How Ad Fraudsters Make Money at Your Brand’s Cost

It is critical for marketers to understand the financial and strategic threat posed by online ad fraudsters in an expanding digital landscape. We live in a world where the prevalence and financial value of online advertising and marketing are increasing. This has led to an explosion in the techniques and impact of ad fraud. The economic losses caused by ad fraud are estimated at $5.8 billion globally. This is expected to continue to rise in the coming years with the continued expansion of digital advertising. There are many misunderstandings about what constitutes ad fraud as it can take various hidden forms. Businesses need to know what ad fraud is and how scammers use brand marketing to make money in order to take preventative measures to avoid it in the first place. 

Ad fraud is the attempt to defraud digital marketing networks for financial gain while causing them to lose their money on fake advertisement websites and apps. Scammers use various methods to trick advertisers into directly paying them by promising audience growth, increased engagement, and more website hits. Newer and smaller businesses can easily fall for these traps as they glorify their website engagement and are more likely to want to grow their brand’s reach and engagement. 

For instance, you may be asked to make payments for your advertisement on a small and likely fake website that is pretending to be a reputable domain. This can lead companies to waste money while ruining their marketing strategy, as there is little to no chance of the advertisement being seen by the public. This directly affects your brand’s reach especially if you don’t have the budget available to duplicate advertising efforts on reputable marketing platforms.

Ad fraud does not always have immediate, noticeable financial consequences, making it even more harmful and difficult to track and stop. After losing large amounts of money and seeing large, consistent drops in engagement, brands figure out they are being scammed. However, the harm has already been done and their money is long gone. After learning how ad fraudsters make money and how it works, you can prevent them from ruining your business. 

Some of the major ways in which digital ad fraud works include click fraud, ad stacking, domain spoofing, fake app installation, and region-based ad fraud. Fraudsters especially exploit small businesses and new marketers who are unaware of the financial consequences of ad fraud and don’t know what to look for to avoid it.

The most common type of ad fraud is click fraud or click spam. These can also be  referred to as click-farms. In this scenario, scammers generate revenue when they use fake clicks, sometimes from real people paid to click on ads from multiple devices at a time to take credit for an app install or website visit. When users use their website, clicks are executed on their behalf without their knowledge, benefiting scammers while boosting their engagement to reach more people. Meanwhile, the companies paying for advertising space get swindled and reach no one in their intended audience despite the clicks being from real people. 

Another common type of ad fraud is domain spoofing when scammers pretend to have a more extensive reach than they actually do in order to receive payment from marketers. Fraudsters accomplish this by spoofing a device to appear as multiple, creating the appearance of increased web traffic, or other content interactions. These actions directly impact business’ initiatives to increase reach to real potential customers and optimize marketing costs. Geomasking obscurs information, changing the geographic identifier from one location to another. This method of ad fraud is especially harmful to marketers targeting an audience in a specific location, because the message is not going to people in the desired target area. 

Fake app installation is another strategy that many ad fraudsters implement in trapping businesses and marketers. Teams of people are paid to manually install different apps and interact with them regularly, click various features, and perform simple actions. This activity causes the app to appear active and even popular, attracting businesses and brands, leading them to market their content. However, as the clicks and installations are all fake, only the phony app owners benefit from the advertisement spending. The companies and marketers, on the contrary, lose their money because the marketing did not reach any real audience members. These ad fraud techniques can damage your business and marketing strategies, yet, these can be prevented with tools like BDEX’s ad fraud-free data guarantee.

In general, companies should be careful about using marketing services that seem too good to be true, or promise explosive growth over a short period of time. Although it may be tempting to see your KPIs improve drastically, and internal pressure might be mounting to get results by any means necessary, the best way to build an engaged audience is through real people and time, not click-farms and quick-fixes. An engaged audience will lead to increased genuine interaction with company content, better sales leads, and a stronger brand over time. 

As ad fraudsters gain more complex strategies and tactics, the technology required to prevent ad fraud also advances. With the prevalence of ad fraud, advanced fraud prevention technology has become a must-have solution of the day for marketers as these scams can cause companies to lose much more money than they initially realize. BDEX’s ad fraud-free data guarantee is equipped with the latest technology and prevention tools that ensure your return on ad spend improves by targeting the right people (who are not fraudsters). You can protect your business and resources by preventing ad fraud in its many forms, click frauds, and bots. Additionally, you can talk to an expert about how to avoid the impacts of ad fraud as you plan your company’s next marketing campaign. 

We suggest following Dr. Fou on LinkedIn for informative daily posts on ad fraud.