Posted on Sep 11, 2023

Protect Your Ad Spend: The Importance of Ad Fraud Detection

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Digital advertising is a critical tool for businesses to reach and engage with their audiences. However, ad fraud poses a significant challenge, artificially inflating metrics and misdirecting advertising budgets. 

In a blog post, we offer a clear overview of ad fraud, explaining its impact and the importance of detection methods. 

Why Do Businesses Need to Prevent Ad Fraud?

As more brands make the shift to online platforms to drive customer acquisition, the risk of encountering ad fraud — a deceptive practice that misrepresents online ad impressions, clicks, or conversions — becomes all the more prevalent. 

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By understanding and combating ad fraud, businesses not only protect their investments but also ensure they are reaching their desired audience in meaningful ways. 

Below, we delve into five key benefits of building an ad fraud prevention process.

  • Maximized advertising ROI: preventing ad fraud ensures that businesses get the most out of their advertising spend. When ads are viewed by genuine users instead of bots or through fraudulent means, businesses receive real value for their money.
  • Accurate data for decision-making: without ad fraud, businesses get a clearer picture of their marketing performance. Genuine views, clicks, and conversions allow for accurate analytics, enabling companies to make informed decisions about where to allocate resources.
  • Enhanced brand reputation: ad fraud can unknowingly place a brand’s advertisements on questionable or inappropriate websites. By preventing this, businesses safeguard their reputation and maintain the trust of their customers.
  • Improved user experience: genuine advertising attracts genuine engagement. By preventing ad fraud, brands ensure their ads reach the intended audience, leading to better user interactions, more relevant feedback, and a positive brand experience.
  • Reduced acquisition costs: ad fraud results in wasted money on fake views and clicks. By preventing it, businesses can save significant amounts of money that can be reinvested into other areas of their marketing or other business operations that help push prospective shoppers down the advertising funnel.

Prioritizing the prevention of ad fraud not only protects a brand’s financial investments but also fortifies its relationship with genuine customers.

Which Businesses are at Risk of Ad Fraud?

Business typeCommon fraud typesExamples
Mobile app developersClick spammingAction fraudFake installs Fake clicks from bots, sudden spikes in app installations with no following user engagement
E-commerce platformsClick fraudGenerating fake accountsClicks by bots without purchases, generation of fake accounts to exploit promo offers
Digital medial outletsAd stacking Pixel stuffingCookie staffingMultiple ads layered on top of each other, unseen ads crammed into one pixel
Gaming platformsIn-game purchase fraudBot farmingFake users making fraudulent in-game purchases, bots making in-game actions to earn in-game currency
Video streaming servicesVideo ad fraud Invisible adsPlaying video ads off-screen or in rapid succession without genuine views
Social media platformsFake account activityBot likesFraud bots creating fake profiles, generating likes and comments to artificially boost posts. 

This table provides a snapshot of how different businesses might be targeted. It’s worth noting that as technology evolves, the methods employed by fraudsters also change, so it’s crucial for businesses to stay updated on the latest in ad fraud tactics and ad fraud prevention methods.

Common Types of Ad Fraud

Ad fraud manifests in various forms, each designed to exploit digital advertising channels. Let’s dissect a few common methods fraudsters employ to deceive advertisers and divert campaign budgets.

1. Click fraud

Definition: Click fraud is a deliberate act of clicking on pay-per-click ads, either manually or using automated scripts, without any intention of exploring the associated offering.

Implications: Advertisers incur costs for each click on their ads. Illegitimate clicks inflate advertising expenses without corresponding returns in terms of genuine user engagement or sales.

Prevention strategies:

  • Implement IP address tracking to identify and block suspicious, repeated clicks from the same source, thus ensuring click fraud protection.
  • Use specialized ad fraud detection software that can spot and prevent abnormal click patterns.
  • Monitor ad traffic for sudden spikes, which might indicate a click fraud attack.

2. Ad stacking

Definition: Ad stacking occurs when multiple advertisements are layered on top of one another within a single ad slot. While only the topmost ad is visible to users, interactions with it can register as engagements for all underlying ads.

Implications: Advertisers are charged based on the premise that their ad has been adequately displayed and had the chance to engage users, when in reality, it may have been obscured entirely.

Prevention strategies:

  • Use ad verification services that can detect when ads are not being fully displayed.
  • Regularly audit where and how ads are being displayed.
  • Partner with reputable ad networks and publishers.
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3. Bot traffic

Definition: Bot traffic encompasses the interactions originating from automated scripts or programs, often designed to simulate human behavior online. This can involve browsing websites, clicking on ads, or even completing transactions.

Implications: Advertisers might be misled by inflated engagement metrics, interpreting bot interactions as genuine human interest and engagement, leading to skewed marketing data and wasted ad spend.

Prevention Strategies:

  • Implement a bot-blocking solution like CAPTCHA tests on sites to differentiate between real users and bots.
  • Monitor traffic sources and block suspicious IP addresses.
  • Use advanced web analytics tools that can differentiate between genuine and invalid traffic.

4. Pixel Stuffing

Definition: In pixel stuffing, advertisements are forced into minuscule spaces (often just 1×1 pixel in size) on a webpage. This technically counts as the ad being displayed, despite it being virtually invisible to human users.

