{{Short description|Fraudulent activity regarding online advertisements}} {{original research|date=September 2018}}
'''Ad fraud''' is the practice of fraudulently creating or simulating online advertisement impressions, clicks, conversions, or data events in order to generate revenue. Ad fraud is the categorical term inclusive of all forms of online advertising fraud, including click fraud.<ref>{{Cite journal|last1=Wilbur|first1=Kenneth C.|last2=Zhu|first2=Yi|date=2008-10-24|title=Click Fraud|url=https://pubsonline.informs.org/doi/abs/10.1287/mksc.1080.0397|journal=Marketing Science|volume=28|issue=2|pages=293–308|doi=10.1287/mksc.1080.0397|issn=0732-2399|url-access=subscription}}</ref> While ad fraud is frequently associated with banner ads, video ads, and in-app ads, click fraud has been associated with search marketing, mobile advertising, and conversion fraud with affiliate marketing.
Ad fraud is a type of cybercrime.<ref>{{Cite journal |last=Richet |first=Jean-Loup |date=2022 |title=How cybercriminal communities grow and change: An investigation of ad-fraud communities |journal=Technological Forecasting and Social Change |volume=174 |issue=121282 |doi=10.1016/j.techfore.2021.121282 |issn=0040-1625 |s2cid=239962449 |doi-access=free |article-number=121282}}</ref> A successful ad-fraud campaign generally involves a sophisticated combination of identity fraud and attribution fraud: for instance, sending fake traffic through bots using fake social accounts and falsified cookies; bots will click on the ads available on a scam page that is faking a famous brand.<ref>{{Cite journal |last=Richet |first=Jean-Loup |date=2022-01-01 |title=How cybercriminal communities grow and change: An investigation of ad-fraud communities |journal=Technological Forecasting and Social Change |volume=174 |issue=121282 |doi=10.1016/j.techfore.2021.121282 |issn=0040-1625 |s2cid=239962449 |doi-access=free |article-number=121282}}</ref>
== History == Research papers covered the topic at least as early as 1999.<ref>{{Cite journal |last=Anupam |first=Vinod |last2=Mayer |first2=Alain |last3=Nissim |first3=Kobbi |last4=Pinkas |first4=Benny |last5=Reiter |first5=Michael K |date=1999-05-17 |title=On the security of pay-per-click and other Web advertising schemes |url=https://www.sciencedirect.com/science/article/pii/S1389128699000237 |journal=Computer Networks |volume=31 |issue=11 |pages=1091–1100 |doi=10.1016/S1389-1286(99)00023-7 |issn=1389-1286|url-access=subscription }}</ref> In 2004, Google's CFO George Reyes said that click fraud was the biggest threat to the Internet economy.<ref>{{Cite web |last=Crawford |first=Krysten |date=December 2, 2004 |title=Google CFO: Fraud a big threat |url=https://money.cnn.com/2004/12/02/technology/google_fraud/ |url-status=dead |archive-url=https://web.archive.org/web/20050103025808/https://money.cnn.com/2004/12/02/technology/google_fraud/ |archive-date=2005-01-03 |access-date=2017-01-07 |website=CNN Money}}</ref>
In 2016, HP Enterprise in its ''Business of Hacking'' report highlighted ad fraud as the easiest and the most lucrative form of cybercrime at that time.<ref>{{Cite web |last=Gillin |first=Paul |date=2016-05-17 |title=Battle cybercrime by treating it as a business, HPE report asserts |url=https://siliconangle.com/2016/05/17/battle-cybercrime-by-treating-it-as-a-business-hpe-report-asserts/ |access-date=2025-11-18 |website=SiliconANGLE |language=en-US}}</ref> That year, the World Federation of Advertisers published its first guidance on ad fraud<ref>{{Cite web |last= |first= |date=2016 |title=Compendium of ad fraud knowledge for media investors |url=https://www.wfanet.org/app/uploads/2017/04/WFA_Compendium_Of_Ad_Fraud_Knowledge.pdf |url-status=dead |archive-url=https://web.archive.org/web/20180201104040/https://www.wfanet.org/app/uploads/2017/04/WFA_Compendium_Of_Ad_Fraud_Knowledge.pdf |archive-date=2018-02-01 |access-date= |website=World Federation of Advertisers |publisher=}}</ref> to advise its members on how to counter the problem that was allegedly eating close to US$20 billion of member ad budgets in 2015.