Ad Fraud to Deplete One-Third of Mobile Advertisers' Budgets

A recent Juniper Research report highlights a concerning trend in the digital advertising landscape. The study indicates that nearly a third of mobile marketing budgets will fall victim to ad fraud this year. Globally, digital ad fraud is projected to incur a substantial cost, estimated at $84 billion in 2023, amounting to about 22% of the $380 billion allocated to online advertising.

The study, which analyzed data from 45 countries, specifically points out that mobile advertising is particularly vulnerable, with ad fraud accounting for a significant 30% of the budget. Despite increased utilization of ad fraud detection tools in most countries, the problem remains prevalent and costly.

Looking ahead, the report predicts that marketers will be investing nearly $750 billion annually in digital advertising by 2028, with ad fraud still capturing a substantial 23% share of the pie.

The impact of this fraud is expected to hit regions like North America, China, and the Far East the hardest. Additionally, the study underscores concerns for Indian marketers, with the subcontinent projected to contribute three percent of the global ad losses by 2028, revealing the significant challenges facing advertisers in India.

This report emerges at a time when India is set to increase its digital advertising spending to an estimated $21 billion by 2028, thanks to the surge in mobile and internet usage, as reported by Redseer Strategy Consultants earlier this year.

Ad fraud poses a significant challenge to advertisers, affecting their return on investment (ROI). Fraudsters employ tactics such as spoofing, engaging with invalid users, and using automated bots, diminishing the effectiveness of advertising and marketing campaigns.

The complexity of the digital advertising ecosystem means that all stakeholders, including ad networks, attribution platforms, and publishers, are vulnerable to fraudulent attacks.

The report identifies artificial intelligence (AI) tools, including those like ChatGPT, as potential assets misused by fraudsters. Advanced algorithms programmed through AI can create bots and malware capable of mimicking human behavior and siphoning ad spending from advertisers. This is particularly worrisome as AI-generated bots are harder to detect.

The report warns that "Sophisticated Invalid Traffic" (SIVT) is a formidable challenge, surpassing "General Invalid Traffic" (GIVT) in complexity. Fraudsters actively change their attack patterns to evade detection, employing AI to not only mask their illegal behaviors but also identify opportunities to simulate valid traffic.

The report provides three key recommendations to combat ad fraud:

- Marketers should diligently monitor invalid clicks and utilize third-party fraud detection services and tools to blacklist potentially fraudulent devices and IP addresses.

- Digital advertisers are encouraged to establish strategic partnerships with ad fraud detection vendors, providing transparent and verifiable data to identify illegitimate traffic.

- To combat SIVT, fraud mitigation providers should invest in AI analytics that offer multi-point corroboration for detecting, identifying, and analyzing suspicious traffic, even as fraudsters employ AI to actively evade detection.