Just How Widespread Is Mobile Ad Fraud?

Article ImageWith the rapid rise in adoption of smartphones has come a corresponding rapid rise in advertisers’ attempts to get their messages in front of consumers wherever they are. Pop-up messages and images, in-app ads, native ads, and other means of exhorting consumers to click through to learn more about an organization’s product and service offerings proliferate. While advertisers were initially lured to the online digital marketplace by low cost and easy reach, those dreams of efficiency have been significantly dashed as scammers have increasingly entered the marketplace, making it difficult for marketers (and consumers) to discern what’s real and what’s not. Did that click come from a real consumer or a bot? Are messages being delivered to the right audience? Is information accurate and reliable or fake?

In a recent article for the Content Marketing Institute (CMI), Kirk Cheyfitz, CEO and chief editorial officer at Story Worldwide, issues a warning: “Digital advertising’s many deadly sins now have generated an unprecedented plague of problems for everybody. Singly, each would be a disaster. Together, they’re an existential threat to both advertising and publishing.” The problem is fraud and what we’ve all come to know as fake news.

The consumer solution is to use ad-blocking tools to stop both the annoyance and the potential danger lurking behind these ads. It’s a double whammy for advertisers—increasing amounts of their ad spend are going to support fraudulent activities, and growing frustration with disruptive digital ads are leading consumers to take steps to ignore, or avoid, those ads entirely.  


Lack of Awareness Exposes Marketers to Costly Impacts

In a 2017 paper commissioned by AppsFlyer, “Mobile Fraud: Marketers’ Massive Hidden Threat,” Forrester referred to mobile fraud as “marketers’ massive hidden threat.” Among the findings are the following:

  • 69% of marketers say that, at minimum, 20% of their budgets are subjected to fraud on mobile web; 71% for in-app advertising.
  • 43% indicate that their exposure to fraud has increased over the past year.
  • Only 19% have fraud prevention mechanisms in place.
  • 32% say fraud is a top challenge that prevents them from achieving mobile advertising goals.

Ari Rosenstein, senior marketing director at AppsFlyer, says, “Our research found that marketers’ top challenges preventing them from meeting mobile advertising goals include lack of visibility into their data and lack of knowledge about programmatic media buying, largely due to the increasingly sophisticated types of fraud.” Many marketers, he says, still lack a comprehensive mobile-fraud protection solution.


Types of Ad Fraud

Click fraud is the most common and the most recognized type of mobile fraud, according to Forrester: 42% of respondents indicated they were familiar with click fraud; 41% track it. Still, that’s a shockingly low percentage, given the financial impact and implications of mobile fraud. And click fraud represents just the tip of the iceberg.

Other types of fraud that topped Forrester’s list, and the levels of awareness for each, included the following:

  • Fraudulent traffic, aka irrelevant visits from non-targeted or non-relevant sources that inflate site statistics (38%)
  • Fake (bot/server) installs that trigger fake downloads from campaigns (33%)
  • Forced clicks—not allowing users to close out of content (33%)
  • Click redirection—taking users someplace other than where they had anticipated (33%)
  • Phantom apps, aka apps that consumers attempt to install, but they don’t actually exist (29%)

Lesser-known types of fraud include mobile emulators, which create virtual new devices that don’t actually exist, but that make it appear that downloads or app installs are occurring (9%); install farms, physical locations with actual mobile devices that are used manually, by humans, to install apps (15%); and click flooding or click spam, which involves sending large numbers of fake clicks in an attempt to deliver the last click prior to an install (18%).

“Education in this regard is key; marketers must learn how to properly identify the different types of fraud such as install hijacking, click flooding, and DeviceID reset fraud,” says Rosenstein. DeviceID reset fraud is a newer form of mobile ad fraud that appears to be a legitimate app and bypasses other anti-fraud technologies.

This type of fraud, says Marc Goldberg, CEO of Trust Metrics, is not limited to the mobile space. But, he says, “Mobile is helping people understand that the problem on desktop is happening even more rapidly in apps, from unsafe downloads to apps that are receiving a lot of impressions but not really actually serving them. There are a lot of misleading things going on in the app space.”


Combating Mobile Ad Fraud

Marketers will never entirely eliminate fraud, says Goldberg: “Fraud is never going away in any industry—fraud will always be here; that’s the nature of the world.” He adds, “I think we can look at it as the bad guys are good and the smart guys only can beat the bad guys by being smarter.” That means educating yourself and staying on top of best practices, Goldberg recommends. “Continue to monitor and really focus on being rigorous with your media planning and buying—not just pre-planning, but post-analysis and making sure all partners are aware that you expect no fraud; you expect good quality inventory, and you’re setting expectations at the beginning.”

To combat the effects of mobile ad fraud, Forrester recommends that marketers do the following: 

  • Assign fraud-related key performance indicators (KPIs) to their agency or ad networks and be actively involved in ensuring that targets are met
  • Be proactive to detect and prevent fraud; 48% of respondents indicate that they are doing this
  • Implement third-party validation technologies to help better understand the implications of fraud

Those who take these steps, says Forrester, will reap measurable benefits, including greater ad-campaign efficiency, better campaign insights, and improved ROI and engagement. 

Fraud is a significant problem for every marketer, says Rosenstein. “It is imperative that they address the issue head-on in order to protect themselves,” he says. “Through education, increased transparency from vendors and partners, and access to fraud data, [digital advertisers] can better understand where and how fraud will hit them next.”   

Related Articles

It's probably not surprising that WordPress powers nearly one-third of websites and captures over 60% of the content management system (CMS) market globally, according to W3Techs. But you may be surprised to learn that, at the time of this writing, over 2,300 websites run on WordPress were infected by malware, based on data provided by PublicWWW, a source code search engine.
Facebook has made a number of changes recently to its news feed, driven by issues ranging from Russian intervention in the 2016 elections, the proliferation of "fake news," and consumers' increasing frustration with spam and click bait. In January, Facebook founder Mark Zuckerberg announced that Facebook users would be seeing more posts from friends and family and less from businesses and brands. The exception: business pages that generated discussion among users.
GDPR creates a new set of standardized, strict rules for consumer protection, designed to ensure privacy and data minimization. It's a regulation with reach; just about any global company that collects or processes data for customers based in the EU will be affected. The consequences for non-compliance are not trivial; GDPR stipulates that offending companies can be fined up to 4% of annual global turnover, or €20 million (about $24 million), whichever is higher.
Ad fraud technology is helpful until it isn't. Many publishers, brands, and agencies work with multiple solution-providers, which gets pricy, frustrating and even confusing. Their laundry list of grievances includes sizable data discrepancies between solution-providers, outlandish pricing, and network infrastructure shortcomings. All of these problems are solvable. They require solution-providers to stop pouring money into marketing activities and instead invest in their product. They also require the industry to band together to define ad fraud measurement standards and rethink MRC accreditation.