Ad Fraud: Protect Your Business from Financial Loss

The year 2021 saw the global expenditure on digital advertisements grow to record highs, with the total spending estimated at more than $700 billion. This growth was triggered by the broader reach of digital media such as social platforms, search engines, and video-sharing sites. While positive, this growth has unfortunately also influenced a rise in advertising (ad) fraud propagated via digital media. As we shall detail later, ad fraud has consistently resulted in losses, demonstrating that you need to protect your business from ad fraud and, by extension, the accompanying financial losses. But how can you achieve this? Through the use of residential proxies.

What is Ad Fraud?

Advertising fraud or ad fraud refers to a collective of illegal practices aimed at cheating digital advertising companies for financial gain. Usually, fraudsters use bots to trick the advertisers into parting with large or small sums of money. Collectively, these payouts add up to huge amounts. 

For instance, a study noted that in 2021 the financial losses associated with ad fraud reached $59 billion globally. The report forecasts that this figure will increase to $68 billion worldwide. For context, the estimated loss associated with ad fraud will be greater than the revenue Google generated from advertising in the fourth quarter of its 2021 financial year. Google’s ad revenue stood at $61.2 billion.

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What’s more, statistics show that bot traffic is greater than human traffic. Of the recorded bot traffic, bad bots, which are used to execute fraud, are responsible for more web traffic than good bots. This means ad fraud is only likely to continue well into the future, especially given that the evolution of technology results in better bots, including bad bots.

Types of Ad Fraud

Fraudsters defraud advertisers by employing various strategies that constitute the various forms of ad fraud. The different types of ad fraud include:

  • Spoofing, such as domain spoofing – it entails creating a website whose domain name/URL is somewhat similar to that of a more valuable site; next, the creators of the spoofed site dupe advertisers into parting with large sums of money to secure fake ad space (ad inventory)
  • Hidden ads– this tactic involves techniques such as ad stacking and pixel. Here, scammers target advertisers who pay based on views (impressions) rather than total clicks
  • Including fake affiliate tracking cookies in websites – some websites pay a commission on the sale of products to affiliates who influenced the buyer to purchase; thus, the scammers are paid even though they did not play any role in influencing the buyer’s decision
  • Using bots to generate fake clicks and visits 
  • Blocking markers that identify the country of origin of traffic to websites – this tactic enables scammers to profit from the fact that traffic from some countries is more valuable than from other nations. And by masking the geotag, they can dupe advertisers into believing the traffic originates from countries that fall into the former category
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How to Protect Your Business from Financial Losses and Ad Fraud

You can potentially prevent your business from financial losses arising from ad fraud by embracing technology. As stated, fraudsters propagate ad fraud using bad bots. Thus, advanced tools are recommended to identify them and subsequently block their activity. It is also vital to undertake due diligence by following some best practices, which we will also list below. 

The measures you can use to protect your business from financial losses and ad fraud include:

  • Advanced bot management tools
  • Residential proxies
  • Implement best practices against ad fraud

Advanced Bot Management Tools

Advanced bot management tools train their machine learning algorithms to distinguish human users from bots automatically. Next, the tools are equally capable of alienating bad and good bots by specifically filtering out fraudulent bot activity. This filtration system through technology ensures that good bots and real users continue to interact with ads and various websites containing affiliate tracking cookies like normal. 

Residential Proxies

A residential proxy is an intermediary that intercepts traffic originating from a user’s computer and subsequently assigns the outgoing requests a new IP address that belongs to real Internet Service Providers (ISPs). This anonymization through the use of ISP’s IP addresses prevents IP blocking. Thus, residential proxies ensure that ad verification continues without a hitch. You can also rely on residential proxies to access geo-blocked content as well as unmask geo-masked traffic.

Implement Best Anti-Ad Fraud Practices

Some of the best anti-ad fraud practices include:

  1. Demand and offer more visibility and transparency into the traffic and inventory
  2. Utilize blocking mechanisms or anti-targeting technologies to block high fraud sites and bad bots
  3. Rely on pre-bid filters
  4. Use inclusion or exclusion lists where necessary
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Conclusion

Ad fraud costs businesses billions in financial losses as unsuspecting ad agencies pay out money to fraudsters. Fortunately, there are ways to limit ad fraud, thereby protecting your business from financial losses. These include using bot management tools and residential proxies as well as implementing best practices.

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