Display ad fraud: How to detect, prevent, and protect your ad spend

Global digital ad fraud losses are projected to exceed $100 billion by 2024 (Juniper Research, 2024). Digital advertising has altered how businesses connect with consumers, offering unparalleled reach and targeting.

However, it also faces a growing and costly issue of display ad fraud. Global digital ad fraud losses were estimated at $81 billion in 2022, with projections indicating an increase to $100 billion by the end of 2023.

This guide explores the types, causes, detection methods, and prevention strategies for display ad fraud.

Understanding display ad fraud: Definition and examples

Display ad fraud is used to build false impressions, clicks, or conversions in internet advertising.

Criminals manipulate advertising metrics by employing bots, scripts, and other techniques, which can force businesses to pay for interactions that have no real value.

According to a recent analysis by Juniper Research, the amount of money lost to fraud in digital advertising would increase from $59 billion in 2021 to $68 billion worldwide in 2022.

Examples of display ad fraud

Ad fraud has become increasingly sophisticated, employing intricate methods to deceive advertisers. The most common display advertisement fraud is as listed below:

• Fake clicks: Bots or human-operated farms repeatedly click on ads, artificially inflating click-through rates (CTR) while depleting advertisers’ budgets.
• Impression fraud: Framing sources generate fake impressions, creating the impression that an ad has been seen when it has not.
• Bot traffic: Bots mimic human behavior, clicking on ads and visiting websites, making them difficult to detect.
• Ad stacking: Multiple ads are displayed consecutively in one ad placement. The top ad is shown, but all ads are billed as having delivered impressions.
• Domain spoofing: Spammers fake website URLs, showing low-quality sites as high-end publishers, fooling advertisers into paying top dollar.
• Pixel stuffing: They are filled into tiny, undetectable pixels so users do not see them, yet advertisers unwittingly pay for impressions.
• False leads and conversions: They mimic sign-ups, downloads, or purchases and damage CPL (Cost Per Lead) and CPA (Cost Per Acquisition) models.

Why does display ad fraud exist?

Display ad fraud exists because it is highly profitable and exploits the automated nature of online advertising. The reasons display ad fraud exists include:

• Monetary incentives: It is estimated that scammers generate billions of dollars by selling false clicks and impressions of ads. In 2023 alone, ad fraud resulted in $84 billion in lost ad spending.
• Transparency shortfall: Some programmatic advertising platforms operate without transparency, making it difficult for advertisers to track where their ads are placed and whether the audience is real.
• Programmatic buying (automated ad buying): Bad scripts and bots exploit programmatic ad bidding platforms, creating false impressions and clicks before detection tools act.
• Evolutions in fraud methods: Fraudsters continually refine their strategies, utilizing bots powered by artificial intelligence, domain spoofing, and hidden ad placements to evade detection.

Best tools for detecting display ad fraud

The following are some of the top tools used for detecting ad fraud:

• ClickPatrol detects click fraud in display ads using machine learning and algorithms to identify fake clicks generated by bots or malicious users. While its primary focus is on click fraud, it may also help detect other related fraudulent activities.
• DoubleVerify: Finds invalid traffic, detects bot traffic, and ensures brand safety.
• White Ops (Human Security): Bot detection and fraud prevention specialist.
• Fraudlogix: Uses AI to scan traffic quality and filter out fake impressions.
• Integral Ad Science (IAS): Provides real-time fraud detection and ad verification.

Impact of display ad fraud on businesses

The impact of display ad fraud on businesses includes:

• Financial loss: Global expenses associated with digital advertising fraud were predicted to rise from $ 88 billion to $ 172 billion over the five years between 2023 and 2028.
• Biased data and poor marketing choices: Fraud skews crucial marketing data, leads to poor decision-making, and wastes budgets.
• Damaging brand reputation: Advertisements on low-quality scam sites can damage a brand’s image.
• More significant cost per acquisition (CPA): Because clicks and impressions fraud never result in sales, businesses have a higher CPA.
• Waste of resources: Marketers optimize the campaign on counterfeit data, robbing effort from actual tactics.

Types of fraud and detection methods

They include:
1. Fake clicks: Bots generate fake clicks on ads to deceive advertisers into paying for non-existent interactions.

• Detection method: Click fraud detection software.

2. Domain spoofing: Fraudsters create fake websites that appear to be legitimate publishers to deceive advertisers.

• Detection method: Using ads.txt and sellers.json.

