Global ad and app fraud is getting worse. Here’s what it is, and how to beat it.

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Kevin Ford

September 27th, 2019

Global ad fraud could be as high as $30 billion this year.

Digital ad fraud is tough to tackle, especially for brands and advertisers reaching out to new consumers across the globe – even worse for those serving digital ads through apps.

Hewlett Packard, in its 2016 business white paper The Business of Hacking (click to view/download), has a great definition of ad fraud: ‘Ad fraud is deliberately attempting to serve ads that have no potential to be viewed by a human user.

‘Attackers set up a page of ads and have bots visit to generate fake traffic. Since it looks like the ads were viewed, the advertising network still gets paid.’

App fraud, though, is a different proposition altogether. Fraudulent apps can be hard to spot, fake installs on a user’s phone and can install other malicious adware designed to drain end-users’ bank accounts and hit advertisers through click fraud. 

Both methods involve fake clicks from trojans, bots and other malicious software taking money directly from your marketing budget in a stealthy manner, and it’s something that brands and marketers need to pay extra special attention to.

Why? As AppsFlyer highlight in their 2019 The State Of Mobile Fraud report, the first six months of the year saw that $2.3 billion in ad spending was subject to app install fraud.

The report looked at 2.5 billion app installs across 9,500 separate apps in the first half of this year, and unveils some worrying findings.  

22.6 percent of non-organic app installs across the globe can be classed as fraudulent, it says, while a quarter of apps were classed as having a serious fraud problem of 20 percent or higher.

AppsFlyer CTO and co-founder, Reshef Mann, highlights the problems that face the industry, saying: “The speed at which fraudsters adapt is also accelerating, from one to two months in 2018 to as little as two to three days today.”

The people hit hardest are brands and marketers spending their budget to reach out to new markets through programmatic ads, including display ads and interactive commercials on apps.

Spending money on in-app display ads to reach out to new audiences? You could be wasting thousands every month because of ever-evolving, sophisticated ad fraud techniques.

As we say, it’s tough to tackle. So, how do you spot it and stop it happening to you whilst maximizing your marketing budget and getting in front of the people who matter to you most?

 

The global specter of ad fraud

First, it’s important to identify what the threat actually is, if you’re going to have any chance of spotting it.

And as Reshef Mann says, that can be the hardest part of the process. The techniques used and the speed that cybercriminals are discovering new loopholes online is a real cause for concern.

Hewlett Packard’s The Business of Hacking shows just how sophisticated those criminal networks were three years ago, let alone now. Back then, they listed five ‘bad guy’ personas and motivations who were most likely to commit cybercrimes such as ad fraud.

They include hobby hackers, hackers driven by a desire for notoriety, cybercriminals driven by profit, ideology-driven hacktivists and – perhaps the strongest players of all – hackers backed by their own nations.  

Attackers range from bored computer-literate people looking to break their boundaries, to patriotic national cells converging around high-value targets is an alarming thought, and they’ll have evolved since 2016

While Hewlett Packard’s definition of ad fraud hasn’t changed since much since 2016, the ad landscape certainly has.

Global mobile advertising spend in 2016 stood at $83 billion, according to IAB Europe, the Internet Advertising Bureau (IAB) and IHS Markit, with display advertising hitting $45 billion; 54 percent of all global mobile spend. Global mobile ad spend is set to hit an incredible $165.7 billion this year, according to WARC. So that’s a doubling in mobile spend in just three years.

 

A technological terror

The sheer amount of money being spent is clearly what’s motivating the criminal networks increasingly involved in ad fraud. The stakes are higher than ever but, amazingly, a huge number of mobile advertisers and brands simply aren’t aware of how much danger they’re actually in.

AppsFlyer has recently revealed that 41 percent of marketers don’t consider mobile ad fraud to be a threat to their ad spend. And, though 53 percent say mobile ads are at the greatest risk of fraud, they’re still the top channel marketers will look at for future investment.

Using apps that propagate empty installs, register fake users to get CPI revenue, pollute data, SDK spoofing and more are just some of the tricks used when committing ad fraud.

It all sounds super technical, so it’s little wonder that brands and marketers may not fully understand problems surrounding ad and app fraud and how to stop it.

Let’s take a look at SDK spoofing as an example. Interceptd calls it ‘the future of ad fraud’ – it certainly has a past, with SDK spoofing accounting for 18 percent of total ad fraud in 2018.

SDK spoofing is a way to hack a Mobile Measurement Partner (MMP) to impersonate the attribution process of an app, simulating real installs and in-app events. The information sent to do this in SDK spoofing can come from a Trojan APK, Trojan SDK, and botnets.

Trojan APKs and SDKs can be built into apps by hackers or included accidentally in apps unwittingly by developers. It’s a highly-sophisticated approach – in short, it simulates fake clicks (that look genuine) and is designed to drain your budget.

Innocent-looking apps designed to steal data and money are a danger to users, too. The Weather Forecast: World Weather Accurate Radar app is just one out of many that have been called out for making premium transactions without users’ knowledge. VidMate was also under the spotlight for its ‘suspicious background activity’ recently, affecting over half a billion users worldwide.

 

Fighting back against ad fraud

As alarming and confusing as the ad and app fraud landscape looks, all is not lost. The ad industry is fighting tooth and nail to expose those committing ad fraud, and working extremely hard on an international level to protect advertisers, brands and their budgets.

