Marketing Fraud with Business Impacts: Threats to Brands

This piece is second in a series about threat and fraud models targeting marketing professionals’ advertising budgets and campaigns.

In the first post in this series, we dug into common causes of marketing fraud within performance marketing. Most marketers have simply accepted it as a small cost of doing business. However, marketing fraud is impacting every brand across the globe and at a much higher level and cost than you may think. It also has a long and lasting effect on marketers’ budgets and efforts to reach their customers. It should not and cannot be ignored as the problem is only getting worse as attackers get more sophisticated.

Many brand advertisers believe their partners have them covered and insulated from marketing fraud through programmatic advertising. For the most part, they aren’t wrong. Leading DSPs, SSPs, and exchanges have formed strong partnerships with bot mitigation and bot prevention leaders. This has greatly reduced the prevalence of fraud running through programmatic platforms.

Unfortunately, none of this protects the brand marketers, as marketing fraud goes way beyond just programmatic display and video. Marketers rely on a host of tactics—like search and social—to attract the interest of their customers. All channels are susceptible to fraudsters, and most platforms are unable to catch this fraudulent behavior.


Bots vs. Brands

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White Ops Marketing Integrity uses the power of the White Ops Bot Mitigation Platform to detect sophisticated bots and protect brands from falling victim to marketing fraud. We are helping marketers understand that this is not “a cost of doing business” problem but one of significant magnitude. To that end, we want to help marketers better understand the threats they are facing:

Brand Ad Skimming: Bad actors mix legitimate traffic with fake bot interactions to make their network of traffic more attractive to agencies and advertisers. Even large, well-reputed publishers can fall prey to this sophisticated bot traffic that passes as human. Since this traffic can be a small subset of the advertiser buy, it persistently presents within very large media buys without raising alarm. This is a lucrative scheme for fraudsters because they can double or triple their legitimate inventory with false inventory, giving them a far larger return in the form of higher CPMs.

Fake Audience Database: Brands increasingly seek to build up their first-party audience databases so they can run subsequent campaigns from their CRM systems to a wider audience. In this process, brands seek outcomes beyond just building awareness, such as having users fill out forms in exchange for promotions or sweepstakes. Malicious actors can wreak havoc on a brand’s audience databases by automating bots to input fake user data, in exchange for a cost per form fill payout or even to benefit from the giveaways. Fraudsters will deliver fake bot or incentivized sign-ups to steal this money and lead to a weaker database of customers for the brands.

Search Fraud:It is no secret that brands use search to build awareness. One study showed that search ads drove an average increase of 6.6 percentage points in top-of-mind awareness, from 8.2% to 14.8%—a lift of 80%. However, since such ads are not driving conversions, bot clicks can go unnoticed. Search ads can be targeted by sophisticated bots through unintentional efforts from advertising partners and intentional efforts from competitors. Marketers looking to mess with competitors budgets and metrics can invoke click bots to launch automated search queries, click on competitor ads to waste competitor budgets, and diffuse targeted marketing efforts. Also, fraudsters can help build the profile of their bots by clicking on search ads. While this isn’t revenue-generating, it further develops their profile to look like a human.

Look-Alike Audiences: As brands seek as broad a reach of relevant audiences as possible, purchasing look-alike audiences is a widespread way to achieve this purpose. With look-alike matching, providers take a core audience of site visitors, app visitors, or an uploaded audience to perform a behavioral analysis to find similar consumers. This can unfortunately invite bad actors who have built up profiles to look like an audience a brand wants to capture. Service providers then have skewed audience pools. While brands think they are building awareness with an extended, but vetted audience per their matching criteria, bots are getting in through this back door.

As more brands increasingly turn away from the cookie, internal customer databases and systems become even more crucial. Therefore, it’s important to view fraud’s effect through the proper lens: lifetime value (LTV). Even a small amount of fraud can have a large and lasting effect on marketing efforts - causing continuous dollars to be lost to bots over a long period of time. LTV measures the true opportunity cost of cyberthreats.


Underneath the Hood

To illustrate this impact, let’s look at a leading brand advertiser who uncovered a significant amount of their annual budget was being compromised by sophisticated bots. Examining the source of the fraud-ridden spend (across search, social, mobile, and display channels) using the White Ops Bot Mitigation Platform, they narrowed down the source to specific IPs via one of their display advertising partners. The brand immediately shifted their campaign strategy to eliminate specific campaigns from the fraud source and systematically removed the previous bot users/sessions from their targeting and CRM systems.


The Upside of Stopping Marketing Fraud

Identifying and eliminating this fraud allowed the brand to deliver significant cost savings and improved return-on-investment (ROI). This brand used a simple estimation of the marketing LTV of the previously lost budget using a 3X factor. Accordingly, the brand valued the recovered revenue by converting real human traffic, at 24% of their annual marketing budget. This, coupled with improved conversion rates, delivered a robust 12X ROI on their platform and effort costs. With active bot monitoring in place, the brand can be alerted and then quickly react to prevent impacts on their campaigns.

By understanding these threats and actively seeking insights into their full marketing efforts, marketers have significant power to influence this battle - and tip it in their favor. