How ad fraud damages companies and the environment

Marketers can deliver ads with high precision nowadays. However, fraudsters are undermining this progress. Ad fraud generates artificial traffic, negatively impacting advertising companies – and the environment at the same time.

Ad fraud is a worldwide problem in the marketing industry.
Image: © Philip-Steury/Adobe Stock

Digital marketing reaches customers globally through online ads

The digital realm is the go-to place for brands and companies to get their messages out to the world – and the figures prove it: for example, the independent cybersecurity and ad fraud expert Dr. Augustine Fou estimates that a total of 500 trillion ad impressions were programmatically bought and sold in 2020. Obviously, every impression consumes energy as a result of operating the servers and displaying the ads. Drop8, a programmatic advertising agency, has calculated that 1,000 programmatic ad impressions use just as much energy as one washing machine cycle. In an interview with The Drum, Steffen Svartberg, CEO of conversational advertising agency Cavai, explained that online advertising accounts for around 1 percent of the world’s CO2 emissions.

500 trillion
programmatic ad impressions in 2020
1 percent
of the world’s CO2 emissions caused by online advertising

This data highlights the importance of precise ad targeting – not only from an economic perspective of course, but also in terms of the environmental impact. To keep energy consumption to a minimum, ads should only be shown to the target group relevant to the communicated messages. However, ad fraud is getting in the way of that.

What is ad fraud?

Most online ads are billed according to the pay-per-click principle, which means that companies pay more if their ads get more clicks. It’s precisely that aspect which is being exploited by fraudsters, who are using a range of tactics as part of a practice known as ad fraud. Common methods include:

  • Click fraud: With this method, ad clicks are artificially generated, often by automated software (bots) or by paid people working in “click farms”, with the aim of increasing the number of seemingly real interactions and causing higher costs for the advertisers.
  • Ad stacking: Multiple ads are stacked on top of each other, but only the top one is visible. However, every click is attributed to all ads, allowing fraudsters to profit from several advertisers at once.
  • Domain spoofing: Fraudsters pretend that their website is a high-ranking, trustworthy site in order to sell ads at a higher price.
  • Impression fraud: Ads are shown on hidden or irrelevant websites, meaning they’re either not visible or completely ineffective for the relevant target group, but still count as having been “displayed”.

Ad fraud is detrimental to advertisers because their advertising budgets are wasted on useless or fake interactions, which lowers the ROI. This underhanded practice undermines the integrity and effectiveness of advertising campaigns. It also has a negative impact on the environment because the clicks are not associated with real people with genuine buying intents. The ads simply vanish into thin air, with the result that brands and companies have to place more ads to actually get their message across.

Ad-fraud is a billon-dollar business

A click or impression usually only costs somewhere between a few cents and dollars, but when you consider the size of the global advertising market, that can quickly turn into billions in damage. Statista predicts that the global cost of ad fraud will exceed the 100 billion dollar mark for the first time by the end of 2023. This figure clearly demonstrates how detrimental ad fraud is to companies on an economic level and in their attempts to achieve sustainability in marketing. Ads that don’t reach people can never be regarded as sustainable ads. Instead, they contribute to higher energy consumption and a bigger carbon footprint.

100 billion dollars
in damage predicted by the end of 2023 as a result of ad fraud

Ad fraudsters are a problem for publishers, advertisers, and the environment. So it’s a relief that new programs are always being developed to detect ad fraud and protect marketers. We’ve also put together some expert advice to help you avoid falling victim to ad fraud. As a marketer, you can adapt your own behavior to increase the security of your campaigns. Here are three tips:

  • Use of advanced fraud detection software: It’s wise to use technologies that detect unusual patterns and behaviors in order to identify bots and other fraudulent activities.
  • Transparent tracking and reporting: Detailed and transparent reporting on advertising campaigns will enable you to spot irregularities and fraudulent activities more quickly. You should never trust providers who don’t communicate where the ads you’ve booked will be displayed.
  • Choose trustworthy partners: Working with reputable advertising networks and publishers that implement tried-and-tested anti-fraud practices themselves can protect you from ad fraud.

High-quality advertising networks and measurement service providers now offer to align the placement of ads with a company’s brand identity. This brand suitability approach makes it possible to display online ads in a more precise and controlled way, which reduces wasted coverage and saves energy.

Ad fraud needs to be tackled – for the sake of business and the environment

A wide range of measures are currently being implemented to increase sustainability in advertising. Ad fraud is proving to be an obstacle in this respect. By applying the anti-fraud methods mentioned above, you’ll not only be able to defend your company from economic damage, but you’ll also contribute to minimizing the carbon footprint of advertising campaigns. Marketers and publishers can work together to play their part in tackling ad fraud to pave the way for a better future.