Mobile fraud is ubiquitous, but every player in the digital advertising ecosystem could be doing more to combat it. Although some degree of fraud is unavoidable, not taking measures to reduce it may be costing advertisers more than they realise. In this piece, Maor Sadra (pictured below), managing director, AppLift, discusses the ways in which programmatic makes it easier to spot fraud – and three action points to stop it. 

Thirty-four percent of programmatic mobile traffic is at risk for fraud, according to a recent report from Applift and Forensiq. Just last month, The Financial Times reported that a Russian developer of mobile phone apps allegedly generated USD$250k (£176k) per day in fraudulent advertising revenue on the MoPub marketplace, costing advertisers millions of dollars. It’s no surprise that fraud is so widespread. Global mobile ad spend is estimated at more than USD$100bn (£70.3bn). We’re swimming in a sea of data, and it is challenging to effectively monitor every single impression. Our industry also has a high tolerance for wasting money — or at least that’s the message we send by tolerating dismal conversion rates. Because our industry-average click-through rate is in the single digits – and advertisers are accustomed to accepting that 99% of the impressions they purchase may not generate action – accepting that up to 34% of mobile traffic is at risk for fraud comes all too naturally.

To reduce fraud is to get more from every ad dollar we spend and to ensure the continued growth of mobile advertising. The good news is that programmatic makes it easier to spot and stop fraudulent patterns.

Maor Sadra, Managing Director, AppLift

Types of mobile ad fraud

On the impression level, there is technical compliance fraud; where an advertiser pays for impressions that haven’t been served in accordance with the agreement and/or advertising standards. For example, the impression may run below the fold or be deemed not viewable by IAB standards. Even if this is unintentional, it still qualifies as fraud. A more malicious type of mobile fraud occurs when 'bad guys' generate false impressions, usually by hacking a server’s API.

Geo fraud is when an advertiser pays a premium CPM for inventory to be served in a particular country or region, but the traffic actually serves elsewhere. There is usually a nefarious media trader pulling the strings and pocketing the difference between the locations’ CPMs, which can be quite substantial.

Click fraud occurs on platforms that sell or monetise on a CPC basis. Facebook continues to make headlines for closing millions of fake profiles and booting off bots. One of the most sophisticated types of mobile fraud is on the conversation level, i.e., app download fraud. Fraudsters can manipulate downloads by creating fake installs or by pinging a DSP or advertiser with a code that indicates an app was installed when it wasn’t.

As mobile commerce continues to grow, we’ll see an uptick in credit card fraud. In these schemes, people make purchases with fraudulent payment info. In the desktop space, we’ve learned to fight this quite adeptly. (Check out PayPal’s approach to fraud detection and protection.) As this type of fraud increases in the mobile space, we’ll get better at fighting it — and with good reason. Mobile e-commerce platforms can be penalised for voiding transactions. Chargebacks can affect credit scores or, worse, prompt a billing provider to terminate its partnership.

Just as an ineffective advertising campaign wastes marketers’ money, so does fraud. Advertisers should ask their partners about their approach to fraud and choose to work with businesses that have robust prevention and protection measures. Look for some of the following tactics; and don’t be afraid to take matters into your own hands.

1. Watch for simple patterns

Publishers and DSPs should monitor traffic and campaign-related KPIs for suspicious patterns. For example, if you observe an unusually high app-install rate, that the time between click and app install is uniform for every user from the same traffic source, or that the time between click and install is inexplicably short, that should raise a red flag. You can set up a system in which certain patterns trigger alerts or actions programmatically. Advertisers should also monitor traffic and KPIs themselves and speak up immediately if they see something suspicious.

2. Combine human and machine intervention

To best fight fraud, use a combination of technology (including third-party solutions) and people – a traffic-quality person or team that scours data for patterns. Advertisers must be proactive. Should you identify a worrisome traffic pattern before your supplier, share as much data as possible so that your partners can learn from the incident.

3. Share best practices

No reputable company wants to serve fraudulent traffic. Keep in mind that we are on the same side, and that to best fight the 'bad guys', we have to collaborate. If a fraud protection method is working for you, share it with the industry. (But do so clandestinely. We don’t want fraudsters knowing all of our tactics.)

Let’s work together to identify fraud, and to find effective measures for stopping it before it starts. Remember, lowering the rate of fraud can do as much for your next campaign as increasing your conversation rate. It’s an opportunity no advertiser should be passing up.