Programmatic has transformed the online advertising space, giving publishers and advertisers the tools to increase revenue and streamline the process.

But it has also opened the door for one of the industry’s major challenges.

Ad fraud plagues the entire online advertising ecosystem, forging clicks, stealing money and faking ads.

But when it comes to understanding what ad fraud actually is and how it can be addressed, many are still in the dark.

Sophos senior security expert John Shier gave B&T his best ad fraud definition.

“It’s advertisement revenue that is not going to the legitimate publishers, and it’s also advertisements that are not actually landing in front of actual consumers,” he said.

“Ad fraud has seen sustained growth over the last 10 years, because there’s a lot of money to be made, it’s a very low-risk venture and you don’t really have a scalability problem.”

To highlight this scalability, he compared ad fraud to real-world robbery.

“If you’re car thief, you have to keep finding nice, well-conditioned, luxury cars to keep stealing. That’s your supply and this a bit of a scaling issue,” Shier said.

“Whereas when you’re talking about things like mobile ads, the internet and digital age, that scaling issue goes away completely – you can reach thousands if not millions of users relatively easily.”

Mobile has become a hotbed for fraudulent activity of late. The continued rise of smartphones means there are now a host of app developers looking to maximise their revenue any way they can.

In a recent report, Sophos revealed it had encountered a host of Android apps with the sole purpose of maximising ad revenue.

These apps are essentially a bootlegged version of another app, but with advertising libraries added that aren’t from the original app.

how does it work?

Ad fraud is complex and there are a number of different ways it can occur.

For mobile specifically, ad fraud has become entangled with apps, as developers look for ways to monetise their product.

“If we just focus on the mobile devices and the apps themselves, app developers will often use advertisements inside their apps in order to generate revenue for the app,” explained Shier.

Specifically developed instructions that falsify clicks on ads are used as a way to convince advertisers their content has been a hit among users.

These fraudulent clicks are then used to ensure the advertising affiliate is paid the premium amount, whether ‘genuine’ clicks were garnered or not.

By reporting a falsified User-Agent string to advertisers, these apps can make it appear as though the fake clicks from a single app on one phone actually came from a range of apps on multiple devices (including iPhones).

There are also problems on the supply-side, Shier said.

“The publishers themselves can be fraudulent. They’re going to basically pretend that they’re putting ads in front of people,” he said.

“They might do that through any number of compromises, but basically they can say to the merchant ‘I put your ad in front of in front of 1000 people’, when really they haven’t. They’ve just faked that they put the ad in front of 1000 people.

At the ground level

The effects of ad fraud can now even be seen at the consumer level. These dodgy apps consume a huge amount of data – even if the phone is in sleep mode – resulting in reduced battery life and even higher data charges.

And while for some this could be a small price to pay for a free app, Shier urged users to show some discretion to help stamp out the problem.

“You may not be feeling the sting yourself as the consumer of an app,” he said.

“If you just get a free app, and there might be some ad fraud associated with that. Your device might get a little bit slow and hot, your battery might drain a little quicker, but you’re not feeling any financial hit.

“That betrays the fact there’s a lot of app developers out there who are trying to get cool apps developed by using this ad ecosystem.

“If they’re being lumped in, or the water is being muddied by all these ad fraudsters and cybercriminals, then they’re not getting their fair share either.