According to fraud expert Augustine Fou, ad fraud is more lucrative than tax fraud, counterfeiting goods or being a Somali pirate! How big is the problem? A report by The&Partnership estimated as much as 20% of all digital ad spend was wasted in 2016. Just under £10 billion. In 2017, ad fraud could cost brands well over £10 billion.

One of the blessings of online advertising is the ability to easily set specific objectives and monitor performance. As advertisers, we monitor actions people take online to gauge the success of campaigns. Not all actions are equal, though. Some might be far less valuable that we might expect. Yes, it’s time to talk about ad fraud...

What is ad fraud?

Ad fraud is characterised by non-human traffic, hidden ads and intentional misrepresentation. As you’d expect in such a lucrative, shady industry - types of ad fraud are diverse and can be complicated. The bottom line is that lots of brands are paying for actions that are worthless.

Fraudsters often use bots to generate fake actions. These bots can mimic legitimate human browsing activity but it’s all pre-programmed and ultimately fake. These actions could simply be page views or clicks, but they can also include more complicated actions like form submissions.

Hidden ads can be served to an unsuspecting, real-life audience. The impressions - and occasional actions - that these ads generate are fraudulent. Some ads are hidden by a practice referred to as ad stacking. Multiple ads load on a single page view but only the top one is visible. Other ads can be loaded in a 1x1 pixel iframe, where the ads are loaded but practically invisible.

An example of intentional misrepresentation is domain spoofing. This is where a high profile or reputable domain name can be hijacked so advertisers think they are buying impressions on that site. This is particularly prevalent when ad spend is high and when there are limited places available to serve ads.

One way to avoid ad fraud is to avoid automated, programmatic advertising. Due to the nature of the ecosystem, this is where the vast majority of ad fraud originates from. This could require manually selecting the publishers - and placements - where you serve your ads. Not being able to scale these types of campaigns with technology is far from ideal, though.

How can we stop ad fraud?

The leading players in the digital revolution, including Google and Facebook, have supported an initiative by the Interactive Advertising Bureau to reduce ad fraud, improve user experience and increase brand safety in digital advertising. A so-called Gold Standard of digital advertising.

One of the requirements is for publishers, sites that serve ads, to provide details of who is authorised to sell space on their sites - by uploading an “ads.txt” file. This would clamp down on unauthorised reselling, making it more reliable to scale campaigns with programmatic advertising - reducing the need to manually contact publishers directly.

This shouldn’t discourage you from online advertising. It can prove to be much better value than traditional advertising and - despite the obvious challenges - it is possible to measure the value in most activities. As you’re aware of the challenges the industry is facing, you can continue to ensure your campaigns are optimised against truly valuable objectives and make sure you are comfortable with the measures of success.