Growth of mobile ad fraud: What app marketers need to know

Mobile advertising has revolutionised how businesses engage with consumers, but it has also opened the door for fraudsters to exploit app marketers. 

Mobile ad fraud, an ever-evolving challenge, is now a significant threat, costing advertisers billions annually and distorting campaign results. According to recent data, the global cost of app install fraud reached an estimated $5.4 billion in 2022

In this article, we are giving an insight on the tactics fraudsters use to manipulate the payout models of app marketers and why app marketers need to act now to safeguard their campaigns. 

What is mobile ad fraud?

At its core, mobile ad fraud involves deceptive practices to fake performance metrics and earn payouts dishonestly. Fraudsters manipulate attribution models to generate installs, clicks, or post-install events, draining budgets without delivering real value. The result? Advertisers are left with skewed analytics, wasted resources, and a false sense of a successful campaign when in reality it is just numbers, no value. 

Why has mobile ad fraud grown so quickly?

The rise in mobile ad spend has created a lucrative target for fraudsters. Performance-based campaigns, which pay for specific actions like installs or purchases, are particularly vulnerable. Fraudsters adapt their methods to game the system, ensuring they meet the required KPIs (Key Performance Indicators), often blending fake activity with legitimate traffic to avoid detection.

How fraudsters exploit payout models

Fraudsters manipulate different payout models to their advantage, ensuring they get paid regardless of the advertiser’s goals. Here’s how:

Fake Installs 

When an advertiser is giving the payout on per install basis, fraudsters often use bots or emulators to mimic real app downloads. The advertisers pay for installs that have no real value, which eventually leads to inflated customer acquisition costs without contributing to the campaign growth. 

Event Spoofing

When the payouts are on soft KPIs like sign-ups or logins, the fraudsters use scripts or some sophisticated techniques like running incentive campaigns to lure users to take action against a reward. In this case, the campaign performance appears strong, but the numbers don’t translate into meaningful user engagement or ROI.

Click Spamming and Click Injection

Not just the soft KPIs, the fraudulent techniques have evolved and now even hard KPIs like purchases can also be spoofed. They hijack legitimate organic traffic using sophisticated techniques like: 

• Click Spamming: Bombarding attribution systems with fake clicks so they claim credit for real user actions.

• Click Injection: Generating clicks just before a genuine user clicks to steal the last-click attribution and show it as an organic conversion.

As a result, marketers unknowingly pay for conversions they would have earned organically, misallocating their budgets. According to our analysis, 22% of ad traffic across sectors is affected by organic poaching. 

How do fraudsters hide their tracks? 

Fraudsters mix fake traffic with organic activity, creating a facade of legitimacy. By balancing bot activity with real user behaviour, they make it difficult for basic ad fraud detection tools to flag their schemes. This blending ensures they meet KPIs while evading scrutiny.

Fighting back: Steps app marketers must take

To combat mobile ad fraud, app marketers require a proactive and multi-faceted approach. Here’s what marketers can do:

1. Invest in Advanced Traffic Validation Tools: Advanced fraud detection platforms with full-funnel validation capability can help to transparency on fraud patterns across each stage. 

2. Track and Audit Traffic Sources: Regularly review traffic sources for anomalies or unexplained spikes in performance.

3. Validate KPIs: Ensure that reported installs, sign-ups, and purchases align with actual user behaviour.

4. Educate Stakeholders: Make sure your team understands the risks and signs of ad fraud to stay vigilant.

Way forward 

Fraudsters thrive in ignorance. Many app marketers remain unaware of the sophisticated techniques being used to drain their budgets. By educating themselves and their teams, marketers can take the first step toward mitigating this threat.

As mobile advertising continues to grow, the fight against ad fraud will demand constant innovation and vigilance. With the right tools and strategies, app marketers can outsmart fraudsters and protect their investments.

This article is penned by Dhiraj Gupta, Co-Founder and CTO, mFilterIt.

Disclaimer: The article features the opinion of the author and does not necessarily reflect the stance of the publication.