The cost of ad fraud is bigger than you think, costing marketers £1.89billion globally in the first half of the year.

The World Federation of Advertisers forecasts that by 2025, £38billion will have been wasted in fraudulent activity annually – that’s millions of pounds being wasted on ads that are not seen each day.

New research from Zenith forecasts that online advertising will account for 52 per cent of global ad spend in 2021, exceeding the 50 per cent mark for the first time, up from 47 per cent this year.

This comes after mobile, online and digital market research specialists Juniper Research’s recent prediction that total spend on digital advertising would reach $520bn by 2023, rising from $249bn this year.

The continued growth in ad spend, in combination with a growing risk of ad fraud means it is more crucial than ever for marketers to truly understand the effectiveness of their campaigns and to protect their ad spend.

The severe cost of ad fraud

Ad fraud is a booming industry, especially on mobile. As devices, channels and platforms proliferate, user consumption patterns have evolved – and the threats from bad actors are evolving too.

We often refer to fraud as a game of cat and mouse, and after massive bot attacks in the summer of 2018, protection solutions found ways to counter the attacks. But since then, ad fraud has evolved with schemes capable of unlimited scale – it is fast becoming a multibillion-pound industry with recent reports claiming this could top £30billion globally. Fraudsters are becoming more advanced, using bots that can mimic the behaviour of how real users interact with their smartphones and mobile devices.

Because this engagement appears genuine, it is increasingly hard for marketers to identify which activity is real and which is fake. On top of the financial impact to brands, there is also a huge risk to reputation if engagement is based on fake activity.

This activity is interfering with metrics, and not matching up to actual figures and revenues. By implementing multi-layer security, advertisers can put in place measures to spot and counteract the growing threat from the fraudulent activity quicker.

Understanding the threat

Facebook recently filed lawsuits against two app developers for generating fraudulent revenue using the platform. To see one of the biggest tech companies take such forceful measures to combat malicious activities is reassuring. It’s likely this won’t be a unique case in the future as fraudsters become more specialised.

As fraudsters continue investing heavily to learn how real users behave, they will continue to scam companies and pocket increasingly large pay-outs as a result. This is achieved by acquiring apps and making real in-app purchases to boost this deception.

A prominent concern for the industry is the manipulation of important and sensitive data. Fraud contaminates genuine data and insights that businesses rely on to make decisions.

We conducted a report to delve deeper into this issue, “2019 State of Mobile Fraud”. This looked at 2.5billion app installs across 9,500 separate apps over six months and uncovered the true scale and sophistication of attacks by fraudsters.

We discovered that advertisers lost $2.3bilion of ad spend to fraud in the first six months of this year. Further to this, 22.6% of non-organic app installs globally can be classed as fraudulent.

The longer the threat lingers, the greater the strain on the resources, relationships and trust between brands and their marketing partners. If strong trust does not exist with partners and consumers, or in the information used to make data-driven decisions, the entire business model is at risk.

Protecting ad revenue

The speed at which fraudsters adapt is accelerating, from one to two months in 2018 to as little as two to three days today. Marketers’ livelihoods in the age of fraud require a comprehensive approach to security, similar to the security measures we take to protect our homes. From an awareness of the different threat practices to the implementation of cutting-edge technologies to analyse user behaviour, businesses can identify emerging patterns to flag suspicious activity to block attacks.

Marketers need to remain vigilant by keeping on top of the latest trends and vulnerabilities being exploited. Businesses need to support their teams so marketers can leverage data sets and tools with machine-learning and artificial intelligence to identify threats, giving them the power to fight back.

When fraud manages to get past the initial defence, marketers require a solution for enabling reconciliation. This is an important step forward in combating app install fraud and responsibility must be taken seriously so that bad actors continue to be thwarted. These measures will potentially save advertisers additional millions per day in wasted ad spend.


Written by Paul Wright, Managing Director, UK, France & MENA, AppsFlyer

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