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Advertising Fraud and How it Affects Your Ecommerce Business

2022 07 21 payment fraud in advertising

It’s the year 2020 and Elon Musk has turned his attention away from the skies to something a little more terrestrial. Well, if you think tweets only relate to birds, perhaps not. The latest real-life drama will take to the court stage soon. Twitter is suing Musk about reneging on his $44 billion offer to buy the social media platform. His reasons? He accuses them of false accounts and inflating their followers by, erm yes, billions. So it’s kicking off!

If you delve deeper into advertising fraud, you’ll find that Twitter is not the only culprit. According to Forbes, a single fraudster can make between $5 and $20 million a year. Bigger ad fraud corporations make many multiples of that. Juniper Research estimates that digital ad spend will hit $520 billion in 2023.  They peg $68 billion in digital ad spend lost to fraud this year alone. That’s more than just a couple of kids in a basement playing with bots. It’s a booming industry, and it’s not likely that it will get smaller soon. 

Where data goes to die 

When you decide to spend your marketing budget on buying online ads, you either look at the size of the audience, or the engagement rate of the audience on various websites, platforms and applications to decide where to place your ads. Advertising fraud involves scammers creating fake websites or inflated data to mislead you. Smaller businesses can more easily fall for these traps because they want to grow their brand’s reach and engagement. 

Some ways scammers defraud you include click fraud, ad stacking, domain spoofing, fake app installation numbers, and region-based ad fraud. Instapage, and Opticks published an in-depth article on these various types of fraud and ways to avoid them.  

The same principle that applies to investments applies to online advertising. If it sounds too good to be true, it is! If a website or advertising platform promises above-average engagement rates or reach, it’s probably fake, so start asking questions.

Who is behind advertising fraud and how it can affect your business

Black hat marketers use their extensive knowledge of digital marketing to manipulate ads. Their tactics make their ads easier to find. The ads can also appear like something it isn’t to attract more clicks. Another form of black hat marketing is bots clicking on competitors’ PPC ads to waste advertising spend. 

Competitors can get nasty by clicking on your ads to sabotage your marketing efforts. While foul play can slowly drain your budget, it’s not all that prevalent. Google is also very good at picking up and preventing competitor sabotage. 

Ordinary fraudsters never let a day go by to make an easy buck. They’re sophisticated in other cyber crimes like spam and phishing, and it would be out of character if they did not target online advertising. They remain a threat to the industry. 

Organised crime groups pose the highest threat. It’s complex, large organisations that generate automated and fake activity to get paid on CPM, CPL or CPC basis. It costs the industry and economy millions of pounds each year. The Methbot Ad Fraud Operation is an example of how prolific these schemes can be. 

How to protect yourself 

Instead of reacting to fraud as it evolves, machine learning can mitigate fraud, and stop fraudsters before they get paid.  According to Juniper Research, it could save advertisers over $10 billion a year in ad spend. 

By being full-funnel, you can give your whole organisation access to accurate, real-time performance data. Measure and respond to traffic across your advertising journey to eliminate the need for separate solutions for different campaign types or channels. 

Expert advice is underrated. If you can operate a computer, you can classify yourself as an ‘expert’ in online media. Look for the real experts and use them. They know more about their areas of expertise than you ever will. 

Speaking about experts. Do you work with a payments provider that is an expert in fraud prevention, the latest in payments trends, cybersecurity and much more? Listen to our latest TruevoTalks where we discuss these topics with Steve Brown from Mastercard and Barbara Zamponi, Chief Risk Officer at Truevo.  

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