Implications: Advertisers pay for impressions believing their ad is being viewed by potential customers, whereas the ad’s visibility is practically nil, rendering the impression valueless.

Prevention strategies:

  • Employ ad verification tools to ensure ads are displayed at appropriate sizes.
  • Monitor ad viewability metrics and investigate outliers.
  • Work with trusted ad exchanges (learn more about the benefits of ad exchange) and networks that have strict quality controls.

5. Domain Spoofing

Definition: Domain spoofing involves misrepresenting or masking the domain where an ad is displayed. Fraudsters make it appear as though their less reputable site is a widely recognized and credible site.

Implications: Advertisers believe they’re placing ads on premium, high-traffic websites, but in reality, their ads may be shown on low-quality or irrelevant sites, harming brand integrity and resulting in inefficient ad spend.

Prevention strategies:

  • Use an ad fraud detection platform to confirm where ads are genuinely being displayed.
  • Maintain whitelists of approved domains where ads should appear.
  • Regularly review and audit performance reports to identify and investigate anomalies.

By being proactive and utilizing these strategies, advertisers can better guard against ad fraud, ensuring their campaigns reach genuine users and achieve desired outcomes.

Ad Fraud Challenges for Businesses

In the evolving digital landscape, businesses are consistently seeking ways to engage their audiences effectively. However, the prevalence of digital and mobile ad fraud poses significant obstacles, impacting the efficacy of digital advertising campaigns and the integrity of the brands involved. Below are some primary challenges associated with ad fraud:

1. Inflated marketing costs

Advertisers allocate budgets to online campaigns expecting genuine user engagements and digital advertising fraud tactics artificially boost engagement metrics, making campaigns appear more successful than they are.

As a result, businesses end up overspending on ineffective campaigns. This means a higher cost-per-acquisition (CPA) and reduced return on ad spend (ROAS), which can strain marketing budgets and reduce overall profitability.

2. Misinformed decision making

Decisions around future ad spend, targeting, and strategy are often based on previous campaign data. Ad fraud skews this data, painting an inaccurate picture of campaign performance.

With corrupted data, businesses might allocate resources to channels, demographics, or strategies that aren’t genuinely effective. This not only wastes resources but can also cause missed opportunities in genuinely profitable avenues.

3. Brand reputation damage

When ads appear on low-quality, irrelevant, or malicious sites due to domain spoofing or fraudulent placements, the association can harm a brand’s reputation. Customers might end up questioning the advertiser’s integrity or product quality, leading to decreased trust and potential loss of loyalty.

How Can SmartHub Protect Your Digital Advertising Strategy?

Over time, it’s becoming more apparent why a white-label platform and ad operation team are great solutions for mitigating ad fraud challenges. That’s why more brands rely on platforms like SmartHub: a cutting-edge white-label ad platform, equipped with a robust ad fraud management and prevention toolset.

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Our value proposition is rooted in three core tenets:

  • Advanced technical ad fraud solutions: SmartHub employs proprietary algorithms, machine learning models, and real-time analytics to identify discrepancies in ad traffic, discerning genuine interactions from fraudulent ones.
  • Deep industry expertise: With a seasoned team comprising industry experts, we have been at the forefront of several paradigm shifts in ad fraud detection. SmartHub keeps continuously refining ad fraud prevention technology, ensuring we stay ahead of the constantly evolving fraudulent tactics.
  • Comprehensive approach: SmartHub offers bespoke solutions for fraud detection and prevention in your ad exchange. For this, we integrated the most sophisticated fraud detection scanners like TMT, Forensiq, Protected Media, Pixalate, GeoEdge, Botman, Scalarr, and more. 

To truly assess the full range of use cases offered by SmartHub solutions, explore our case studies.

Bottom Line

The digital advertising landscape holds immense potential for businesses looking to expand their reach. However, this promise comes at the risk of ad fraud that can compromise the effectiveness and integrity of online campaigns. 

Using ad fraud detection technology isn’t just a technical necessity — it’s a strategic imperative. Businesses that prioritize fraud prevention not only safeguard their financial resources but also uphold their brand’s reputation, ensuring genuine engagement with target audiences. 


What is ad fraud, and why should I be concerned?
Ad fraud refers to deceptive tactics used to skew the results of digital advertising campaigns, leading to wasted ad spend. This can involve generating fake clicks, showing ads where they can’t be viewed, or simulating user engagement through bots.
How does ad fraud detection work?
Advertising fraud detection employs a combination of methods: analyzing traffic patterns, employing machine learning models to discern genuine from fraudulent interactions, and real-time monitoring for suspicious activities.  By identifying discrepancies and anomalies, these systems can flag or help businesses prevent fraud in transactions, ensuring accuracy in campaign metrics.
Is it enough to have mobile and online ad fraud detection tools, or should I also take other measures?
While ad fraud detection tools are vital, it’s also essential to adopt a holistic approach by reviewing and analyzing campaign metrics, staying updated with the latest fraud tactics, and collaborating closely with trusted digital advertising partners who prioritize transparency and integrity.
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