Mobile in-app advertising is one of the best ways for companies to reach their target audiences. One of the reasons for this is that, since the boom in smartphones, people’s average screen time has increased exponentially. Today, the average American spends almost 7 hours and 4 mins a day looking at a screen. Although laptops and desktop PCs are also responsible for this, mobile phones have played a significant role.
In 2019, for instance, more than 53 percent of all web traffic was derived from smartphones. By the end of the second quarter, total web traffic from mobile phones rose to 59 percent, suggesting this figure is on the rise. This year, 6.92 billion people worldwide are predicted to operate a smartphone, meaning 86 percent of the world’s population now uses a mobile device.
Unsurprisingly, the number of apps on the market has also boomed. The Apple Store now offers more than 2 million apps, while google play store has 3 million. Nowadays, the average smartphone user has around 80 apps on their phone. And did you know that, on average, Americans check their phones a staggering 342 times per day?
Safe to say, then, that people are addicted to their phones – and apps are doing everything they can to retain users for as long as possible.
As a result, advertisers have flocked to this arena, hoping to reach their target audiences. Through this, fraudsters have followed them, trying to make money illegally through mobile in-app advertising fraud.
Types of fraud in mobile in-app advertising
Photo by Annie Spratt on Unsplash
As suggested, criminals have developed various techniques to confuse users, advertisers, ad networks, and publishers to make money illegally. The following details some of the ad fraud techniques that they use:
Ad stacking
In this type of fraud, criminals stack multiple ads on top of one another. The user can only see the ad at the top of this list, but the other ads pop up when the user clicks the ad on top. By using this technique, fraudsters earn money for all the other ad clicks when, in reality, the user is only interested in the top ad.
App spoofing
In this method, a fraudster will use an app to send fake bundled IDs to advertisers, posing as a premium app. After the advertisers make their purchase, their ads appear on another app and not the premium one they thought they were investing in. After the loss of income, the worst thing about this type of fraud is that it threatens brand safety. Advertisers end up paying for premium inventory while being supplied with low-quality traffic from low-quality apps.
Retargeting fraud
Bots can be programmed to imitate interested shoppers. Criminals use then this technique to attract higher effective cost per mille (eCPMs) across all the apps they use to participate in fraud.
Bots
Criminals use bots to carry out malicious activities like generating fake clicks, app installs, and invalid traffic. They do this to get credits for installs, clicks, or in-app engagements.
Click fraud
This is one of the most popular methods fraudsters use. In it, click farms or bots generate fake clicks that criminals use to defraud advertisers by claiming that their ad space has a higher click-through rate than it really does. In turn, advertisers pay for clicks that don’t exist.
Click injection is another form of click fraud. In it, the fraudster generates a click on a user’s phone without the user’s knowledge to get credit for an app install that happens on that has surreptitiously occurred on their device. By claiming this attribution, the criminal gets paid for an organic install.
These are some of the many techniques scam artists use to commit fraud in mobile in-app advertising.
Types of invalid traffic
Like the online ad business in general, mobile in-app advertising depends on traffic.
Photo by Amy Hirschi on Unsplash
Knowing this, fraudsters try to pass off low-quality traffic as high-quality, attempting to illegally make money by making the traffic look genuine.
Despite this, not all invalid traffic is harmful. In fact, there are two types of it, one good and one bad: general invalid traffic (GIVT) and sophisticated invalid traffic (SIVT).
General invalid traffic (GIVT)
GIVT refers to traffic that comes from known bots and crawlers. Since this traffic does not imitate human behavior, it is not fraudulent. Here are some examples of GIVT:
- Search engine crawlers
- Self-identified bots
- Data center traffic
- Proxy traffic
- Data center traffic
It is possible to filter out this traffic through the lists of known crawlers and data centers.
Sophisticated invalid traffic (SIVT)
Sophisticated invalid traffic refers to fraudulent traffic that attempts to appear legitimate. One can recognize fake traffic easily by checking the pattern. When SIVT is operating against your mobile in-app advertising, your traffic quality is essentially under threat. Here are some examples:
- Bots that imitate human behavior
- Stacked/Concealed ads
- Fraudulent proxy traffic
Identifying SIVT is difficult, as fraudsters use various techniques to make low-quality traffic appear authentic. By using advanced technology, analytics, and a bit of human intervention, however, you can quickly identify SIVT.
How much does mobile ad fraud cost the industry?
By the end of 2023, mobile ad fraud will rob the business of $100 billion. Sadly, this isn’t surprising either: half of the apps with more than 5–10 million downloads have security flaws. As a result, many apps are effectively inviting criminals to add malicious code to their products.
Consequently, legitimate businesses will end up spending a lot of money unnecessarily fixing the problems that arise from this. And that’s not all. Here are some of the other ill effects mobile ad fraud can have.
Lawsuits and TCPA Violation Fines
When fraudsters send fake leads to companies, it can raise another big problem. Sometimes, they pass on the data belonging to real customers who may, in fact, be uninterested in receiving any communication from the company that has been tricked into buying this information. What’s worse, an increase in complaints from such rightly disgruntled consumers can attract lawsuits and TCPA violation fines.
Loss of trust and reputation
When companies get hit with regulatory compliance penalties, their reputations can also take a huge blow. Sometimes, it’s also just too difficult for brands to repair or fix the damage. In turn, this can drive away customers.
Wasted ad spend
This is one of the most significant losses businesses involved in mobile in-app advertising can incur. These companies naturally invest a great deal in such marketing, but due to fake clicks, installs, and traffic, they do not see the conversions they’re paying for. Consequently. their marketing ROI will plummet as a result.
Wasted sales team resources
Bad leads will cause your sales team stress. More often than not, they won’t be able to convert these leads as most of them may not be interested in the product, service, or company in the first place.
To avoid getting into this situation in the first place, advertisers should use the right fraud prevention tools to avert transactions with fraudsters or fake publishers.
Swaarm is one such tool that helps advertisers and ad networks stay on top of this. Using optimization tools, companies can set rules to identify ad fraud and protect their marketing budget from criminals.
In conclusion
People are addicted to their smartphones and check them frequently. As a result, mobile in-app advertising is one of the best ways for companies to reach out to their target audience.
Aware of how lucrative this market is, fraudsters are constantly trying to make quick money using devious methods targeting mobile in-app advertising. This article will help you understand everything about mobile ad fraud and how advertisers can avoid it.
