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What is Ad Fraud?
Ad fraud refers to invalid or fraudulent clicks and impressions on online advertisements that cannot convert into actual customers. Cybercriminals artificially inflate ad metrics to steal money from advertisers through fake engagement.
The Coalition for Better Ads estimates that up to 30% of all website traffic is fraudulent. This fraudulent traffic comes from bots, malware-infected devices, hijacked browsers, and click farms. The perpetrators benefit by taking a cut of the fees advertisers pay publishers and networks for the fake ad views.
For small businesses with limited marketing budgets, losing even a small portion of ad spend to fraud can significantly impact ROI. Being diligent about detecting and preventing ad fraud is crucial.
Main Forms of Ad Fraud
While ad fraud comes in many forms, some of the most common schemes that small businesses should watch for include:
- Click injection – Fraudsters use bots or scripts to simulate fake clicks on pay-per-click ads. The advertiser is still charged even if users don’t visit the landing page.
- Pixel stuffing – Web page ad spaces are stuffed with hidden, overlapped ads. The ads register impressions without ever being seen.
- Domain spoofing – Ads get displayed on fake pages mimicking legitimate publishers to earn revenue. Advertisers pay for worthless impressions.
- Attribution fraud – Fraudsters take credit for app downloads or sales they didn’t generate to earn a commission.
- Device fraud – Traffic comes from bots, emulators, and non-human devices like hijacked smart appliances. Awareness of how ad fraud happens is the first step toward protecting your ad budget as a small business.
Impacts of Ad Fraud on Small Businesses
The consequences of ad fraud range from minor annoyance to major revenue loss, depending on severity. Some potential impacts for small businesses include:
- Wasted ad spend – Businesses lose money on fraudulent ad clicks and impressions that never result in conversions. This reduces ROI.
- Skewed analytics – Performance data needs to be more accurate since it includes fraudulent traffic. This corrupts crucial metrics needed to optimize campaigns.
- Lower rank – Poor click-through rates from bots can cause ads to underperform, leading to lower quality scores and higher costs.
- Missed opportunities – Focusing budgets on combating fraud diverts resources from campaigns, innovation, and growth.
- Reputational risks – High bounce rates from fake traffic indicate low-quality sites to search engines, potentially harming organic rankings.
When a small business is operating on a tight margin, losing ad money and analytics data to fraud can have an outsized impact compared to larger brands.
How to Detect Ad Fraud
The first step toward fighting back against ad fraud is learning to detect it in your advertising analytics and metrics. Here are some signs that may indicate an ad fraud problem:
- Unusual spikes or drops in clicks, impressions, conversions, or other metrics
- High volumes of traffic from unknown sources
- High bounce rates and extremely short session durations
- Clicks and traffic from suspicious geographic locations
- Traffic from mismatched devices like desktop clicks on mobile ads
- Consistent clicks at odd hours or holidays when users are less active
- Significantly higher conversion rates than industry benchmarks
Monitoring analytics regularly makes it easier to notice anomalies that may point to ad fraud. Sudden changes in metrics can also trigger closer inspection.
5 Ways Small Businesses Can Prevent Ad Fraud
Small business owners can take steps to minimize ad fraud impact on ad budgets.
1. Use Trusted Ad Networks and Publishers
Stick to well-known, reputable networks like Google Ads and Facebook when starting online advertising. Avoid fly-by-night networks promising lots of traffic at low costs, which are ripe for fraud.
Also, be cautious about who you allow to join your affiliate program or display ads – low-quality sites tend to have higher fraud.
2. Monitor Metrics and Analytics
Review campaign analytics regularly to understand normal traffic patterns and results. Unexplained changes could indicate fraud. Traffic source reports can also help identify suspicious sources to block.
3. Implement fraud detection software
Invest in third-party fraud detection platforms that use sophisticated analytics and machine learning to identify bots and suspicious clicks. This provides the most thorough protection.
4. Optimize Landing Pages
Ensure your landing pages load quickly on mobile devices. High-quality sites tend to attract less automated bot traffic.
