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As the festive season approaches, brands and e-commerce platforms are once again grappling with a surge in ad fraud activities. With a rise in online shopping and promotional campaigns during this period, fraudsters are exploiting vulnerabilities to deceive consumers and siphon off revenue from legitimate businesses.
In 2023, Juniper Research reported that ad fraud caused a loss of US$84 billion in global ad spend. This figure is projected to increase to US$172 billion by 2028.
Let's look at the types of ad frauds going on during the current festive season:
1. Phishing Scams
Fraudsters create fake websites and emails that mimic well-known brands. These deceptive tactics trick unsuspecting users into revealing sensitive information such as login credentials and financial data, leading to significant losses.
2. Promoting Gaming & Gambling Sites
Fraudsters use a network of money mules and fake payment gateways to move funds offshore. The introduction of 'Mule as a Service' has further facilitated these activities, making it easier for criminals to exploit the system during high-traffic periods.
3. Affiliate Fraud
Affiliates become more active during festive periods, promoting "too good to be true" referral codes and incentive campaigns, such as offering 25% off on the first purchase if users install a specific app. These campaigns can lead to fraudulent installs and low-quality traffic.
4. Lead Fraud in Brand Promotions
For brands running lead generation campaigns, lead fraud is a major challenge. Bots programmed to automatically fill out forms generate false leads, wasting valuable resources and skewing campaign performance data.
5. Click Fraud on Publisher Networks
Publisher networks on platforms like Google and Facebook become more active, leading to click fraud. This includes invalid traffic, click spamming, and other tactics to inflate click-through rates fraudulently.
6. Fake E-commerce Websites
Adding to the complexity, fake e-commerce websites have become rampant. These fraudulent platforms lure customers with too-good-to-be-true offers, only for the victims to realize that their purchases never arrive. This not only results in financial losses but also erodes trust in reputable e-commerce brands.
7. Brand Impersonation
Brand impersonation scams are also on the rise, with fraudsters creating ads that closely resemble those of legitimate brands. Users are tricked into clicking on malicious links or sharing personal details, causing irreparable damage to brand reputations.
8. Counterfeit Products
Counterfeit products are flooding the market, especially on major e-commerce platforms like Amazon and Flipkart. These fake products, often sold under the guise of reputable brand names, lead to customer dissatisfaction and tarnish the brands’ image.
Across the industry, no sector is safe from these fraudulent schemes. Electronics, fashion, and home appliances are frequent targets. Major platforms such as Amazon, Flipkart, Snapdeal, and even social media channels have become hotbeds for these scams, with fraudulent activity even spilling over into messaging platforms like Telegram and WhatsApp.
The financial impact of these scams is immense. Brands face a twofold loss—first, in the form of lost revenue from scammed customers, and second, through the cost of damage control and brand reputation protection. In addition, the increasing prevalence of fraudulent clicks and impressions significantly impacts marketing budgets, pushing brands to allocate more resources toward security.
Ad fraud surges by 20-30% during the festive season, with this year’s projections showing even greater sophistication in fraudulent techniques. While brands are becoming more proactive in identifying and mitigating these risks, fraudsters continue to evolve their methods.
Dhiraj Gupta, Co-founder and CTO at MfilterIt, has emphasized the persistent nature of ad fraud, particularly during festive seasons when advertisers significantly increase their budgets. According to Gupta, the heightened spending creates an imbalance of demand and supply in the advertising market, leading to inflated media costs and an increased vulnerability to fraudulent activities.
"The type of ad fraud remains the same," Gupta stated, noting that as brands ramp up their investments, the resulting demand outstrips supply. This scenario creates a "bubble" where the costs for impressions and clicks surge, making every advertising dollar more valuable and more susceptible to fraud. During festive periods, as major brands compete for consumer attention, it becomes even more crucial for companies to protect themselves against these fraudulent schemes.
Gupta revealed that the festive season typically accounts for about 40% to 50% of most companies' annual media budgets. "This is a very, very critical period for everyone," he asserted, urging advertisers to implement robust tools to ensure their marketing dollars are effectively utilized and not wasted on fraudulent traffic.
Gupta also addressed the importance of brand safety, emphasizing that ads must run on appropriate content to maintain their value. "If your ads are not running on safe content, you are diluting the value of the ad, even if it is seen by a human," Gupta explained. He stressed that unique technology is essential to combat ad fraud effectively, as manual checks are often insufficient. While many clients trust their agencies to safeguard their interests, Gupta argues that technology must play a more significant role in protecting brands from the evolving landscape of ad fraud.
"Advertisers need to wake up to this," he warned, urging brands to prioritize these concerns not just during the festive season but consistently throughout the year. Gupta highlighted that neglecting ad fraud could lead to substantial wastage of funds and directly impact return on ad spend (ROAS) and profitability.