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Ad Fraud in Paid Advertising Every Business Must Know

Ad fraud is a deceptive practice of making advertisers and businesses pay for fake impressions, clicks, installs, or conversions. Here’s how you can detect and protect your ad budget.

Seeing inflated impressions, clicks, or other metrics in your advertising channels can be alarming, especially when they’re generated by bots. This is the reality of ad fraud; scammers exploit your weak spots in your campaigns, making you spend more than necessary. While paid ads deliver real value for your business, staying vigilant against these schemes is essential.

Ad fraud is a global problem that costs companies billions each year. It drains return on investment (ROI), skews performance data, and creates distrust in digital channels. For businesses planning to invest in advertising, understanding these threats is crucial in protecting both budgets and strategy.

Key Takeaways

• 29% of invalid traffic came from mobile apps, a growing concern on ad fraud. [Pixalate]
• Advertising fraud comes in many forms and can quietly drain your ad budget.
• Fraudsters target multiple platforms. This includes social media, search ads, programmatic, and mobile, making no channel completely safe without proper checks.
• Click fraud is just one type of ad fraud; it can also manipulate impressions, installs, and more.
• Businesses can work with trusted ad networks, use fraud detection tools, and regularly audit ad spend to lessen the chances of falling victim.

Common Types of Ad Fraud

Paid ads scams can take on many forms before you even realize it. Here are some of the most common types of ad fraud, so you’ll know what to watch out for:

Impression Fraud

This is a type of advertising fraud that involves manipulating the number of times your ad was “seen.” Imagine paying for 100,000 impressions in a campaign, but only a fraction of those were actual real people. You’re basically spending on empty numbers for impression-based KPI and missing a lot on boosting marketing campaigns. 

To learn about this KPI type, check out this quick guide:

Display Fraud

It’s one of the most widespread forms of ad fraud that targets display ads that appear on websites. It works by making ads seem visible to users when they actually aren’t. This essentially means paying for exposure that never reached your audience.

Affiliate Fraud

In affiliate marketing, fraudsters manipulate systems to earn commissions illegitimately. They often use tricks to bypass this system. In 2022, PR Newswire reported that industries faced $3.4 billion loss because of this fraud. This shifts the concern from evaluating if you’re a victim to how much you actually did lose.

App Install Fraud (Mobile Fraud)

Mobile fraud happens in mobile advertising, where people fake app installations to milk attribution systems. This messes with user data, making it difficult for businesses to optimize organic customer journeys.

How Ad Fraud Works Across Channels

Frauds can be found in your search, social, and mobile marketing campaigns. The key to effective campaigns is understanding how it works. Here’s how each type of fraud functions across different channels:

Social Media Advertising

According to EMarketer, 60% of media professionals believe social media is the most vulnerable to ad fraud. This is because fraudsters can manipulate key performance indicators like views, engagement, and video completions.

Search Advertising (PPC)

Search ads are a prevalent target of click fraud. This happens when bots, competitors, or even malicious affiliates repeatedly click on your pay-per-click (PPC) ads without intending to convert. It distorts your performance data, making it harder to optimize campaigns.

Programmatic Advertising

This involves automated auctions for ad inventory. It works through multiple intermediaries, where fraud can sneak in. Scammers exploit this with tactics by domain spoofing, ad stacking, or showing ads in non-viewable placements. In fact, 15% of ad spend is wasted on these clickbait websites. 

Mobile and App Advertising

Mobile app systems are vulnerable, with around 25-31% of fraud app installations on Android and iOS platforms, according to NEXD Insights. Common tactics include click injection, device farms, and spoof installations. 

Ad Fraud vs Click Fraud: What’s the Difference?

Click fraud and advertising fraud are often used interchangeably, but there are distinctions between them. Ad fraud refers to the broader term of advertising scam behaviors like fake impressions, domain spoofing, and more. Meanwhile, click fraud aims to drive up cost per click or waste ad spend by disguising fake traffic as legitimate. 

While all click fraud falls under ad fraud, not all ad fraud involves clicks. Understanding the difference matters as the first rule of ad fraud detection. It involves monitoring click-through rates, detecting sudden spikes in clicks, and comparing behavior metrics. In addition, preventing other forms of fraud may require third-party validation.

To learn more about click fraud, here’s a separate guide for your reference:

Cross-channel Strategies for Ad Fraud Prevention

There are strong, layered strategies businesses can use to defend themselves against fraudulent marketing. Here are ad fraud prevention practices that work across channels:

Verify Inventory for Smarter Targeting

Work with verified ad networks, publishers, or platforms that provide transparency into where your ads are shown. It’s best if you have a whitelist of sites you trust and avoid suspicious publisher networks. Regularly review your inventory for Made-For-Advertising (MFA) sites or low content sites.

Monitor Engagement and Behavior

Besides raw clicks or installations, monitor your downstream engagement like time on site, scroll depth, and quality conversion leads. A high volume of clicks with little to no sales or sign-ups can indicate fraudulent activity. Sudden traffic surges from unusual locations should be treated as potential red flags.

Turn clicks into conversions through Meta Ads here:

Validate Attribution

Use multitouch attribution and verify leads or installs through third-party tools. Ensure Software Development Kit (SDK) verification for app installations. It’s best if you reduce reliance on easily manipulated identifiers and check for click injection or install hijacking.

Use Fraud Detection Tools and Strategies

Ad verification platforms, fraud detection services, bot filtering, and invalid traffic (IVT) monitoring can help address performance measurement workflows. Implementing these strengthens campaign integrity by giving marketers clear insights into where their budget is going, ensuring ad spend is invested wisely.

Source: Pixalate

Allocate Budget and Conservative Metrics

Focus on high-quality outcomes instead of optimizing purely for click-through rate. Keep some of your budget in safe channels or well-trusted vendors, where cost-per-lead or cost-per-install aligns with higher quality outcomes.

Do Regular Audit Transparency

Demand transparency from partners, agencies, and publishers by auditing your ad spend frequently. Ask specific questions like “Which publishers delivered the impressions?” or “What percentage of traffic is flagged as invalid or non-human?”. This can help you decide which areas you should allocate your money.

Conclusion

Ad fraud can steadily exhaust your marketing budget and often goes unnoticed until performance issues appear. Inflated metrics may create false confidence, leading businesses to overspend or miss growth opportunities. That’s why staying informed and adapting to new fraud tactics is critical.

With Syntactics Inc., you can run campaigns that are both efficient and reliable. We specialize in PPC management services in the Philippines, so your business can drive targeted traffic through Google and social media advertising. Leverage high-performing campaigns and innovative strategies with us today. 

Frequently Asked Questions (FAQs)

What is digital ad fraud?

Digital ad fraud is a deceptive practice of making advertisers pay for fake impressions, clicks, installs, or conversions. It’s carried out by bots, click farms, or fraudulent affiliates. It delivers no real customers, costing businesses money and messing up their marketing data.

How to deal with ad fraud?

Dealing with ad fraud includes closely monitoring post-click engagement and working with trusted ad networks. If fraud is detected, document and report it to your ad platform for possible refunds or credits. Being proactive allows you to reclaim wasted spend and strengthen campaign integrity.

How can ad fraud be prevented?

Ad fraud can be prevented through smarter targeting, fraud detection tools, transparency from partners, and regular performance audits. Vigilance and right resources can protect your budget and make sure your ads reach genuine audiences.