By Chad Kinlay, Chief Marketing Officer, Trafficguard

2021 saw an upsurge of digital advertising spending and with it another uphill struggle against opportunistic fraudsters. Yet with preventive measures in place, marketers can stem the tide of wasted advertising dollars — but why are so many choosing not to?

Imagine you had a pie, warm and freshly baked from the oven. You divide it up, eat half, and then throw the rest in the bin. This may seem a crude analogy, but this is the effect of rampant ad fraud on the marketing industry. Every day, marketers spend thousands of hours and dollars planning, crafting, and strategizing a campaign, only for a significant chunk of the proceeds to end up as waste.

It’s true, ad fraud has plagued the industry for years now. Indeed, back in 2016, the World Federation of Advertisers predicted that it would become the second-largest market for organized crime.

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However, last year’s unprecedented spike in global ad spend and e-commerce have widened the window of opportunity for fraudsters. Due to the complex — and often opaque — nature of the digital supply chain, it is hard to predict the total cost of ad fraud. Some Analysts put it at $87 billion in 2022, with the Asia Pacific slated to incur the most losses — approximately $56 billion.

A niggling distraction

As mentioned, ad fraud is very familiar to the advertising community, but, like anything, it remains an ever-evolving threat. At its core, it’s essentially any activity that interferes with the delivery of ads to the intended audience. Tactics used include bots or domain spoofing to falsify the number of times a digital advertisement is clicked on or displayed.

Bad bots and click farms are the most prevalent and familiar forms of ad fraud. However, more recently, other menaces have emerged, including click spamming, whereby fraudsters execute clicks for users who haven’t made them and steal organic users. Geomasking, where fraudsters hide the location of clicks they have generated, has also become more sophisticated. There are also cases of fraudsters increasingly using data centers to hide their fraudulent activity.

Given the exponential scale of ad fraud — Juniper estimates losses will reach $100 billion in 2022 — marketers have an uphill battle to identify and recoup their advertising dollars. Unfortunately, the more money spent on digital ads, the harder it becomes to tackle.

Of course, there are preventative measures businesses can take to minimize losses. Surprisingly though, fewer than expected are choosing to do so. Part of this is down to awareness and training: given the continuously evolving threat, employee education needs to be regular and up-to-date.

Another key reason is that consumers have shifted en-masse to streaming services. Targeting these platforms has now topped many brands’ priorities list while ad fraud remains a niggling distraction for many.

Then there are privacy issues: as regulatory scrutiny increases, Google and Apple are making changes to cross-site tracking, including, in the former’s case, dropping the iconic cookie. As current tracking tools become obsolete, marketers may not see a point in investing in the current tech available.

And finally, we are all guilty of this: not monitoring our campaigns and metrics well enough. Once the thrill of launching a campaign is over, it’s easy just to sit back and hope for the best. But, avoiding close examination of these metrics leaves campaigns wide open to massive fraud. As a result of all these reasons, marketers are failing to fully incorporate a business strategy that will both reduce ad fraud instances and advertising dollars.

An intervention

Although it is easy to be discouraged by the sheer scale of ad fraud, technology today puts marketers in a much better position to fight it. Indeed, artificial intelligence (AI) and machine learning technologies can help reduce ad fraud by as much as $10 billion this year.

AI algorithms can help marketers analyze huge swathes of data from advertising activities, putting them in a better position to detect suspicious behavior. Automation technology is also naturally faster and more efficient than traditional tracking methods, meaning agencies lose less time combing through all their campaigns.

Continuous improvements to AI detection and the prospect of blockchain could set a new dawn in marketers’ fight toward transparency. The latter in particular can use an impression token that eliminates data asymmetry between a buyer and seller — thereby eradicating the opaqueness required for fraud.

As the sun sets on cookies, and with tighter privacy restrictions emerging, it will only become more difficult for marketers to tell how invalid traffic is impacting their performance. Without intervention, invalid traffic will only continue to eat up its share of ad spend.

By now though, the scale of ad fraud is much larger than anything ever imagined by advertisers. As global ad spending continues its soaring trajectory, it is unlikely that fraudsters will stop their illicit activities anytime soon. But with the right preventative measures, using AI and machine learning, businesses can now stop fraudulent activity in their tracks. Only then can marketers finally enjoy the entirety of their hard-earned pie.

TrafficGuard is a cloud-based digital ad fraud protection solution, which assists digital advertisers, agencies, and advertisement networks with fraud prevention and mitigation.