How Ad Fraud Works

Now you know why ad fraud is such a formidable threat, silently siphoning off substantial portions of advertising budgets. With an estimated loss of billions annually, the financial stakes for companies are alarmingly high.

However, for many businesses, it’s still unclear how ad fraud works. That’s why we’re here to pull back the curtain on the mechanisms and tactics used by fraudsters to carry out ad fraud. By shedding light on both well-known and more sophisticated techniques, you can make sure your advertising dollars aren’t being wasted on ad fraud.

Breaking Down Popular Ad Fraud Techniques

Ad fraud comes in many shapes and forms. From deceptive pixel stuffing to sophisticated hackers all attempting to skew your metrics. But have you ever wondered who is behind these fraudulent traffic sources?

There are two common ways ad fraud works.

Bots and Malware: The Digital Perpetrators

Bots and malware are some of the most persistent threats to digital marketing campaigns.

By most estimates, nearly half of all internet traffic comes from bots. These automated software programs are designed to carry out specific tasks. They can mimic human interactions with ads, such as fraudulent clicks and impressions, on a massive scale.

Of course, not all bots are bad. Some are used to streamline cumbersome or time-consuming tasks while following website rules. They can be used to enhance search engine rankings and even provide customer service.

It’s the so-called “bad bots” that are designed with harmful intent. They are relatively easy and inexpensive to deploy, meaning they can quickly skew performance metrics and deplete ad budgets. They are often distributed across compromised computers and devices via malware, which they also continue to spread.

Malware and bots truly go hand in hand. This malicious software is installed without the user’s knowledge to create a botnet. More sophisticated malware can also alter the ads displayed on a user’s device, substituting legitimate ads with others from which fraudsters can earn revenue.

Human-Led Schemes: Click Farms

Bots can be an effective way for bad actors to carry out different types of ad fraud on a large scale. Some can even be sophisticated enough to bypass traditional bot prevention methods like CAPTCHAs.

However, bot traffic still has its flaws. Bad actors need to be able to run a botnet and be careful not to seem suspicious. Human click farms are another way ad fraud works which addresses these concerns.

Just like it sounds, click farms are groups of low-paid workers who manually click on ads, fill out forms, or download apps to inflate engagement statistics artificially. These operations are often based in regions where labor is inexpensive so operating these farms is feasible.

Click farms can be surprisingly sophisticated. This click fraud technique relies on simulating genuine user interactions by browsing websites, spending time on pages, and interacting with content in a way that mimics legitimate users.

This human touch makes the traffic seem more realistic than bot-generated traffic. They are particularly problematic for campaigns where success is measured by interaction rates, leading advertisers to make misguided decisions based on inflated data.

Lesser-Known Ad Fraud Techniques

While the above are two common ways ad fraud works, there are also some more savvy methods fraudsters use. This includes the misuse of residential VPNs and proxy services. The same tools designed to enhance user privacy by masking their IP addresses can be exploited by bad actors to carry out fraud.

This sophisticated form of ad fraud works in a few distinct steps:

1. Acquisition of Residential IPs: Fraudsters subscribe to services offering residential VPNs. These typically lease access to networks of devices whose owners have unknowingly or knowingly installed software that allows their IP addresses to be used as part of the VPN network.
2. Scaling Operations: By using automation tools, fraudsters can control multiple residential IPs simultaneously to mask fraudulent activities.
3. Launching Ad Fraud Schemes: With access to these residential IPs, fraudsters can execute click fraud, impression fraud, and more.
4. Bypassing Detection: Because residential IPs are associated with actual Internet Service Providers and real user behaviors, they can bypass common ad fraud detection measures.
5. Monetization: The end goal is to profit from these fraudulent activities by boosting ad revenue through fake clicks and impressions.

How Does Click Fraud Work?

As you can see, these are all ways fraudsters carry out ad fraud – especially click fraud.

Whether it’s by bots or humans, click fraud works by generating false clicks to inflate traffic data. This means your advertising dollars are being wasted on non-existent engagement. Fraudsters have developed a variety of techniques to carry out click fraud, including:

• User Behavior Simulation: Modern bots are capable of simulating mouse movements, scrolling, and randomized browsing paths that closely mimic human behavior. This complexity makes it difficult for ad fraud detection systems to distinguish between legitimate user activity and bot-generated interactions. This can let bots through or even cause false positives and block real users.
• Device and Browser Spoofing: Fraudsters use techniques to mask the true characteristics of the devices or browsers from which the clicks are generated. Bots or humans in one location can appear to be a diverse pool of legitimate users using different devices and browsers.
• Session and Time Manipulation: Spreading clicks over varied times and maintaining realistic durations on pages helps bypass systems that look for rapid bursts of activity or unusually short or long page visits. Essentially, bots and click farms are becoming adept at avoiding the major red flags of ad fraud.

Are You Prepared for How Ad Fraud Will Work?

As we wrap up how ad fraud works, it's crucial to look to the future. With new technologies comes new ad fraud techniques that businesses need to be aware of. Being prepared for the future of ad fraud means investing in comprehensive technologies and staying informed about the latest developments in fraud detection.

Continue reading our Ultimate Guide to Ad Fraud to learn more about how fraud runs rampant on popular platforms and the best solutions to combat the silent drain.

Experience the power of Anura and discover just how much fraud you have with a free trial.