<ref>{{Cite news |last=Slefo |first=George P. |date=October 22, 2015 |title=Report: For Every $3 Spent on Digital Ads, Fraud Takes $1 |url=http://adage.com/article/digital/ad-fraud-eating-digital-advertising-revenue/301017/ |access-date=2017-01-07 |work=Ad Age}}</ref> As of 2016, there were four notable non-profit organizations focused on creating awareness and availability of resources for countering ad fraud: Botlab, JiCWEBS, Media Rating Council (MRC), and Trustworthy Accountability Group (TAG). Each published various guidelines and commentaries on ad fraud, most notable of which was the Media Rating Council's ''Invalid Traffic Detection Guidelines''.<ref>{{Cite web |date=October 15, 2015 |title=Invalid Traffic Detection and Filtration Guidelines Addendum |url=http://www.mediaratingcouncil.org/101515_IVT%20Addendum%20FINAL%20(Version%201.0).pdf |url-status=dead |archive-url=https://web.archive.org/web/20220308113538/http://mediaratingcouncil.org/101515_IVT%20Addendum%20FINAL%20(Version%201.0).pdf |archive-date=2022-03-08 |access-date=2019-03-19}}</ref>
In 2017, P&G and Chase suspended their digital ad budget of $200 million and reduced their ad shares from 400 thousand to 5 thousand in an attempt to reduce their exposure to ad fraud.<ref>{{Cite web |last=Fou |first=Augustine |date=2020-07-05 |title=Out Of The Darkness (Of Ad Fraud) And Into The Light |url=https://www.forbes.com/sites/augustinefou/2020/07/05/out-of-the-darkness-of-ad-fraud-and-into-the-light/ |access-date=2020-08-02 |website=Forbes |language=en}}</ref>
AppsFlyer estimated financial exposure to app install fraud in Q1 of 2018 was as much as $800 million.<ref name=":0">{{Cite web |last=Natanson |first=Elad |date=11 June 2018 |title=Mobile Ad Fraud in 2018 - Tackling the Newest Threats |url=https://www.forbes.com/sites/eladnatanson/2018/06/11/mobile-ad-fraud-in-2018-tackling-the-newest-threats/#5c47db9850f5 |website=Forbes}}</ref>
A study conducted in 2023 found that the average rate of fraudulent activities in search engine advertisements is approximately 11.5%.<ref>{{Cite web |last=admin |date=2023-11-22 |title=Fraud Protection Report 2023 - KIM LABS® GmbH, Trier |url=https://www.kim-weinand.de/fraud-protection-report/ |access-date=2023-12-05 |website=Kim Weinand - Kim Labs |language=de}}</ref> This statistic highlights the growing importance of implementing effective fraud protection measures in search engine marketing to combat ad fraud.<ref>{{Cite web |last=Chiocchi |first=Paula |date=November 7, 2023 |title=Council Post: Ad Fraud: The Biggest Threat To The Advertising Industry |url=https://www.forbes.com/sites/forbesagencycouncil/2023/11/07/ad-fraud-the-biggest-threat-to-the-advertising-industry/ |access-date=2024-08-02 |website=Forbes |language=en}}</ref> In 2024, the share of malvertising increased by 10%, with 70% of users distrusting online advertising.<ref>{{Cite web |last=Shiboli |first=Yuval |date=2025-02-03 |title=Digital Advertising Malware in 2024: Lessons for 2025 and Beyond |url=https://admonsters.com/digital-advertising-malware-in-2024-lessons-for-2025-and-beyond/ |access-date=2025-04-18 |website=AdMonsters |language=en-US}}</ref> A joint study between Juniper Research and Fraud Blocker found the cost of fraud in digital advertising globally was $88 billion in 2023; growing to $172 billion by 2028.<ref>{{Cite web |date=September 2023 |title=New Ad Fraud Study: 22% of Online Ad Spend is Wasted Due to Ad Fraud in 2023, According to Juniper Research |url=https://www.prnewswire.com/news-releases/new-ad-fraud-study-22-of-online-ad-spend-is-wasted-due-to-ad-fraud-in-2023-according-to-juniper-research-301938050.html |website=PR Newswire}}</ref> Ad fraud is estimated to cost advertisers approximately $100 billion globally in 2024, making it one of the largest sources of financial loss in digital marketing.<ref>{{cite web |url=https://www.statista.com/statistics/677466/digital-ad-fraud-cost/ |title=Digital advertising fraud cost worldwide 2024 |publisher=Statista |date=2024}}</ref>
== Classifications == === Types of fraud === * Bots / Non-human traffic ad fraud * Click farms ad fraud * Ad injection fraud * Domain name spoofing * Cookie stuffing * Ad hijacking – When unauthorized parties imitate a brand's paid ads and redirect traffic through their own links to earn commissions or steal clicks.
