In the last one-two years, artificial intelligence has taken the world by storm and this also includes the digital advertising industry. While large enterprise technology companies like Google and Meta are the first ones to deploy AI to better the performance of digital ads, this has also led to an increase in ad-fraud. Many experts opine that AI is a double-edged sword. “Although AI provides strong tools to combat fraud, fraudsters can also use it as a weapon to craft increasingly complex and challenging-to-detect schemes. Its efficiency in the right manner is dependent on development, implementation, and continuous watchfulness against changing threats. The key to success is a multi-folded strategy that includes strong verification tools, industry cooperation, and AI-powered detection.” Vishal Agrahari, AVP Media, BC Web Wise, said, adding that gaining the trust of advertisers and their audience over the application of AI in ad fraud detection will require openness and unambiguous communication. Ad fraud detection requires ongoing AI research and development to stay ahead of the curve and maintain a robust digital advertising ecosystem.
India will contribute as much as three percent to the global ad waste by 2028, a report by Juniper Research reveals. With an Internet penetration of 52% in 2024, India is one of the ideal markets for the advertising industry to rely on, for return on investment (ROI). However, with the silver lining comes the dark cloud too – ad fraud. According to another report from the Association of National Advertisers, the adverse impact of ad fraud will amount to a financial loss of anywhere between $88 billion to $172 billion over five years, globally.
Furthermore, it is believed that the Indian digital advertising industry is facing a significant challenge with ad fraud. Despite advancements in third-party verification methods, fraudulent activities persist as new schemes continuously emerge. With over 80% of internet users in India accessing the web via smartphones, the industry is particularly vulnerable to ad fraud. Studies indicate that programmatic platforms and affiliate networks are especially at risk. Ad fraud not only drains advertiser budgets by failing to reach genuine users but also disrupts campaign data and optimisation efforts.
The one with the brunt bearers
It is believed the impact of ad fraud on the advertising industry is multifaceted. One of the major concerns is the risk to a brand’s reputation, as ads appearing on fraudulent websites can harm credibility and consumer trust. In addition to financial losses borne by advertisers, there are substantial technological and operational costs incurred to safeguard their ads from falling into the trap of ad fraud. These expenses reflect the ongoing efforts required to maintain the integrity and effectiveness of advertising campaigns in an increasingly complex digital world. Although it is believed that there hasn’t been a major case of ad fraud in the country as of yet, advertisers struggle to draw the line between organic impressions and impressions generated through AI. “This has required us to allocate additional resources for fraud prevention, thus impacting our operational costs. At the same time, investments have rendered higher-performing campaigns for the Indian market. Going by the industrial reports and our analysis, we believe ad fraud might be eating into 10% to 20% of our digital spending in India. In money terms, this works out to a possible loss of effectiveness anywhere between Rs 50 lakh to Rs 2 crore yearly, if we go by our current digital marketing budget for the Indian market. This represents the direct financial loss from impressions or clicks in the area of fraudulent and indirect costs for incorrectly planning for the Indian market and resources invested for preventing fraud” Riddhima Kansal, director, Rosemoore, said.
The one with the antagonist
Imagine an AI-based ad fraud detection system that analyses user behaviour. It uses AI algorithms to mimic actions of real users, such as browsing websites, clicking on ads, and even making conversions. This is known as sophisticated invalid traffic and is just one of the many AI-powered scams that wheels ad frauds. AI-powered fraudsters use NLP (natural language processing) to create convincing but fake content, such as fake news articles or reviews. Automated click fraud powered by AI can operate endlessly, clicking on ads round-the-clock. AI’s ability to analyse clickstream data enables scammers to detect hidden patterns and continuously adjust their click-fraud tactics to evade detection. Some AI models can even solve CAPTCHAs, the distorted text challenges designed to filter bots, with high accuracy, allowing click fraud bots to bypass basic security measures and infiltrate ad platforms effectively.
“The Indian advertising ecosystem is in desperate need of building trust and transparency. Frauds are more and more sophisticated, to combat such scenarios brands need scalable solutions that can keep pace with evolving fraud techniques with advanced AI-ML-driven algorithms and full-funnel protection. Click frauds, frauds in impressions, and at the event level are on the rise along with geo-location frauds, device ID repetition to generate fake impressions, clicks, etc. Efficiencies of programmatic advertising campaigns are getting dented with F-cap violations,” Amit Relan, co-founder, mFilterit, said.
According to the ANA report 15% of ad expenditure is wasted on ads placed on MFA(Made For Adsense) sites and 21% of impressions come from MFA sites. 48% of brands do not own direct DSP (Demand Side Platforms) data access resulting in transparency issues.
The one where the protagonist arrives
A mythological tale, prevalent in Indian states, tells of how a demon named Bhasmasura asked for a wicked wish to turn anything he touches into ashes. By the end of the tale, the demon dies due to his own touch, drawing a parallel of this tale to the current involvement of AI in ad fraud, it is evident how AI is also helping in combating ad fraud. According to Double Verify’s report, ad fraud in India reduced by 36% due to the increased adoption of verification tools. It is expected that AI will play a major role in reshaping the advertising industry. The road ahead is filled with possibilities of significant advancements such as hyper-personalisation of advertisements by accurately predicting the user’s mood and preferences on a real-time basis. Priority will be given to lesser human intervention with a greater bet on dynamic bidding to gain potency and an improved ROI. Furthermore, AI will be extensively used for voice-enabled search and chat functionalities in the coming years. Amidst these promising AI-driven developments, ethical considerations will play a pivotal role, particularly in ensuring transparency, user data security, and privacy. Building trust with users through transparent practices in data usage will be crucial in this evolving scenario. From what it is understood, brands have begun to deploy a trusted third-party validator to ensure transparency in the case of fraud detection. Digital audits are conducted to ensure safe ad placements, creative compliance checks, and brand protection in the digital ecosystem. The larger organisations track and optimise the digital journey at every touch point.
“Looking ahead, we plan to enhance our ad fraud prevention strategies by investing in more advanced AI technologies and collaborating with industry partners to develop robust standards and practices. We are also exploring blockchain technology for its potential to add an extra layer of security and transparency to our ad transactions. By staying at the forefront of technological advancements, we aim to further safeguard our advertising efforts against evolving fraud tactics.” Vanda Ferrao, CMO, WOW Skin Science, commented.
Like every fantasy movie, defeating evil requires a team. Collaboration among digital advertisers, brands, and martech companies is crucial for effectively combating ad fraud and building a more resilient digital advertising ecosystem. A unified voice advocating regulatory and legal measures will be heard clearly and lay the foundation for a better understanding of fraud patterns and practices to deal with them. The network effect of collective defence makes it harder for fraudsters to succeed, and scalable efforts benefit smaller players. “By working with industry associations, trust and reputation in the industry are bound to improve as stakeholders demonstrate a commitment to integrity. Examples of collaborative efforts include industry consortiums like the Trustworthy Accountability Group (TAG), joint ventures for developing anti-fraud technologies, and information exchanges through platforms like the Media Rating Council (MRC), .” Laura Quigley, SVP, Integral Ad Science, commented.