Why ad fraud continues to trouble the digital industry

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Updated: January 06, 2020 7:53 AM

Marketers are losing almost 20% of their digital advertising budgets to ad fraud, according to a recent report by the Mobile Marketing Association (MMA) India.

Presently, more than 50% of the Indian advertising community does not use tools to curb ad fraud.Presently, more than 50% of the Indian advertising community does not use tools to curb ad fraud.

The rapid growth of digital advertising — an EY-FICCI 2019 report pegs it at nearly `20,000 crore — has marketers increasingly worried about advertising fraud in India. Marketers are losing almost 20% of their digital advertising budgets to ad fraud, according to a recent report by Mobile Marketing Association (MMA) India. The industry has identified advertising fraud as one of the major challenges that need to be addressed in 2020. However, the lack of industry standards on digital advertising fraud is a cause for concern in India. What doesn’t help the situation is that Indian marketers are yet to start spending liberally on curbing this menace.

Keeping fraud at bay
Digital advertising fraud is of three main types: traffic fraud, which boosts impressions and other website activity through bots; misrepresentation fraud, which falsifies site information by domain spoofing, ad injection, device hijacking, etc; and attribution fraud where a fraudulent party takes credit for conversions it did not influence. As per the latest MMA India report, 62% of all digital ad frauds occurs on mobile advertising, which is now the dominant type of digital advertising.

Moneka Khurana, country head, MMA India, says ad fraud is no different from spam in email marketing, and piracy in the music industry. “In any environment that has scale and large consumption, there are bound to be some cases of fraud,” she says.

Shamsuddin Jasani, group managing director, South Asia, Isobar, says marketers had been turning a blind eye to ad fraud, until now. “Ad fraud did not concern brands much when digital advertising budgets were limited. Now that spends are increasing, the issue has escalated beyond the digital media head and has become a more significant problem that needs to be addressed.”

Marketers lose huge chunks of money to digital ad fraud because “ad fraud is hard to detect as it is not noticed until marketers review the outcomes of a campaign, much after it has concluded,” says Khurana. It is believed that ad fraud tends to creep in mainly when buying digital inventory from aggregators and affiliates.

Read Also: How TikTok and Likee are gaining popularity as movie promotion vehicles

Marketers can eliminate ad fraud, over time, by deploying a third-party solution provider who can identify fraud on a real-time basis and by working with partners who promise to be transparent about the whole process. Khurana adds that the first step is to have a top-down approach that mandates using tools that weed out fraud as part of a brand’s digital advertising plans.

Shortsighted approach
Presently, more than 50% of the Indian advertising community does not use tools to curb ad fraud. According to an EY-FICCI survey, 45% of respondents said that they would increase digital advertising spends, despite the risk of ad fraud. Experts say that this apathy is further resulting in the perpetuation of ad fraud.

Khurana attributes this attitude of marketers to budgets. Largely, companies with large digital advertising budgets that work with leading agency networks do set aside budgets to prevent ad fraud. But not those working within limited budgets. Setting aside money they spend on the campaign for third-party ad fraud solutions could reduce the potential to meet the target set for the marketing campaign.

“What marketers do not realise is that by setting aside 10-20% of their marketing budget, they can prevent nearly 30% worth of wastage. If only one looked at the model that way,” Khurana adds.

YouTube earned a lot of flak for not taking brand safety seriously or protecting companies against bad actors. The video platform, which attracts a large chunk of digital advertising spend, reviewed its guidelines to make it safer for brands after ex-Unilever CMO Keith Weed threatened to stop advertising on the platform.

In the case of ad fraud though, since there is no single platform that can control the chances of fraud, “the industry needs to take collective responsibility to create awareness and make sure ad fraud is tackled,” says Jasani.

Niraj Ruparel, national head, mobile, Mindshare India, believes the long-term vision should be to facilitate the serious players in the game and help them with the implementation of best practices, while rewarding publishers who offer more ROI to advertisers.

Read Also: How YouTube and Tik-Tok are a platform not just for corporate entities but also for content creators

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