Digital advertising spending is forecast to reach $836 billion in 2026, up from $522.5 billion in 2021. However, not all this money is giving brands and agencies the return they should be able to expect. Due to the persistent challenge of digital ad fraud, advertisers’ budgets are at risk. Fortunately, as we shall see, there are steps that brands and agencies can take to ensure that their ad spend is not lost to fraudsters.
What is digital ad fraud?
Put simply, digital advertising fraud is where scammers defraud global digital advertising networks for financial gain. Usually this involves fraudulently inflating performance metrics such as click or view rates.
Digital ad fraud comes in a wide variety of formats. Some of the common approaches used by scammers include click fraud, where bots are used by dishonest publishers to boost revenue from pay-per-click advertisements by inflating click rates; domain spoofing, where criminals impersonate a publisher’s domain to trick advertisers into paying premium prices for low-quality inventory; and pixel stuffing, where fraudsters embed a normal-looking ad with a fraudulent pixel loaded with multiple ads, meaning that users view multiple ads when the page loads.
The cost of digital ad fraud
The scale of ad fraud is truly vast. According to digital ad fraud statistics from the Association of National Advertisers, the cost of digital ad fraud is an astonishing $120 billion annually. Others put the number slightly lower, suggesting that ad fraud costs will reach $100 billion annually in 2023. Whichever way you look at it, however, the digital advertising industry is haemorrhaging a scandalous amount of money, and something needs to be done urgently.
Digital ad fraud statistics
Before we look at a potential solution, here are some other essential digital ad fraud statistics on the scale and nature of the problem facing advertisers.
- Digital ad fraud accounts for $1 for every $3 spent on digital ads (invesp)
- 7% of advertisers surveyed are ready to pay a premium of 11% or more for certified human traffic (invesp)
- The rate of fraudulent traffic on Android is 31% and 25% of iOS (Interceptd)
- Fraud instances are 25% lower for in-app advertising than for the web (Protected Media)
- 36% of display ad clicks are fraudulent (Lunio)
- 17% of CTV impressions are fraudulent (Lunio)
- 11% of search ad clicks are fraudulent or invalid (Lunio)
- Just 12% of ad impressions paid for by brands can be accounted for (i.e. matched) (Campaign Asia)
- Ad fraud by region: China $18.7 billion lost, North America – $2.6 billion, EMEA – $804 million (Statistica)
- 24% of total web bots are used for fraud and theft (Imperva)
- It is estimated that about 43% of traffic is invalid traffic (Forbes)
How to prevent digital advertising fraud
Companies have drawn on a wide range of anti-fraud measures to protect their ad spend and ensure that their hard work ends up in front of real people, not bots. Solutions include verification filters, publisher blacklists, Domain Name System monitoring and others. However, given the continued scale of the problem new solutions are required to provide extra cover.
One emerging approach that shows much promise, combines first-party data from publishers and brands with customer intelligence from telcos to create and activate audiences efficiently and at scale for programmatic advertising campaigns.
The approach works like this: publishers share privacy first identifiers (such as Novatiq’s Zenith ID), which represent visitors to their sites, with their telco partners, who then verify that this publisher ID corresponds to a known subscriber on their network. Doing so, the telco is in effect verifying that the visitor to a website or app is a human being and not a bot.
Additionally, brands and agencies can leverage a second transaction ID (such as Novatiq’s Hyper ID), verified as a human in the same way, to activate campaigns with the audiences they most want to reach. The strength of this approach is that is provides advertisers and agencies with the confidence that the audiences they are advertising to are attributable. In short, they can rest easy that their advertising spend is going on impressions that are not only being shown to people, but to exactly the right people for their brand.
Telco-verified IDs promises to help protect against ad fraud by leveraging data intelligence that is 100% verified at source and only reaches real audiences. They should therefore be seen as a significant weapon in a brands’ arsenal in combatting fraudsters