Ad fraud set to surge due to automation advancements

Recorded Future's threat intelligence unit, Insikt Group, has released a research paper indicating an increase in ad losses, projected to reach $100 billion, owing to growing accessibility and advancements in automation solutions like bot software. The findings reveal that these technologies allow low-level fraudsters lacking technical expertise to conduct ad fraud on a large scale.

Ad fraud involves artificial inflation of the metrics used to measure ad performance for personal or financial gain. It directly hits advertisers, publishers, and ad tech companies, leading to increased ad spend and creating a risk of brand impairment. According to Statista, ad fraud losses are predicted to touch $100 billion by the end of 2023.

The Insikt Group study underscores the role of advancements in botnets, bot farms and techniques for committing large-scale ad fraud. The report also indicates a convergence of threats, including money-laundering and cybercrime, as fraudsters exploit automated online advertising for card fraud-funded malvertising attacks.

Despite the enablers available for fraudsters, including the dark web, open source, underground forums and public channels like YouTube, solutions are available. The report suggests implementing technical solutions capable of detection and filtering out Invalid Traffic (IVT), indicative of bot activity, as one of the mitigation strategies. The use of ads.txt and sellers.json can increase transparency for advertisers and help combat ad fraud. In addition to this, employing strategic threat intelligence can help understand and mitigate ad fraud threats.

Insikt Group emphasises the need to address ad spend inefficiencies and prioritise advertising effectiveness over low cost. The figures suggest a significant growth in digital ad spend, predicted to surpass $600 billion by the end of 2023. As a result, aggregate losses from ad fraud for this year alone may touch a staggering $33 billion, according to Lunio.

The impact of ad fraud extends beyond financial losses. Swedish news outlets reported that Swedish gangs behind an increase in bombings and shootings had begun to use streaming manipulation - an ad fraud-adjacent technique, to launder money from drug deals, robberies, fraud, and contract killings. Fraudsters are also leveraging the programmatic advertising market to conduct combined payment fraud and malvertising cybercrime schemes, exposing victims to the risk of compromise of payment card data, personally identifiable information (PII), or account credentials indirectly creating a vicious cycle.

The escalation of ad fraud is likely to continue each year due to the growth of the programmatic advertising market as a whole, impacting the credibility of the ecosystem and posing brand impairment risks for ad tech companies and advertising intermediaries. The stakeholder's ability to utilise Artificial Intelligence (AI) solutions to detect and prevent Invalid Traffic (IVT) and ad fraud will possibly moderate the threat posed by ad fraud in the coming years.

Ad fraud presents different risks for advertisers, publishers, and ad tech companies, but all stakeholders in the advertising ecosystem can mitigate the threat more effectively by understanding the tools and tactics used by fraudsters. As a result, proactive strategies incorporating AI technology are needed to safeguard advertising campaigns and ensure the integrity of marketing efforts.