How has click fraud worsened during the coronavirus pandemic?

In this Q&A interview with Stewart Boutcher, CTO and data lead of Beacon, he discusses how click fraud has worsened during the coronavirus pandemic and what e-commerce businesses can do to protect themselves

What is click fraud?

“Before defining click fraud, it’s important to establish what is meant by the term ‘ad fraud’.

“Ad fraud is any attempt to defraud digital advertising networks for financial gain and is often carried out by scammers and criminal gangs. While ad fraud takes many forms, any kind of this nefarious activity involving the use of so-called ‘bots’ – automated programs designed to steal online ad clicks and exhaust marketing budgets – is referred to as click fraud.

“Click fraud is particularly common across a range of digital advertising content, including Pay-Per-Click [PPC] ads on Google and Bing, promoted social media posts, programmatic advertising, influencer marketing and other paid-for media, such as display banner ads.”

How big of a risk to businesses does ad fraud pose?

“The threat that ad fraud poses to businesses is significant, widespread, and should not be underestimated by digital marketers.

“Research by matchseries.com shows that global losses from ad fraud in 2020 reached a total of $35 billion, while a Campaign Asia report published in December found that ad fraud is stealing 20% of the world’s online ad spending. These figures help illustrate the extent of the problem that ad fraud creates for businesses, and the vast array of different ad platforms and options that are available to firms means the level of wastage can vary considerably.

“It is not only SMEs that fall victim to such significant amounts of fraudulent traffic. Though they may have dedicated teams in place to help tackle the issue, many of the world’s biggest companies are also being affected. A prime example is Uber, which turned off two thirds of its annual advertising budgets –roughly equating to $100 million – and basically saw no change to the effectiveness of its marketing campaigns.”

Has click fraud grown in size during the pandemic?

“When assessing any level of growth in click fraud during the pandemic, it is important to first highlight that it not consistent across the board. Networks, campaigns, geographies and sectors are all variables that influence the impact click fraud has. As an average, however, there appears to be plenty of anecdotal and empirical evidence that click fraud has become more widespread in the wake of coronavirus. What is not clear though is whether this is because it is being carried out on a larger scale, or purely because advertisers have noticed it more.

“More companies than ever before have been pushed online by the crisis, with those that were already using digital marketing having invested more heavily in digital spaces. As brands spend increasing amounts of money online, it stands to reason that they will become exposed to greater levels of click fraud and lose more money as a result. This, of course, makes click fraud much more noticeable and, in my view, is why it appears that click fraud has grown during the pandemic. It’s not necessarily that those committing click fraud have doubled their efforts in any significant way; click fraud appears to have grown more prevalent simply due to the rise in digital marketing.

“This is corroborated by what we have seen across our client base. There has been a fairly consistent rise in click bot traffic in clients’ advertising campaigns, so it appears to be an absolute increase rather than any sector-specific increase, which would likely be the case if a greater level of click fraud was being committed.”

What new opportunities for exploitation has the crisis presented to fraudsters?  

“It’s highly likely that bot networks have evolved at a greater speed during the pandemic due to the opportunity that the situation has presented to scammers. However, the technology that enables click fraud was already becoming increasingly sophisticated prior to COVID.

“While bot networks used to rely heavily on running off individual machines like laptops, it seems that in recent years they have largely switched to run off cloud networks. This approach makes the task of running a bot network that much easier, and means bots can be deployed across a wider range of campaigns at once. This is the biggest technological change to the way click fraud is conducted that we’ve seen in recent times.

“In some ways, this makes it slightly easier to detect click fraud, due to the sheer size of cloud structures. However, bot detection is still no easy feat, which is why we have had to develop new innovations to remain in-step with the technology that the scammers are using.”

Has there been heightened pressure on the online giants to combat the growing instances of click fraud on their platforms?

“There has certainly been a greater level of pressure placed on the online giants to take action on click fraud during the pandemic, but the impact that this pressure has had is questionable.

“Many of the major platforms argue that they do their best to ensure traffic that those using their marketing services receive comes from genuine human visitors, but they can always do more. Moreover, platforms could do more to support organisations that are committed to combating click fraud online, and only through a greater level of collaboration will we achieve sustained decreases in fraudulent activity across the board.”

What would be the likely impact on firms if they fail to address the increased levels of click fraud in their marketing campaigns?

“Frankly, businesses are leaving money on the table if they fail to take action on click fraud, due to the amount of their budgets that are otherwise wasted.

“It’s easy to look at a digital marketing campaign and see that you’re getting 100 human clicks, but in actuality you could likely get upwards of 200 genuine clicks if you removed the bot traffic.

“By failing to act, marketers are not doing the best that they can for their businesses, and it could even be argued that they are inadvertently supporting organised crime in not doing enough. While companies can still claim they aren’t fully aware of the extent of click fraud now, that simply won’t be an acceptable argument in the future.

“At present, there is no legal standpoint for businesses to take action against click fraud; but it is likely that there will be at some point in years to come. For now though, it is a purely moral standpoint, and if companies are truly passionate about safeguarding their customers, they absolutely should care about the impact that click fraud has.

“So, while it is fair to say that more needs to be done by the online giants, not all the blame can be laid at their feet; marketers using their platforms have a responsibility also.”

What can businesses do to mitigate the risks? 

“The best and most impactful way that companies can reduce the risk that click fraud poses to them is by investing in click fraud protection technology. These solutions are effective at identifying the presence of click bots in marketing channels and can take meaningful steps to blocking them, thereby producing a much stronger Return on Investment [RoI] for the marketer.

“The most important thing that advertisers can do themselves, however, is simply to learn about click fraud and have a greater awareness of what is actually going on in their marketing. I have a lot of sympathy for advertisers as click fraud requires expertise, time and effort to combat and often companies don’t have the resources to fight it on their own – which is where we come in. However, once they know about click fraud and the impact it is having on their business, they can no longer be ignorant to it.

“Make no mistake, this is an arms race and there are vast amounts of money being made by bots. Bot detection, therefore, can only be seen as a good thing for advertisers, but it requires continued innovation if it is to keep pace with the fraudsters.

“Moreover, companies like Beacon must try to understand the mindset of the scammers so that we can get ahead of them and fight instances of click fraud wherever possible. We have the commitment and capability to achieve this for our clients, so I would encourage digital marketers to get in touch with us to find out how we can help them to take the fight back to the bots.”