“My digital ad budgets seem to be disappearing faster than a magician's rabbit in a hat,” a senior marketer told exchange4media recently. Why so, one might ask. It’s because they are falling prey to digital ad frauds. And well, he is not alone.

In the digital world, every click, view, and impression is a potential customer. However, multiple advertisers are facing the challenge of ad fraud. It's the digital equivalent of a modern-day heist, where cybercriminals employ sophisticated tactics to syphon off billions of dollars from unsuspecting brands.

Picture this: while you're diligently monitoring your campaign metrics, a shadowy network of bots and click farms is silently draining your resources, leaving you with little to show for your investment. And this is a global issue. Ad fraud cost marketers $84 billion in 2023 – 22% of all online ad spend, according to a Juniper research. This figure is expected to soar to $170 billion by 2028. The research added that globally, 30% of mobile ad spend was lost to ad fraud in 2023.

"Data provided by popular ad platforms, such as Facebook and Google, provide an incomplete picture of the success of advertising campaigns," Senior Research Analyst from Juniper Research, Elisha Sudlow-Poole said in a statement. "That is, these platforms give an optimistic view of campaign efficiency, failing to distinguish between how many clicks or views originated from legitimate users compared to click farms or fraudulent bots."

Recently released EY-FICCI’s media & entertainment report also highlighted how big an issue digital ad fraud is becoming with every passing day. If you analyse the average invalid traffic percentage across platforms, you’d find that in India, under walled gardens, partner networks contributed to around 20% of it. Under open networks, 41% of invalid traffic happened on affiliate networks and 27% on programmatic platforms.

Last year, an ANA report indicated a 35% plus wastage on programmatic ads due to the opaque nature of procurement and bidding.

This shows how the scale of the problem is staggering, with billions of dollars at stake and no industry left untouched. From global conglomerates to local startups, everyone is vulnerable to the insidious tactics of fraudsters lurking in the shadows of the digital realm.

Sajal Gupta, Chief Executive, Kiaos Marketing pointed out that recently while delivering the keynote at the ANA conference, Marc Pritchard, Chief Brand Officer at P&G emphasised the need for greater transparency among the digital platforms while arguing the need for innovation in media buying and placements.

“Ad Fraud is among the key concerns of all digital ad buyers across the globe. As media buys are moving more and more towards programmatic platforms, and on AI / ML-driven bidding models, advertisers and media buyers have been asking for transparency from the platforms to address their ad fraud concerns. Based on advertisers’ demands, some ad platforms have already made changes in their ML-driven ad policies to give advertisers more control over the placement of their ads,” Gupta said.

The Mighty F-Caps

A crucial aspect of digital advertising is ‘Frequency Cap’, which is important in CPM campaigns to control the number of times an ad is shown to a user. However, the EY report pointed out that there have been instances where ads are shown to a single user repeatedly, which goes against the goal of building brand awareness. Instead of leaving a positive impression, users may become saturated and annoyed by seeing the same ad frequently.

An analysis of a campaign on an Indian OTT player showed that 46% of the impressions violated frequency cap limits, i.e., close to half of the consumers saw the campaign much more than the desired frequency.

Gopa Menon, Head of Digital, South Asia, Mindshare agrees that frequency cap violation definitely is a problem. “While exceeding frequency caps can be annoying for users, it can also lead to ad fatigue and decreased ROI for advertisers,” he says.

So are marketers just panicking or are working to figure out a way to fight this menace?

Menon shared that this issue is on the priority list for the agency’s clients. “Once identified as a problem, and it is a problem, brands need to solve it. The conversations with clients are on how to solve it and ensure a definite process with the help of tools and tech. It’s in everyone's interest to drive efficiency and effectiveness of their communication and spending,” he added.

Need Independent Audit Authority

However, Preetham Venkky, Chief Digital Officer, DDB Mudra Group brought up how it’s about time that the digital ad ecosystem gets an independent audit authority to keep a check. “This has to be backed by some kind of governance. You can use the independent audit authority’s data to hold accountable the digital media platform or maybe a programmatic player going forward.”

Venkky highlighted how lawmakers have held social giants accountable, surrounding user tracking, monopolistic practices etc. “In these situations, one can build a case. But there’s nothing done on wastage of ad spends, because there’s no proper audit done yet to build a proper use case,” he explained.

Another digital expert from an agency agreed that the government needs to play a role in this measurement, considering that between Meta and Google, the industry has a duopoly. In such a scenario, there needs to be an independent authority who can make a strong claim. “Right now, there is no media provider who can do that,” the person said.

The coming years are set to see a further boom in mediums like CTV and contextual advertising. With this boom, ad frauds are also set to creep their way into the system. Gupta says, “This makes it important for advertisers to have effective measures to address the ad spend leakage to keep the effectiveness of the media flying high. In conclusion, as digital media takes the premier position of the largest media, it comes with its additional responsibility to rein in the industry malpractices.”