=== Sources of traffic ===
* Botnets * Browser toolbars * Infected software (malware) * Paid to click (PTC) websites * Click farms
=== Formats ===
* Banner * Video * In-app * Social
=== Types of mobile ad fraud === {| class="wikitable" |+ !Category !Description !Types |- |Attribution fraud<ref>{{Cite news|url=https://adexchanger.com/data-driven-thinking/attribution-fraud-getting-gamed/|title=Attribution Fraud: Are You Getting Gamed? {{!}} AdExchanger|date=2016-07-08|work=AdExchanger|access-date=2018-10-23|language=en-US}}</ref> |Attribution fraud is when a real user downloads an app and a fraudster attempts to claim attribution for that install. Attribution fraud sees the advertiser pay for a user it attracted through other channels. |Types of attribution fraud:
* Click spam * Ad stacking * Click injection * In-app event * Evasion techniques |- |Install fraud<ref>{{Cite news|url=https://www.mobilemarketer.com/news/study-app-install-fraud-jumped-30-in-q1/520351/|title=Study: App install fraud jumped 30% in Q1|work=Mobile Marketer|access-date=2018-10-23|language=en-US}}</ref> |Install fraud is when app installs are not from genuine app users. These installs may be from bots or from people that are not its intended users. These installs do not deliver return on ad spend (ROAS). |Types of install fraud:
* App install farms * SDK spoofing * Evasion techniques |}
=== Sourced traffic === The Association of National Advertisers reported that sourced traffic,<ref>{{Cite web|url=http://www.ana.net/miccontent/show/id/rr-2016-sourced-traffic|title=Sourced Traffic: Buyer Beware {{!}} Industry Insights {{!}} All MKC Content {{!}} ANA|website=www.ana.net|access-date=2017-01-07}}</ref> a practice where companies partaking in the formal online advertising market buy fraudulent traffic to resell it as legitimate, was a notable form of ad fraud. Sourced traffic has been mistakenly referred to as arbitrage, because buying sourced traffic does not have any potential for return whereas in financial markets arbitrage refers to "risk-free" trading of legitimate assets. While there is no evidence to support the claim, and such evidence would be impossible to conclusively gather, it may be that sourced traffic represents lion's share of the ad fraud market due to the ease and popularity of acquiring and reselling it. The only evidence-based study to sourced traffic found in 2016 that around 50% of the acquired traffic was originating from data center IP addresses<ref>{{Cite journal|date=2016-06-08|title=Mystery Shopping Inside the Ad-Verification Bubble|url=http://www.slideshare.net/ShailinDhar/mystery-shopping-inside-the-adverification-bubble}}</ref> and that selected ad fraud verification vendors Integral Ad Science and Moat largely failed to detect it as ad fraud. The report also showed that sourced traffic could be acquired for as low as $0.001 per click, in contrast to the going price per click in the formal market, which is typically $1 or more.<ref>{{Cite news|url=https://www.hochmanconsultants.com/cost-of-ppc-advertising/|title=The Cost of Pay-Per-Click (PPC) Advertising—Trends and Analysis - Hochman Consultants|date=2015-11-24|newspaper=Hochman Consultants|language=en-US|access-date=2017-01-08}}</ref>
== References == {{reflist}}
Category:Fraud Category:Online advertising