Artificial Intelligence
$81 Billion in Ad Fraud this Year: How AI Can Help
Mins Read
June 3, 2022

Ad Fraud: Who Can Be Trusted?

Advertising is a multi-billion dollar industry, and it's only getting bigger. However, ad fraud is also a huge problem in the advertising world. Ad fraud costs businesses billions of dollars every year, and it's only getting worse. So what can be done about this problem? AI is playing a big role in combating ad fraud. Let's dive into it.

What is Ad Fraud?

Ad fraud is using deception to generate clicks on ads or view ad impressions. This can be done through bots, click farms or other deceptive methods. Ad fraud costs businesses billions of dollars every year, and it's a huge problem in the advertising industry.

According to the Atlantic, 52% of internet traffic is related to bots which contribute to click fraud. The total cost of ad fraud is estimated to reach $81 billion in 2022 and $100 billion by 2023.

Fraud is hard to nail down. There will always be new variations to combat.

Ad fraud hit the news in a big way in 2018 - with Google acknowledging that a scheme stole nearly $10 million from the ad networks and partners. This shed some light on the fact that accreditation and verification tools cannot be blindly trusted.

So, Why is Ad Fraud so Prevalent?

There are a few reasons for this:

  • Advertisers are willing to pay more for ad space on popular websites. This creates an incentive for website owners to inflate their traffic numbers.
  • The ad buying process is complex and opaque. This makes it difficult for advertisers to know where their ads are being placed and how much they're really paying for ad space.
  • Ad fraud is low risk and high reward. It's relatively easy to commit ad fraud, and the payouts can be significant.

However, the most prevalent reason why there is so much ad fraud is that there are so many steps in the advertising chain to get lost in. An advertiser sets up a campaign in a DSP (demand-side platform), the DSP then bids through RTB (real time bidding), which is determined by publishers (websites) who set their prices, then the bid is transacted and an ad is filled. The publisher gets paid by impression, so the more "users" on the site, the more they get paid. That's where bot traffic can come in. Therefore fraud can be transacted by DSPs, publishers, or even third-party groups.

In this article, we'll focus on publisher & click fraud.

Publisher & Click Fraud

Publisher ad fraud is when a website owner artificially inflates the number of visitors to their site, the number of ad impressions and clicks. This can be done through a variety of methods, including bots, click farms, and other deceptive practices.

Frequently DSPs and ad servers seem to want to talk about the converse... which is how many "bad" ads they removed, instead of how many poor publishers or bad websites are allowing your ads to be served with wasted impressions.

Google's 2021 Ads Safety Report, published in May 2022, touted that they stopped 3.4 Billion bad ads, restricted 5.7 billion ads and suspended 5.6 million advertiser accounts. In comparison, they restricted ads from 1.7 billion publisher pages.

But what they don't say is why, or how they determined what a bad publisher is or what a bad ad is; and with 28.5% spend reported to have been through Google's servers - which is the highest percentage, followed closely by Facebook's 23.8%.

If Google holds the keys to determining what is bad and what is good,  and they restrict more ads than they do publishers, then what incentive do they have to be transparent about ad fraud? What incentive to third-party ad fraud detectors have? How can we trust any player in the advertising space?

The answer?

Be an Advertising Skeptic

Don't be afraid to analyze your own data, ask questions, and utilize AI to help you combat ad fraud at its source. The number 1 threat to advertising budgets in a survey by Business of Apps was the inability to connect campaign exposure to ROI on ad sales at 75%, followed by lack of media quality transparency at 60%. Both of those issues likely stem from bot traffic and ad fraud.

Questions to Ask as an Advertiser

  • Is my ad being placed on a reputable site?
  • Are the site's brand safe?
  • Are the sites trafficked by multiple bots?
  • Does my DSP allow me to see site lists?
  • How are you enforcing ads.txt?
  • Can I get an IVT support from my fraud verification system?
  • Can I see a block report of which sites were blocked?

How AI Can Help

AI is playing a big role in combating ad fraud. Here are some of the ways that AI is being used to fight ad fraud:

-Detecting bots: AI can help to detect bots by looking for patterns in user behavior. This helps to identify ad fraud before it happens.

-Preventing click fraud: AI can also help to prevent click fraud by identifying patterns in user behavior. By identifying these patterns, AI can help to block ad fraud before it happens.

-Improving Viewability: Advertising platforms, like CatapultX, can use AI to improve viewability measurement - CatapultX's viewability was 6.8X better than display ads shown on Viant.

-Monitoring ad placements: AI can help to monitor ad placements and make sure that ads are being placed in the right places. This helps to ensure that advertisers are getting what they're paying for.

AI is a powerful tool in the fight against ad fraud. By using AI, businesses can avoid being cheated out of their ad spend. In fact, Business of Apps stated that machine learning saved advertisers $10 billion in 2019. They said "AI can detect suspicious behavior, filter IP addresses, and generally monitor traffic. Its increasing prevalence in combating ad fraud will come in tandem with general wider use in advertising."

As ad fraud becomes more prevalent, AI will become more and more essential in the fight against it. businesses need to be aware of the problem and take steps to combat it. By using AI, businesses can protect themselves from ad fraud and ensure that their ad spend is going to the right places.

How CatapultX Views Ad Fraud

At CatapultX, we're constantly working to stay ahead of the curve when it comes to ad fraud. We use a variety of tools, including AI, to detect and prevent ad fraud. We also work closely with our partners to ensure that they are adhering to best practices for ad placements and viewability measurement.

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