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Navigating the Minefield of Mobile Ad Fraud: Strategies, Insights, and State of the Industry

Mobile ad fraud is a significant challenge within the advertising industry, undermining the effectiveness and efficiency of mobile campaigns. Understanding the various forms of fraud and implementing strategies to combat them is crucial for advertisers looking to safeguard their investments.

In 2021, the estimated mobile ad fraud exposure was $2.1 billion.

Appsflyer

What Is Mobile Ad Fraud?

Fraudsters make money from mobile ad fraud through several mechanisms, capitalizing on the digital advertising industry’s complex ecosystem. Here’s how:

  • Ad Stacking and Impression Laundering: Fraudsters place multiple ads over each other in a single ad slot, charging advertisers for views that never occur. Impression laundering disguises fraudulent ad traffic as legitimate, allowing fraudsters to sell ad space at inflated prices.
  • Fake Impressions and Clicks: By using bots or other automated software, fraudsters create fake ad impressions or clicks, leading advertisers to pay for engagement that never actually happened.
  • In-App Event Fraud: Fraudsters generate false actions within mobile applications, such as completing tasks or making purchases, are fabricated by fraudsters, causing advertisers to pay for non-existent user activities. The fraudulent in-app event rate is 5.4%.
  • In-App Purchase Fraud: Fraudsters use stolen credit card information or deceive users into making unauthorized in-app purchases, then collect the proceeds from these fake transactions. The fraudulent in-app purchase rate average is 6%.
  • Install and Engagement Fraud: This involves simulating app installs or engagements that never actually occurred, tricking advertisers into paying for non-existent users or actions. The industry average install fraud rate is 8%.
  • Remarketing Fraud: Fraudsters simulate engagement with ads aimed at users who have previously interacted with a product or service, leading to inflated costs for non-genuine re-engagements. The industry average remarketing fraud rate is 8%.
  • Traffic and Lead Generation: Fraudsters generate fake traffic to websites or digital properties using bots, then sell advertising space or collect fees based on the inflated traffic numbers.

Fraudsters exploit the fact that digital advertising often operates on a pay-per-performance model. By manipulating this system, they can siphon off significant amounts of money from advertising budgets. For advertisers, this means paying for services, engagements, or impressions that are not genuine, leading to wasted budgets and skewed marketing data.

Ad Fraud Mitigation Strategies

In response to these challenges, the industry has developed several countermeasures. Companies now invest in sophisticated fraud detection tools designed to identify and flag suspicious activities. The establishment of industry standards and certifications, such as those provided by the Interactive Advertising Bureau (IAB), aims to curb fraudulent practices by promoting transparency and accountability. Additionally, collaborative efforts between businesses have led to the sharing of intelligence and best practices, enhancing the overall effectiveness of fraud prevention measures.

SKAdNetwork (SKAN) is Apple’s framework for attributing app installations and conversions while preserving user privacy. By design, SKAN aims to provide advertisers with accurate attribution data without compromising user anonymity. This change was primarily introduced with the rollout of Apple’s App Tracking Transparency (ATT) framework, which restricts the traditional ways of tracking users across apps and websites.

Impact on Fraudsters:

  1. Harder for Fraudsters: In many ways, SKAdNetwork makes the job harder for fraudsters. By limiting access to user-level data and providing standardized, randomized, and delayed attribution reports, SKAN reduces the opportunities for fraudsters to manipulate attribution through methods like click injection or SDK spoofing. The privacy-centric approach means less granular data is available for malicious entities to exploit.
  2. Increased Complexity: The shift to SKAN changes the landscape of mobile ad fraud by altering the traditional metrics and methods used for attribution. Fraudsters who relied on user-level data and immediate feedback to refine their tactics may find it more challenging to operate effectively under the new system.
  3. Adaptation Required: Like any systemic change, while SKAN may initially disrupt fraudulent activities, determined fraudsters may seek new vulnerabilities within the framework or shift their focus to other types of fraud not covered by SKAN. This means that while SKAN raises the barrier, it may not eliminate mobile ad fraud entirely.

SKAdNetwork generally makes the job harder for fraudsters by limiting the data available for manipulation and changing the fundamental ways in which app attribution is reported. However, as with any anti-fraud measure, its effectiveness depends on ongoing updates and the industry’s ability to adapt to emerging threats. Advertisers and platforms must continue to be vigilant and employ a multi-faceted approach to fraud prevention.

Advertisers themselves play a crucial role in combating fraud. Choosing to work with vetted partners known for their strict anti-fraud measures can significantly reduce the risk of fraud. Regular monitoring of campaign analytics allows advertisers to spot and address unusual patterns that may indicate fraudulent activity. Implementing anti-fraud technologies offers an additional layer of protection, helping to detect and prevent fraudulent activities in real-time. Furthermore, staying informed about the latest trends and tactics in ad fraud can empower advertisers to better protect their campaigns.

While mobile ad fraud presents a complex and evolving challenge, understanding its various forms and adopting a proactive approach to prevention can greatly mitigate its impact. By leveraging industry resources, employing advanced technologies, and maintaining vigilance, advertisers can protect their budgets and ensure the integrity of their mobile advertising campaigns.

the state of mobile ad fraud
Source: Appsflyer

Adam Small

Adam Small is the CEO of AgentSauce, a full-featured, automated real estate marketing platform integrated with direct mail, email, SMS, mobile apps, social media, CRM, and MLS.

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