3 Ways Programmatic Advertising Is Exploited By Fraudsters

5 min read
04 October 2022

Online advertising has huge potential for assisting firms in acquiring new clients. With almost 4.6 billion people utilizing the internet, it's easy to see why online advertising might be appealing.

Programmatic advertising is a very efficient form of online advertising, with an average cost-per-lead (CPL) of $40—a fraction of the cost of a lead in traditional advertising channels like TV, radio, and print, which have an average CPL of $630. 

The above scenario explains why advertisers in the United States are expected to spend approximately $110 billion on digital display ads in 2021. With so much money at risk, it was unavoidable that scammers would emerge to prey on those attempting to run programmatic ads.

But what exactly is a programmatic fraud platform? How does it function? In this post, we are going to take a deep into it and explore this fraud:

Basics of Programmatic Advertising 

Programmatic advertising is a type of digital marketing that uses software to decide when and where to put ads in front of a certain audience. When determining which ads to show, the software may check several rules and characteristics, such as:

  • Browsing history of different users around the world.

  • How much does the advertising merchant bid for the ad space on the demand-side platform (DSP)?

  • Keywords which are associated with the website and the user's browsing or search history.

  • The main goal is to get the right ad in front of an interested audience at a time when they might be interested in the service or product being advertised. 

Understanding Programmatic Ad Fraud

A subcategory of ad fraud known as programmatic fraud occurs when fraudulent actors attempt to enrich themselves financially by taking advantage of programmatic advertising.

There are many different kinds of programmatic advertising fraud campaigns, each of which has its unique set of tactics that fraudsters use. Because programmatic campaigns use a range of income schemes and because different ad networks may have varying degrees of security for their programmatic ad platforms, there are various ways that they might be attacked.

How does Programmatic Ad Fraud Work?

Advertisers and ad networks can be the victims of programmatic ad fraud, which comes in various guises and scams. Many of these techniques use malware, bots, and even human fraud farms to enable the fraudster to maximize their profit with minimal investment of time and effort.

Let’s take a look at 3 fraud strategies:

Click-Bait Fraud

Click fraud occurs when fraudsters use automated software or human labor to create clicks on an ad in a programmatic campaign that pays per click rather than per impression.

A basic botnet doesn't cost very much, so even a novice can build up a network with dozens, hundreds, or thousands of bots that can click on an ad from various IP addresses.

Human fraud farms employ enormous numbers of workers, often located in overseas sweatshops, who use a wide range of connected devices to click on adverts as quickly as possible while frequently moving between them. 

You may think that the high labor cost on these farms would make this strategy unfeasible, but in reality, the workers there earn relatively little.

Pixel Stuffing & Ad Stacking 

Some scammers "display" ads when they haven't. Fraudsters can claim that advertisements were "shown" to website visitors when they had no opportunity to view or click on them.

Stacking advertising on a page maximizes impressions while preserving "real estate" The page's advertising is layered and occupies the same space. Only the top ad is shown. Thus it has a chance of performing. However, every other ad is buried and can't be clicked, generating no results.

Pixel stuffing is another way scammers add additional advertising to a website without using much space. This fraud technique compresses display ads and videos to a single pixel. 

This is worse than ad stacking because at least one ad is visible with ad stacking. In addition, pixel stuffing prevents website users from seeing and responding to ads.

Spoofing Domains to Increase Bid Prices

Programmatic advertising networks are a common victim of domain spoofing; fraud is used to steal money from the networks and their clients. 

The main tactic is to steal one website and pass it off as another, more valuable one so that the fraudster may charge more for advertising space on the fake site.

If a fraudster sees that Wakerpedia.com is a highly visited site, they may try to pass off a website with the almost same design but with a slightly different domain name, such as Wackerpedia.com or Wakerpedla.com. 

People who visit the site without knowing the risks may pay more for advertising space.

What's worse about this tactic is that it frequently accomplishes far more than stealing money from ad networks and their clients.

Faked websites are not uncommon to be rife with malicious code and spam, and any advertisements that show on them may be related to this. Advertised products may suffer as a result of this.

In case you have found a mistake in the text, please send a message to the author by selecting the mistake and pressing Ctrl-Enter.
Alex 9.8K
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