How ad fraud affects brand marketing

Chadwick Kinlay, the Chief Marketing Officer of TrafficGuard, shares his insights on ad fraud’s impact on brand marketing and what APAC marketers need to know about it to safeguard their brands.

Advertising fraud is a global problem. The ad fraud cost is estimated to reach US$44 billion or about 45 percent of total ad spend this year. Statista suggested that ad fraud’s annual cost will grow from US$35 billion in 2018 to US$100 billion this year. The increasing number of ad frauds prompts publishers and advertisers to take action and preventive measures against those who abuse the system for financial gain.

MartechAsia interviewed Chadwick Kinlay, the Chief Marketing Officer of TrafficGuard, an ad fraud verification and prevention platform. He shared expert insights about ad fraud’s impacts on marketing and the education sector and the preventive measures available.

Why do APAC marketers need to understand ad fraud in the education sector?

Digital advertising is one of the marketing industry’s most endemic – and costly problems, with fraudsters predicted to steal over US$100 billion in 2023. Today, it’s estimated that 20 percent of ad transactions come from fraudulent sources, which makes fighting it turn into a never-ending game of catchup for advertisers. 

Specifically, in the education sector, the average cost per acquisition (CPA) in the tertiary education industry currently stands at $1985 per student—meaning every student who enrolls at an institution has had nearly $2000 of advertising and engagement outlay to get them there. In addition to these declining enrollment numbers, competition between institutions for a shrinking pool of candidates and subsequent rising enrollment targets for student acquisition teams. Marketers are looking at hefty paid media budgets that need to work overtime. 

The high advertising spend makes sense though, right? The lifetime value of a single student can be in the tens of thousands, so the high amounts spent on driving enrollment are thought to be well-recouped throughout their attendance.

Chadwick Kinlay, Chief Marketing Officer, TrafficGuard

But this high spend attracts advertising adversaries, making the education sector a hot spot for fraud, where fraudsters steal large amounts of the budget by delivering false engagement through bot fraud, click spoofing, click injection, and install farms- making a direct impact on performance.

What do APAC marketers need to know about ad fraud to help with their day-to-day tasks?

Ad fraud plagues marketers in the following ways that affect their campaign performance daily:

  • Invalid traffic (IVT) via search campaigns

Invalid traffic encompasses clicks or impressions that offer no real value to the advertiser, resulting in inflated costs. Whether from fraudulent or accidental activity, any non-genuine user engagement is considered invalid. Such invalid traffic can seriously impact your campaigns’ effectiveness and limit your ad budget’s reach – not something desirable in a competitive industry like higher education.

Take a common example: A typical marketer aiming to recruit students for an MBA program will run search campaigns based on higher education keywords such as “MBA Programs,” “Business School,” etc. Did you know that these keywords cost a pretty penny:

‘MBA programs’ – $45 per click

‘Business school’ – $50 per click

‘Online MFA’ – $20 per click

The high CPC of popular education-related keywords is a huge draw to fraudsters, who can steal large amounts of the budget by delivering false engagement. It all means the effects of fraud are felt more keenly, as the high cost of clicks quickly eats away at the budget.

  • Reduced retargeting efforts via PPC fraud

The journey from researching educational institutions to starting courses often takes months or even years for prospective students, resulting in a lengthy sales cycle with multiple touchpoints. Retargeting is a crucial component of marketers’ channel mix, especially for PPC campaigns that enable institutions to reconnect with learners who revisit their websites to research and inquire. Unfortunately, fraudulent activity can quickly deplete retargeting budgets, meaning up to 30% of your ad budget may go towards targeting bots instead of actual students – a situation we’ve seen occur all too often.

  • Compromised Campaign Data

Marketers face challenges in timely campaign optimization decisions when they lack complete certainty regarding traffic validity. In addition to compromising campaign effectiveness, a high volume of invalid traffic can lure marketers into directing their spending towards traffic sources that seem promising but are generating non-opportunities. This can result in wasting precious time, effort, and budget on sources that do not yield a strong ROI.

How can ad fraud affect brand marketing?

Ad fraud can have severe long-term consequences on a brand’s user acquisition and growth potential. Unchecked ad fraud can negatively impact campaign optimization, with supply sources optimizing and scaling activity with the best-performing sources. However, without real-time knowledge of traffic quality, there is a risk that campaigns will scale with sources delivering a high proportion of fraudulent clicks, putting the overall success of the campaign in peril.

Moreover, ad fraud can also harm a brand’s relationship with its audience, advertising and media networks, leading to a lack of transparency in campaign numbers and attribution, often resulting in advertisers frequently changing networks and traffic sources. This can lead to a “cold start,” wherein marketers must begin the entire campaign process from scratch, losing optimization and insights gained from the outgoing source and wasting dollars.

In the edtech sector, marketers work with various traffic sources, allocating budgets to each source, expecting them to deliver as many clicks/conversions as possible. However, fraudulent traffic can under-utilize these budgets, leading to the search for alternative traffic sources, compounding the cold start effect.

What are the examples or use cases wherein ad fraud can negatively impact brand marketing?

Recently we witnessed an eCommerce website in the edtech sector dishing out $40,000 a month on Google Ads across various accounts, but their ad ops team was struggling to combat invalid traffic. Despite analyzing placement reporting and updating exclusion lists manually, their efforts were insufficient in protecting them from ad fraud. It was time for a more effective strategy.

But through our assessment and automated PPC fraud prevention capabilities, we found that:

    • 135% more invalid traffic than identified by Google, representing a cost-saving of $3k+
    • Invalid traffic sources were forecast to generate a further $7k in invalid traffic in the same month if left unabated
    • Invalid traffic stood to waste 25% of this client’s monthly ad spend

With TrafficGuard, their campaigns are protected in real-time, rather than waiting for human analysis and manual exclusion management. This frees up the team’s time while also giving their Google Ads campaigns more thorough coverage and enabling:

    • A 12% reduction in cost per conversion
    • A conversion rate improvement of 8%, as low-quality traffic was removed
    • 24x ROI increase – just based on mitigated IVT

How can APAC marketers prevent ad fraud?

Marketers have been slow to respond to the threats, partly due to a lack of awareness and also because of Google and Apple’s impending changes to cross-site tracking. As current tracking tools face obsoletion, marketers may not see a point in investing in the current tech available.

As such, many marketers still fail to execute appropriate measures to combat ad fraud, such as monitoring campaigns and metrics or implementing correct internal procedures. They also may not be investing in third-party tools to track and attribute conversions and screen out fraudulent traffic.

However, given the grim outlook for 2023, alongside the World Federation of Advertisers’ 2016 prediction that ad fraud would become the second-largest market for organised crime, it’s imperative that marketers take preventative steps now.

With advanced technologies like machine learning (ML) and artificial intelligence (AI), the industry can help reduce ad fraud losses by US$10 billion in 2022. AI tools are exceptionally helpful in detecting suspicious behaviour, and can also analyse the data generated from advertising activities and help advertisers minimise financial losses.

To effectively combat ad fraud, brands must carefully evaluate various ML capabilities, pricing models, and coverage levels and be willing to invest in the most effective technologies. The most advanced solution fully utilizes multipoint fraud mitigation tools that can quickly detect and block invalid traffic in real-time.

However, these tools alone cannot completely solve the problem of ad fraud. It’s essential to restore trust and transparency across the entire digital advertising supply chain. Ignoring ad fraud is not an option, as it often goes undetected until it’s too late. Marketers must take immediate action and implement effective measures to protect their campaigns and brand from fraud to succeed in this competitive industry.