Mobile Ad Fraud: a $16 Billion Problem?

For mobile marketers, there is a huge number of ad partners to consider. Some of them are great, several of them are good, but there is a number of them we should definitively watch out for, according to a recent study from Tune: the company inspected 24.3 billion clicks across 700 ad networks, with shocking results. Some marketers might be even disillusioned. The research found out that 8 ad networks out of 700 were 100% fraud, and 35 ad networks are 50% or greater.

According to estimates by WhiteOps data, marketers in 2016 lost about $7.2 billion on fraud traffic. Adloox, a verification company, suggests that in 2017 marketers will lose 16.4 billion to ad fraud. That’s almost double. The numbers might not be exact; however fraud is a critical and massive problem that concerns mobile marketing.

What are the three major types of app installs fraud? According to TUNE business intelligence manager Jessica Reichow, these are the main types:

  • Click fraud: fake click, genuine user
  • Install fraud: fake click, fake user
  • Compliance fraud: genuine click, genuine user, wrong user geography/profile/etc.

In addition, there are multiple kinds of non app-install mobile ad fraud, including:

  • Viewability fraud: stacked, off-screen, not viewable
  • Targeting/compliance fraud: served to real people, but not the audience a marketer wants
  • Bot fraud: served to bots or software agents, not real people; the bots may click (tap) on the ads

During their study, TUNE has found out that the average fraud traffic across all the ad networks was 15.17%

23.3% of ad networks have significant fraud levels, which is more than 20%. Some are due to bad actors enabling fraud, which cause problems for the entire industry. Some other are well-meaning companies that simply do not pay too much attention to the sub-publishers where the ads are actually running.

23% Of the Ad Networks Had More Than 20% Fraud (Image Credit: TUNE)

The biggest problem is that the worst ad networks that bring up all the other networks’ average. Below you can see the traffic patterns of the worst 34:

Worst 34 Ad Networks: Fraud Percentage (Image Credit: TUNE)

Let’s face it, marketers who make the wrong choices will pay for them by giving their hard earned money directly to the hands of the fraudsters, therefore reducing ROI and ROAS, leading to the result of enabling even more fraud.

Not all ad networks are crooked, and fraud issues derive from how the ad networks work with each others, and with publishers. Fraudsters are simply exploiting the cracks created by sub-publishers and re-brokering.

The Re-Brokering Process (Image Credit: TUNE)

Very often the ad networks re-broker the ad traffic to other ad networks and to sub-publishers. As networks provide media buying, this is legitimate. However, through this re-brokering the fraudulent traffic can enter more easily in the picture, TUNE enterprise data evangelist Jimmy Tommaney explains.

The re-brokering originates from a demand and supply concept. Marketers’ demand to place ads usually exceeds the ad networks’ owned supply, or space for ads. Therefore, ad networks broker with other ad networks who have access to supply (sub-publishers) to fulfil this demand. In the re-brokering process quality traffic can suffer.

Re-brokering is often automated and at high speed, therefore is not always easy for ad network to know in real time whether they are filling demand with legitimate supply. In this fractured system, fraudulent publishers find cracks via which they can insert themselves into the legitimate ad ecosystem.

The biggest game developers spend considerable amount of money in marketing. But what we should be concerned, especially, are the mid-size and smaller developers. They cannot count on the same capital a big developer can count on, and even a small budget for a marketing campaign can be quite costly, especially if the campaign does not provide good ROI due to fraud traffic. Fixing fraud is in the ad network’s best interest, as their very existence depends on trust from marketers.

Source: TUNE

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