Digital Advertising Fraud Is a $88B Problem, Bigger Than Credit Card Fraud  

The Perils of Fake Traffic: Click Jacking, Malicious Bots, Page Scrapers and Malicious Automation Tools

How Digital Ad Fraud Works 

Click fraud is a sophisticated scheme that typically involves several steps to deceive advertisers and ad networks: 

Fraudulent clicks: The process begins with a person, automated script, computer program, or auto clicker imitating a legitimate user by clicking on an ad. These clicks are made without any real interest in the ad’s content, solely to inflate click numbers. 

IP address manipulation: To avoid detection, fraudsters often use fake or stolen IP addresses. This disguises their true location and makes it harder for ad networks to identify the fraudulent activity. 

Cookie manipulation: Fraudsters use cookies to track and manipulate users' browsing behavior. This makes it appear as though the real users are genuinely interested in the ad, further complicating detection efforts. 

Ad network exploitation: Finally, fraudsters exploit vulnerabilities in ad networks to generate fake impressions and clicks. This can involve sophisticated techniques to bypass security measures and maximize their fraudulent gains. 

The Impact of Online Advertising Fraud on Businesses 

The model used in online ads means that every click results in an expense for the company that published the ad. Fake clicks on these ads can lead to significant financial losses and distorted campaign metrics. Click fraud reduces the budget for these ads without yielding results. It may seem like there’s heightened engagement with fake traffic, but the company won’t see this translate into revenue. 

Losing revenue is not the only negative impact of click fraud—it can also skew marketing data. In the marketing world, data is king. We use metrics to analyze campaign performance and look for strengths and weaknesses. Click fraud disrupts these calculations and makes it harder for companies to see the real picture. Fraudsters' malicious activity manipulates fake clicks on competitors' links in organic search results to artificially inflate their search engine rankings. Consequently, the organic traffic of the targeted business diminishes. 

Finally, digital marketers who facilitate PPC campaigns for clients may suffer low retention rates. Given that the latter’s ad budget won’t provide the target return on investment (ROI) because of PPC fraud, they may cast doubt on the agency’s capabilities and feel dissatisfied with the service. Agencies that don’t address this issue may find themselves facing higher client turnover and difficulty attracting new business. 

Sectors Most Affected by Click Fraud 

While click fraud can affect any industry that relies on online advertising, certain sectors are particularly vulnerable: 

E-commerce: Online retailers are prime targets for click fraud. Fraudsters use fake clicks to inflate ad costs, reducing profit margins and skewing performance metrics. 

Finance: Financial institutions and online lenders often face click fraud, where fraudsters generate fake clicks to create leads and potentially steal sensitive information. This not only wastes ad spend but also poses significant security risks. 

Travel: Online travel agencies and travel websites are also susceptible to click fraud. Fraudsters’ fake clicks can lead to wasted ad spend and reduced bookings, impacting overall business performance. 

Examples of Click Fraud 

Click fraud can manifest in several ways, each with its own malicious intent, tactics, and methods: 

• Botnet attacks: In these attacks, a group of compromised computers or mobile devices, known as a botnet, is used to generate bot clicks on ads. This often involves malware or viruses, making it a widespread and challenging issue to combat. 

• Click farms: A click farm employs groups of low-paid workers to click on ads repeatedly. These workers often use fake IP addresses and cookies to avoid detection, inflating ad costs and skewing performance data. 

• Competitor clicks: In a more vicious form of click fraud, competitors click on a rival’s ads to inflate their ad costs and reduce their profit margins. This unethical practice can significantly affect a business’s ad budgets and overall performance. 

Detecting and Preventing Click Fraud with AI Fraud Prevention 

Many fraud detection tools have emerged in recent years to aid in click fraud prevention, but none are as efficient as artificial intelligence (AI). Connection Model takes advantage of this innovation to perform the following tasks.  

• Analyze traffic sources and detect invalid traffic  

• Detect performance metric anomalies (inflated conversion and click-through rates, and engagement metrics) 

• Block fraudulent activities  

• Provide real-time alerts  

Thanks to its features, AI can help companies detect fraudulent clicks in PPC advertising and protect their campaigns.  

With the data it gathers, an AI-powered fraud detection program can interpret the numbers and provide actionable insights. For example, suppose the AI detects spikes in a region that typically doesn’t convert sales. In that case, it may see the activity as a red flag and inform marketers about possible courses of action. Our AI program comes with comprehensive reporting features that allow you to access the insights you’re looking for easily. Leveraging AI expedites the analysis process, in short. This way, you can recalibrate your strategies and maintain your campaign’s performance.