5. Adjust Bidding Strategies
Try bid adjustments to minimize spending on sites and sources with higher fraud risk or poor performance. This reduces wasted spend.
Combining fraud prevention best practices with close analytics monitoring is the best defense for small business advertisers.
Third-Party Fraud Detection Platforms
Dedicated anti-fraud services provide the most advanced protection for digital advertising budgets. These platforms use techniques like:
- IP address monitoring
- Sophisticated bot detection
- VPN identification
- Device fingerprinting
- Anomaly detection algorithms
- Fraud blacklists
This allows much more accurate identification of fake vs. legitimate traffic than a small business relying on its limited analytics.
Some top ad fraud protection platforms recommended for small businesses include:
- DoubleVerify – Offers pre-bid avoidance of known fraud, post-bid monitoring, and optimization.
- Fraudlogix – Specializes in identifying bot traffic and suspicious behavior patterns to stop fraud.
- FraudBlocker – Blocks real-time fraudulent traffic to improve ad performance and protect marketing spend.
- Pixalate – Uses bidding algorithms and analytics at the ad impression level to optimize away from fraud.
The cost of these platforms is relatively low compared to the amount they can save in wasted ad spend. Most offer customized pricing for small businesses and add additional features like real-time reporting and support for various channels like display, video, CTV, mobile in-app, etc.
Ad Fraud FAQs
How much does ad fraud cost small businesses?
Industry research indicates small businesses can expect to lose 10-30% of their total digital ad spend to ad fraud on average. For a monthly $5,000 ad budget, $500-$1,500 lost.
What industries tend to be most targeted by ad fraud?
High-value verticals like finance, insurance, software, and e-commerce tend to attract the most ad fraud activity due to bigger budgets. However, fraudsters cast a wide net, so no vertical is immune, including local businesses.
How can I check if my ads are being shown to real people?
Metrics like low bounce rates, longer session durations, geo-targeted traffic sources, and conversions signal that ads reach real humans. Fraud bots tend to leave opposite patterns.
Are Google Ads or Facebook Ads safe from fraud?
Even reputable networks like Google Ads and Facebook Ads are vulnerable to fraud. Their internal protections are limited, so it is still recommended to use third-party verification and fraud blocking for complete protection.
Should I avoid low-cost ad networks to reduce fraud?
Very cheap ad inventory often correlates strongly to ad fraud, even if the network’s reputation seems legitimate otherwise. Steer clear of deals that seem too good to be true.
Final Tips on Combating Ad Fraud
- Test anti-fraud platforms – Take advantage of free trials or demo options to evaluate protection capabilities before committing.
- Share data – Let your ad and fraud detection platforms exchange data to improve bot fingerprinting and blacklists.
- Prioritize quality over quantity – Focus ad spend on trusted sources likely to generate authentic engagement over cheap suspect traffic.
- Check traffic quality often – Periodically sample traffic to confirm it aligns with target audience interests and geo-locations.
- Beware of scams – Ignore “anti-fraud seals” or messages asking you to pay to stop fraud – these are ploys. Only use reputable, well-reviewed vendors.
Wrapping It Up
With the proper precautions, small businesses can ensure their precious ad dollars are spent efficiently. Following fraud prevention, best practices will lead to greater returns on ad investments over time.
We use a proprietary ad click fraud blocking system in the PPC management campaigns for our small business clients.
Key Takeaways
- Ad fraud is a growing threat that can waste advertising budgets through fake clicks and impressions. In 2023, the amount lost to global ad fraud is estimated to reach $84 billion.
- Small businesses with limited marketing budgets may suffer more because of their lack of resources to detect and combat ad fraud.
- Using third-party fraud detection platforms is the most effective way for small businesses to protect their online ads. These services use advanced analytics and machine learning to identify fake traffic.
- Other tips like monitoring analytics, avoiding low-quality ad networks, and optimizing landing pages can also help minimize ad fraud.
- Being vigilant about ad fraud will ensure ad budgets are spent effectively, leading to maximum ROI.
Best, Don Roberts