Paid advertising is a great investment in terms of increased traffic, better visibility, and improved sales. The downside is the inability to measure the effectiveness of each ad campaign—especially if you’re running ads on multiple channels simultaneously.

A sustainable solution to this is the CPA advertising model. CPA stands for Cost Per Action, meaning advertisers get charged only when a user performs an action. This model uses a performance-based approach as a metric for ad-campaign conversions. As a result, every marketing effort is tied to a dollar amount that determines the value of a lead.

How fraudsters are taking advantage of the CPA advertising model

A broader look at CPA shows it’s a sustainable model for advertisers that helps them to avoid ad fraud as they only get charged when users perform certain actions. The story is fast changing, however. A major loophole in the CPA advertising model fails to verify the set trigger actions once they’re fulfilled. For example, simply installing a mobile app can easily qualify as an action that gets advertisers charged. CPA ads that are unverified and require little action, e.g., installing an app, can be automated by bad actors to claim advertisers’ ad spend.

Manipulating the attribution system using sophisticated invalid traffic (SIVT) is one of the ways fraudsters have found to counter CPA ads. By combining this with ad fraud techniques such as click injection, click spamming, fake users/bots, and SDK spoofing, fraudsters can mimic user actions to install apps and perform other actions.

On the receiving end of the majority of these ad fraud attacks are companies in the mobile gaming industry. Between 2019 and 2020, fake users/bots accounted for 64.63% of prevalent fraud-type in video gaming apps. This number is followed closely by entertainment and e-commerce apps at 32.46% and 36.64%, respectively.

Early signs of ad fraud on your ad campaigns

Knowing how to run your ad campaigns effectively garners little to no results if your entire ad budget goes to fraudsters. However, you can mitigate the impact of ad fraud if you can detect the early signs, including:

● A sudden spike in clicks

An obvious sign of ad fraud is a disparity between clicks and conversions. Often, these clicks come from the same geographical location, IP address, or device within a short period of time. However, since these clicks are invalid/fake, they don’t lead to conversions but end up draining your ad budget.

● Unusual increase in affiliate or publisher attribution sales

Affiliates or publishers are always looking for ways to trick the attribution system. To do this, they’ll often use various ad fraud techniques to mimic the required human action to complete the process. This is often difficult to prevent, but one way to catch it early is to check if an affiliate partner or publisher has an unusual spike in sales.

● High bounce rates

If users aren’t spending much time on your website, it can be due to one of the following reasons:

• Poor content
• Slow website
• Poor design
• Bots

Often, the first three can be fixed since they’re easy to detect, but with bots—not so much. If you notice a high volume of visits with low on-page time or session duration, you might want to block the origin IP address from draining your ad spend.

Marketing Technology News: Integrate Appoints John Gurski as New President and Chief Revenue Officer

How to protect your business ad fraud

There’s no one-size-fits-all solution to the ad fraud problem. As a result, it’s impossible to completely protect your business from ad fraud. However, implementing systems to avoid a possible ad fraud attack gives you a fighting chance.

● Use only verified scripts and plugins

Third-party scripts and plugins provide you with the functions needed to customize, analyze, and run your ads effectively. However, this approach could expose your ads to ad fraud attacks such as click injection. Therefore, we recommend you use only verified scripts and plugins for your ads.

● Block fraudulent IP addresses

Once you notice suspicious activity from a region resulting in invalid traffic or clicks, block the IP address immediately. Or better yet, set up an IP blacklist containing areas suspected of high ad fraud rate and restrict all IP addresses from that region from interacting with your ad. With this approach, you can refine your ad for a retargeting campaign in areas where you’ve had the most success.

● Use ads.txt file

Only work with verified publishers that have ads.txt files installed on their root domain.  A text file containing lists of ad networks, exchanges, and supply-side platforms (SSPs), ads.txt files, short for Authorized Digital Sellers, are authorized to resell ad content. This file allows advertisers to easily prevent ad fraud techniques like domain spoofing and inventory arbitrage from siphoning ad budgets. Apart from ads.txt, you should also ensure your monetization partner and ad exchange has a valid Sellers.json file. This allows you to verify who’s authorized to sell an ad inventory.

The bottom line: Ad fraud takes multiple forms that are difficult to manage, track, predict, or even prevent. This can lead to wasted revenue—or a damaged brand reputation. Understanding how ad fraud works allows you to take preventive measures against any ad fraud-related attacks on your business.

Marketing Technology News: MarTech Interview With Curt Larson, Chief Product Officer at Sharethrough