3. Impression fraud: Bots generate false ad impressions to make it appear as if the ad is being viewed, inflating stats.

• Detection method: Traffic quality analysis.

4. Ad stacking: Multiple ads are stacked on each other in one placement, but only the top ad is visible to users.

• Detection method: Ad placement verification.

Real-life case study

3ve Botnet Takedown:

In 2017, the FBI collaborated with cybersecurity and digital advertising experts to dismantle the “3ve” botnet.

The operation was sophisticated. Scammers created decoy websites with ads injected into them and instructed bots to interact with the ads, generating fake ad revenue.

The operation was a massive success in preventing widespread ad fraud.

How to detect display ad fraud

How to detect display ad fraud includes:
1. Traffic quality analysis: Search for irregular traffic patterns:

• High bounce rates with low engagement
• Unusually high CTRs
• Traffic from unknown locations

2. Ad verification tools:

• Solutions like DoubleVerify, Moat, and White Ops detect invalid traffic and mark fraudulent ad placements.

3. Click and conversion pattern monitoring:

• A sudden increase in clicks without corresponding conversions can indicate fraud.

4. Domain spoofing check:

• Use ads.txt (Authorized Digital Sellers) files to verify genuine publisher websites.

5. Carrying out IP analysis:

• Scammers use data centers, VPNs, and proxy servers to generate fake traffic.

How to prevent display ad fraud and safeguard your ad budget

They include:

• Partner with solid ad networks: Partner with well-established ad networks that are transparent and have anti-fraud policies. Advertisers like Google Ads, Microsoft, and Amazon Advertising have strong anti-fraud controls.
• Apply Ads.txt and Sellers.json: Utilize these features to ensure that only approved vendors can sell your ad inventory, thereby preventing domain spoofing and unauthorized reselling of your ad space.
• Utilize AI-powered fraud detection: AI can detect fraud more efficiently than human vision. Fraudlogix, Shield, and Integral Ad Science (IAS) are the top AI-powered fraud detection tools. They detect bot traffic, fake impressions, and unusual click patterns.
• Track conversions, not just clicks: Clicks do not always mean real engagement. Set up conversion tracking to focus on actual results, such as purchases, sign-ups, or downloads, so you are not paying for fake interactions.

The future of ad fraud prevention: Emerging technologies and industry efforts

As digital ad fraud evolves, emerging technologies and industry efforts are stepping in to prevent it.

• Blockchain for transparency: Blockchain technology can enhance transparency in digital ad transactions by providing tamper-proof records, enabling advertisers to pay only for verified impressions.
• Machine learning and AI: Fraud detection software that utilizes AI is becoming more responsive and intelligent, employing real-time analysis to identify bot traffic, false clicks, and suspicious patterns before fraudsters can exploit them.
• Industry-wide collaboration: Companies such as the IAB (Interactive Advertising Bureau) and TAG (Trustworthy Accountability Group) are developing global standards and best practices to combat fraud and more effectively protect ad efforts.

Guard your ad spend and get ahead of ad fraud

Ad fraud is a multi-billion-dollar problem that undermines digital ad efforts worldwide. From artificial clicks aided by bots to domain spoofing, criminals continue to devise new methods to defraud advertisers and steal ad budgets.

Without effective detection and prevention techniques, businesses can suffer significant losses, including wasted advertising money, distorted marketing information, and damage to their brand reputation.

Advertisers must employ AI-based fraud detection tools to combat this growing threat, partner with open ad networks, and constantly monitor traffic quality.

Implementing solutions like ads.txt, sellers.json, and blockchain transparency can minimize risks and ensure ad budgets are spent on genuine, high-quality engagement.

Protect your ad spend today, start using ClickPatrol’s advanced fraud detection tool.

FAQS

Q. 1 What is display ad fraud, and how does it impact advertisers?

Display ad fraud is a deceptive practice where fraudsters generate fake ad impressions, clicks, or conversions using bots, scripts, or invisible placements. It results in wasted ad spend, distorted marketing data, and reduced ROI for advertisers.

Q. 2 Can ad fraud appearing in display ads be eliminated?

While ad fraud cannot be eliminated, businesses can significantly reduce its impact through AI-driven fraud detection, verification of traffic sources, and monitoring of ads.

Q. 3 How can advertisers check to see if they are being targeted by ad fraud?

Advertisers can identify fraud by monitoring for abnormally high traffic spikes, inordinate bounce rates, unexpected drops in conversions, and unwanted source traffic. Regular IP analysis and ad placement audits can also identify fraud.

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