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Stomping out click fraud: the plague of mobile advertising

A not-so-new but formidable obstacle to the growth of the mobile advertising market is click fraud. Its emergence has cost marketers over USD 11 billion in 2014, with a strong focus on the video marketplace.

Click fraud, according to the Interactive Advertising Bureau (IAB), “has never been a bigger threat to the industry”. Its consequences to the overall growth of digital marketing have prompted top agencies, brands, internet, and ad tech companies to come together and make a collective effort to combat what is one of the most pressing problems facing CMOs today.

Some estimates have highlighted that up to a staggering 50 per cent, or half of all publisher traffic come from bots. More worrying is the fact that several Asia-Pacific countries rank on a top 10 list of mobile app install click fraud rates, based on recent research by Apsalar. The global average was 2.57, indicating that for every click resulting in a legitimate download; there were 2.57 fraudulent or unexplained clicks. Compared against this average, Singapore had 141 clicks per application download, while Hong Kong, ranked at the top of the list, had 318 clicks per application download.

But not all is lost for the advertisers – there are ways for them to defend against the scourge that is click fraud. Key to doing this is to eliminate the fraud even before any false clicks or impressions are made. Let’s take a deeper look.

The plague
Internet advertising for years has operated on a pay-per-click (PPC) model. Publishers are paid for every click on an advertisement put out by the advertiser. This model has been increasingly exploited in the last decade as individuals or automated software programs began to drive phone impressions and clicks, thus requiring advertisers to pay for an impression that was never made.

The phenomenon has gotten worse as those responsible for perpetrating click fraud have been refining their techniques. Among their many methods is to randomise IPs or device IDs to get the traffic to appear as human and legitimate as possible. They also use bot networks that drive fake impressions to specific sites for predetermined periods of time, and hide banners in the background (iframes), so that impressions are racked up and counted for, even though the banner had never actually been seen.

Study from Suntrust Robinson Humphreys shows, 11 per cent of display ad views and 23 per cent of video ads stem from bot activity. Elsewhere, it was estimated that bots were responsible for anywhere between three and 31 per cent of programmatically-bought ad impressions, with the average statistic being 17 per cent. “Premium” programmatic campaigns placed on private advertising exchanges were not safe from fraudulent activity either, with approximately 10 per cent of ad impressions coming from bots. Aside from distorting the advertisers’ outlook on initial impressions, bots also drive 19 per cent of retargeted ads. The mobile platform once thought of as a risk-freezone for advertisers, is in danger of being neglected, as fraudulent behaviour becomes the norm within the domain.

Click fraud has seriously affected both the publishers and the advertisers alike. For advertisers, their time, effort and money spent in increasing exposure and growing the user base is largely wasted as bots deprive advertisers of their connection to targeted users. Bots also cause rising inventory prices across the board, all while building distrust within the mobile advertising ecosystem. If left unchecked, click fraud could prevent mobile publishers from monetising their applications as advertisers become unwilling to partner with them.

The cure
A positive development amidst click fraud’s epidemic is that it has raised awareness in the industry that is starting to bring about a meaningful change. Advertisers are taking steps to protect themselves against fraudulent traffic by only collaborating with ad exchanges that maintain high standards and offer transparency.These ad exchanges are developing platforms that protect advertisers by deploying artificial intelligence and auto-learning to automatically root out fraud. Furthermore, they investigate traffic origins to detect patterns that can be attributed to bots. Through the verification of app processes, it is now possible to ensure the legitimacy of apps, mobile websites, and all impressions.

Ad platforms, especially those in programmatic, are working hard to eliminate the fraud elements as they don’t want customers going to premium publishers simply because they think of them as more trustworthy. Aiming to provide a clean marketplace for everyone by creating platforms that focuses on internal algorithm for fraud inspection and rejects fraudulent ads, allowing publishers to maintain customer trust and maximise user engagement and revenue.

A collective effort from exchanges and advertisers will spark off the change needed to keep click fraud out. The results of which will be felt across the entire industry. Advertisers will be able to reap higher returns on investment (ROI) for every dollar spent and reach larger audience. With transparency, they will also have access to better data on who is clicking on their ads, and be in a good position to extract useful insights, identify market opportunities, and develop more comprehensive business strategies. Programmatic and mobile advertising will take on bigger roles in future, and having a clean ad ecosystem is a requirement to help the market open up and be accepted.

Malcolm Wong

Malcolm Wong is the Managing Director for Smaato in Singapore. He oversees operations in the Asia-Pacific office, as well as Smaato’s joint venture with Indosat: the Indonesia Mobile Exchange in Indonesia.
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