environments, and the right context. They offer verification services to protect against ad fraud, viewability issues, and brand risk management tools.
Technological Advancements in Ad Fraud Detection
New technologies like artificial intelligence (AI) and blockchain are increasingly significant in combating ad fraud. They offer new approaches and tools to address this space’s pervasive and evolving challenges.
AI and machine learning (ML) can be used to analyze large sets of data quickly and identify patterns that might indicate fraudulent behavior. For example, AI can detect irregular click patterns or suspiciously high traffic levels coming from a single IP address, which could indicate bot activity. AI can also help identify complex ad fraud tactics that might go unnoticed, such as sophisticated invalid traffic (SIVT).
Machine learning algorithms can also adapt and improve over time, learning from each interaction to better detect and prevent fraudulent activity in the future. The rapidly evolving nature of ad fraud techniques makes them especially valuable in combating ad fraud.
Blockchain technology provides a decentralized and transparent record of transactions, making it an exciting tool for combating ad fraud. In digital advertising, a transaction can be anything from an ad impression to a click or a conversion.
With blockchain, each participant in the ad supply chain can verify the authenticity of transactions. This makes it much more difficult for fraudulent activity to go undetected. For instance, if a botnet generates a significant number of ad clicks, the transparency of blockchain would make these fraudulent transactions more readily apparent.
Moreover, the immutability of blockchain records also makes it more challenging for malicious actors to alter or delete transaction data to cover their tracks.
Blockchain can also aid in improving transparency and trust in the supply chain by ensuring advertisers get what they’re paying for. By tracking ad impressions, clicks, and conversions in an unalterable blockchain ledger, advertisers can verify that they’re paying for genuine human engagements.
It’s important to note that while these technologies present promising solutions, they’re not without their challenges. Implementing AI and blockchain solutions at scale in the advertising industry requires broad acceptance, collaboration, and technological advancements. Moreover, as these technologies evolve, so do the techniques employed by those looking to commit ad fraud, which means ongoing vigilance and innovation are necessary to stay ahead.
Ad Fraud Is Not Going Away
Ad fraud is an ongoing challenge in the digital advertising landscape. Like a game of cat and mouse, the fraudsters and the defenders are in a constant race, each trying to outsmart the other. Given the lucrative nature of ad fraud and the continuously evolving digital ecosystem, it is unlikely that ad fraud will ever completely disappear.
Ad fraud morphs and adapts as new technologies and practices are introduced, creating a perpetual cycle of action and reaction. Therefore, it demands continuous diligence and collaboration from all platforms, publishers, and advertisers. They must remain vigilant, consistently monitor their traffic and ad performance, and adopt the latest technologies and best practices to protect their investments. Ad fraud isn’t just an individual problem; it’s an industry-wide issue. Thus, it requires an industry-wide response—a collective and continuous effort to safeguard the integrity of digital advertising and ensure it continues to be a valuable space for genuine human engagement.