Authored by: Matt Sutton, CRO, TrafficGuard
Digital advertising is one of the marketing industry’s most endemic – and costly – problems, with fraudsters predicted to steal over US$100 billion in 2023. While previously a product of poorly orchestrated programmatic display campaigns, ad fraud today is plaguing every frontier of the digital marketing ecosystem. Now mobile applications have become the latest lucrative target for digital fraudsters.
Last year, the rate of app installations by non-human users worldwide in 2021 was said to be around 7 per cent for Apple iOS apps and 12 per cent for those on Android devices. Indeed, the iOS ecosystem was found to have a whopping 20 per cent post-attribution fraud rate, leading Apple to deactivate around 170 million fraudulent customer accounts last year.
So why is ad fraud so prevalent within the mobile ecosystem? And what can marketers do to prevent further loss of advertising dollars?
Budgets decimated
Mobile ad fraud is a subgroup of ad fraud but is conducted through various devices such as smartphones and tablets, either through web browsers or through mobile apps.
Common types of mobile ad fraud are click flooding, which is when actors send a large number of fraudulent click reports in order to get paid by advertisers for the last click before installation, and click injections, which ‘infects’ a user device at the operating system level and monitors all the installations. With injections, a click is triggered just before an app is fully installed, misattributing the organic installation to the fraudster.
Both types can decimate a marketer’s budget, especially in Singapore where fraud is hitting more than a quarter of ad install rates.
The main reason for mobile applications’ particular vulnerability is simply its numbers. There are millions of apps available on Google Play and the App Store, the majority of which are in fierce competition to drive download and install rates. Customer acquisition has become a huge target for application brand owners thereby, spurring the creation of advertising campaigns to drive this.
However, when these campaigns are tainted by invalid traffic, the expenditure on these campaigns is effectively wasted. The bigger the campaign, the harder it is to identify the underlying fraudulent traffic, giving the bad actors more time to leech more money from a brand’s media spend.
More than waste
If unresolved, ad fraud will adversely harm a brand’s user acquisition and growth potential over the long term.
One indirect result of unchecked ad fraud is its effect on campaign optimisation. After a campaign commences, supply sources will begin to optimise and then scale activity with the best performing sources. However, without a real-time understanding of the traffic’s quality, there is a risk that campaigns are being scaled with sources that are delivering a high proportion of fraudulent installs. This puts the overall success of a campaign at a huge risk of poor performance.
In addition, the presence of ad fraud can also damage a brand’s relationship with its advertising and media networks. A lack of transparency into campaign numbers and attribution is partly why it’s common for advertisers to frequently change networks and traffic sources.
As a result, marketers will have to begin the entire mobile campaign process from scratch – known as a cold start – which can also inhibit the growth of an app’s success. With every cold start, the optimisation and insights gained from the outgoing source are lost. Thus, dollars wasted.
The majority of mobile app advertisers work with a variety of traffic sources at any given time. The advertiser will then allocate a budget to each source with the expectation that they will deliver as many installs as possible. However, when fraudulent traffic hits a campaign, these budgets remain under-utilised. This again compels advertisers to seek alternative traffic sources, compounding the cold start effect.
Preventative measures
Ad fraud is notoriously difficult to resolve. The sheer scale of ad fraud operations is vast and fraudsters are continuously evolving their methods to steal advertising dollars.
Mobile marketers themselves have been slow to respond to the threats, in part due to a lack of awareness and also because of Google and Apples’ impending changes to cross-site tracking. As current tracking tools face obsoletion, markets may not see a point in investing in the current tech available.
As such, many marketers are still failing to execute appropriate measures to combat ad fraud, such as monitoring campaigns and metrics or implementing correct internal procedures. They also may not be investing in third-party tools to track and attribute conversions and screen out fraudulent traffic.
However, given the grim outlook for 2023, alongside the World Federation of Advertisers’ 2016 prediction that ad fraud would become the second-largest market for organised crime, it’s imperative that mobile marketers take preventative steps now.
With advanced technologies like machine learning (ML) and artificial intelligence (AI), the industry can help reduce ad fraud losses by US$10 billion in 2022. AI tools are exceptionally helpful in detecting suspicious behaviour, and can also analyse the data generated from advertising activities and help advertisers minimise financial losses.
Brands should take the time to assess different ML capabilities, pricing models and coverage levels and be prepared to invest in the technologies that provide the strongest defence against ad fraud. At the top end is full utilisation of multipoint fraud mitigation tools that detect and block invalid traffic surgically, in real-time.
The mobile marketing industry is facing some imminent disruption with the impending demise of third-party cookies and increasing privacy concerns. Amid this complex landscape, it is clear that fraudsters will continue to target digital and mobile advertising, syphoning more ad spend and skewing marketers’ metrics.
AI and ML tools are one part of the solution to combat ad fraud. The other, and more critical, is restoring trust and transparency collectively across all parts of the mobile advertising supply chain.
