Entire Asia Pacific region is infested with ad fraud virus

APAC's digital advertising landscape is in turmoil because of rising ad frauds across sectors like digital advertising, e-commerce, gaming, mobile apps and finance. The only way to stem the rot is by taking immediate proactive measures to combat and mitigate the impact of such fraudulent activities that run into crores.

In the APAC region alone, ad fraud accounted for a loss of a staggering $75 billion in 2022, impacting several sectors and undermining advertising effectiveness and ROI. One prominent sector facing ad fraud challenges is the digital advertising industry. Fraudsters employ various tactics such as bot traffic, click farms, and ad stacking to manipulate impressions, clicks, and conversions, leading to wasted ad spend. Nearly 65 per cent of the finance sector, including banking and fintech companies, experience such threats. Phishing schemes, fraudulent display ads, and fake financial services can mislead consumers, compromise data security, and damage a brand's reputation.

Similarly, e-commerce is another sector heavily impacted by ad fraud in the APAC (38 per cent) region. With the rapid growth of online shopping, fraudsters exploit vulnerabilities in the digital advertising ecosystem to defraud e-commerce platforms and advertisers. This includes fake clicks, impression and affiliate fraud, ultimately diminishing the returns on advertising investment.

The mobile app industry is also subject to the challenges in APAC. Fraudulent practices like fake installs, click injection and click spamming will harm mobile app developers and advertisers by distorting metrics, depleting marketing budgets, and hindering accurate performance analysis.

Talking to Bizz Buzz, Himanshu Nagrecha, Vice-president of India & South Asia of TrafficGuard says, “Ad fraud encompasses various techniques used by fraudsters to generate fake clicks, impressions, conversions, or interactions with ads to deceive advertisers and profit illicitly.” And, in the modern world, the fast-growing landscape of digital advertising has been plagued by several types of ad fraud, he said.

According to Nagrecha, “There are different types of ad fraud. They include click fraud, impression fraud, domain spoofing, bot traffic and ad injection.

Ad fraud is a subset of invalid traffic that specifically involves fraudulent or deceptive activities designed to exploit advertising systems.

Now, what is invalid traffic? Well, this refers to any clicks or impressions that may artificially inflate an advertiser’s costs. IVT is generated by actions that provide no legitimate value to the advertiser and covers both fraudulent activities and accidental clicks—any activity that doesn’t come from a real user with genuine interest is invalid.

IVT is segmented into two categories: general invalid traffic and sophisticated invalid traffic. It’s worth noting that both can have a negative impact on ad budgets and performance, even if the IVT is not generated with any malicious intent. General Invalid Traffic (GIVT) is a form of invalid traffic which is easy to detect. It usually happens when web crawlers index web pages sans any malicious intent. GIVT can also come from accidental clicks, and internal traffic.

Sophisticated Invalid Traffic (SIVT) needs more attention. More difficult to detect than its counterpart, SIVT is an actively fraudulent traffic created to drain advertisers’ budgets and generate inaccurate data. SIVT comes from hijacked devices, adware, competitor clicks or advertising botnets.

Companies employ several strategies to prevent ad fraud, including relying on solutions from Google Ads, Networks, MMPs & AMPs. These methods identify suspicious activities, such as invalid clicks, bot traffic, or click farms, and mitigate the impact of ad fraud.

While these strategies have been effective to some extent, ad fraud remains a persistent challenge.

Evolving tactics: The street-smart ad fraudsters keep adapting newer techniques to circumvent detection systems. As new measures are introduced, fraudsters find innovative ways to exploit vulnerabilities, making it challenging to stay ahead of their tactics.

Sophisticated fraud networks: Ad fraud is often perpetrated by organized fraud networks with significant resources and expertise. They employ complex strategies and technologies to conduct large-scale operations that are difficult to detect and combat. However, despite these efforts, ad fraud remains a persistent challenge. One reason for the problem is a lack of transparency and lack of omni-channel capabilities.

Another factor is the lack of industry-wide standards and collaboration. While individual companies may have their own prevention strategies, a uniform approach is required to combat ad fraud effectively. Greater cooperation among industry stakeholders, including advertisers, publishers, ad networks, and technology providers, is necessary to share information, insights, and best practices to address ad fraud comprehensively.

Additionally, the anonymity and complexity of the digital advertising ecosystem contributes to the overall challenge. Multiple intermediaries and programmatic advertising processes create opportunities for fraudsters to exploit vulnerabilities. Therefore, transparency and accountability across the supply chain are crucial for identifying and addressing fraudulent activities effectively.

Overall, while companies have implemented various strategies to prevent ad fraud, the continuously evolving tactics of fraudsters, lack of industry standards, and complexities of the digital advertising ecosystem pose significant challenges, making the current efforts insufficient. Addressing ad fraud requires ongoing innovation, collaboration and industry-wide initiatives to stay one step ahead of fraudsters and safeguard the integrity of the digital advertising ecosystem.