Bodies including the Mobile Marketing Association (MMA) and the IAB have been leading the fight on the global stage. The MMA has its ‘Ad Fraud Roadshow’ to help raise awareness of ad fraud amongst marketers on the ground floor, and both organizations regularly produce key insights and research surrounding ad fraud and offer solutions on how to tackle it.

Both work closely with the world’s leading digital platforms (including Google, Verizon Media, and Facebook), and often issue guidelines and recommendations to help combat the problem.

The MMA and IAB have a very visible presence in the US and EMEA and have been working tirelessly to raise online and mobile advertising standards for years.

Pleasingly, too, AppsFlyer highlights that brands and marketers who are actually aware of ad fraud and its consequences are taking action to prevent it themselves.

37 percent of marketers who understand the risks has hired a specialist anti-fraud team to help them, while 43 percent of marketers look to hire ad fraud talent over programmatic experts (25 percent).

Which leads us to China. It’s no secret that China is firmly in the sights of many mobile-focused brands and programmatic marketers in the west. It’s a mobile-first nation and many users are willing to spend through their devices.

With the right approach, a strong mobile advertising strategy could seriously accelerate a brand’s global growth potential, if successful. That strategy shouldn’t just focus on demographics targeting and creative outreach, though. 

The right strategy will also include fail-safes surrounding issues of ad fraud in the region, of which China and other APAC territories are not immune.   

 

How does ad fraud look in China?

China is the land of opportunity for mobile advertisers. It boasts the world’s largest smartphone market, and accounted for nearly half of global app downloads in 2018. It also accounted for 40 percent of consumer spending, according to App Annie.

Most interesting is the boom in Chinese programmatic advertising. The county’s programmatic market is expected to pass the $30 billion mark this year; an increase of over 33 percent, with in-app video advertising on apps such as Douyin  4(better known as TikTok in the west) driving that growth.

Douyin alone has more than 250 million users in China, and with new biddable programmatic ads being introduced on the platform, it and other apps represent an incredible opportunity for international advertisers to attract the attention of China’s mobile-first population.

The problem for international advertisers though is that they may be more susceptible to ad and app fraud in China than other global territories. Research by Group M estimates that 83 percent of global ad fraud comes from China, with an approximate fraudulent inventory of $18.7 billion in the country.

China is a victim of its own success in a way. The explosion in programmatic advertising and the sheer size and scale of its smartphone market – as well as a fractured Android market consisting of around 400 app stores – means that publishers and regulators are playing catch-up.

China is currently battling against issues such as a lack of verification and a need for Chinese tech vendors to learn more about measurement accuracy, as well as adopting technology prevalent throughout the wider digital supply chain.

A lot of that, again, will come with maturity and vendors catching up to what’s required of them by advertisers, especially when it comes to battling ad and app fraud. On a technical side, better support for JavaScript tagging and better solutions surrounding a fractured Android market (and in turn SDK submissions to those app stores) could help in the fight.

 

DSPs can help in the fight against ad fraud

China is working hard to address issues such as ad regulations and lack of verification, though, and it’s surely only a matter of time until it reaches standards seen in other international territories.

In April this year, for instance, the Media Rating Council (MRC) and the China Media Assessment Council (CMAC) outlined a joint program to validate digital audience measurement.

Steps include promoting the development of industry tools designed to filter fraud and identify invalid traffic, as well as auditing and accrediting vendors for those tools.

These new tools are specially built for mobile and in-app advertising platforms; solutions surrounding better brand safety, ad performance and ad validation are other issues that the MRC and CMAC want standardised across China as soon as possible.

That new approach can’t come soon enough for mobile and app advertisers looking to make an impression in China, especially when considering the country’s aforementioned fractured Android market.

Research by Pixalate released in April shows that, in Q4 2018, Android devices saw a mobile fraud rate 1.7 times higher than iOS devices (26 percent to 16 percent), while more than a quarter of display ads on Android devices were invalid compared to 12 percent of iOS ads.

That’s significant for advertisers with Apple taking a beating in China from Huawei this year – for now and the future if this trend continues, more Chinese smartphone users are likely to see ads on an Android device than an iPhone.

So, what’s the best way for international advertisers to reach China’s mobile-first audience without seeing their budget drained from fraudulent ads and unverified apps?

Working with a trusted partner who knows the Chinese mobile landscape, knows the quirks of its app landscape, and is able to serve your advertisements to the right audience is essential not just to grow your brand, but to mitigate the risks of ad fraud and maximize the potential of your budget.

Around 80 percent of China’s programmatic market is made up of China’s BAT companies; internet giants Baidu, Alibaba, and Tencent. Each one offers a huge variety of display ad solutions across its apps and platforms. Accessing those platforms and making sure that their budget works as best it can be confusing for even the most experienced advertisers used to western ad tools.

This is where demand-side platform (DSP) technology can help. A DSP can help you access those platforms and others through its software, allowing you to manage them all through a single point of access.

A good DSP gives international advertisers a strong footing in the Chinese market, while the right partner will use their first-hand knowledge and experience of the environment to advise you away from potentially fraudulent apps that could stifle your growth in the world’s largest mobile market.

 

Kevin Ford

2019-09-27

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