Online Advertising Fraud: Types, Causes and Solutions

  • Mark Edwards ·
  • June 28, 2023

Online advertising is one of the best ways to get eyeballs on your products and services. However, it comes with risks. Companies can find themselves unwitting victims of fraud. 

What Is Ad Fraud?

Online fraud is any activity that intentionally misrepresents or manipulates online ads in a way that benefits the fraudster and puts you at a disadvantage. There are many types, including:-

  • Click fraud, where malicious actors continually click your ads, forcing you to spend money, but without any organic intention of purchasing your products
  • Conversion fraud, which generates fake conversions by automating the download of e-books, form filling, and sign-ups
  • Domain spoofing, which is all about pretending to be a legitimate publisher or website to sell ad inventory at a higher price
  • Impression fraud, which is all about generating fake ad impressions to increase the costs for the advertiser or publisher

How Does Online Ad Fraud Work? 

Online ad fraud depends on the actions of a few committed and highly skilled fraudsters who use various techniques and tools to generate dubious or fake traffic without any real value. 

All sorts of tools exist. Bots are perhaps the main enemy of today’s businesses. These mimic human behavior on apps, websites, and ads, making it seem like a human is interacting with content when they are not. Bots usually operate on the user’s device, carrying out actions in the background they are unaware of. They can be extremely harmful to advertisers and may also skew a user’s web experience. 

Botnets are a slightly different fraud approach controlled by servers and peer-to-peer networks. Malicious actors use these to generate massive quantities of fake clicks and conversions, independent of any particular user’s computer. 

Another tactic is proxies. These are tools that hide the true origin of internet traffic. Fraudsters can use them to pretend thousands of different computers and IP addresses are interested in a particular ad, even if it is only one or two. 

Lastly, you sometimes see criminals using traffic generators. These are tools that create artificial web traffic from various sources, including search engines, email campaigns, and social media platforms. People will often use these to manipulate app rankings or drive internet traffic to low-quality sites and away from yours. 

How to Address Online Ad Fraud

For businesses, finding an ad fraud solution is critical to prevent losses. Companies need to discover ways to stop cyber criminals from harming their budgets and destroying their livelihoods. 

The most important approach is education. Advertisers and publishers need to become aware of how big of an issue fraud is, and the impact that it has on their business models.

They also need to develop and implement tools, technologies, and methodologies that reduce the risk of online fraud. AI, machine learning, and blockchain technologies can all help with this. 

Verification and validation is another strategy. Using third-party validation tools can improve firms’ ability to detect fraudulent clicks and other malicious activities, even if they appear outwardly genuine. 

Lastly, companies can seek ways to punish those engaging in ad fraud. Severe penalties may act as a deterrent.

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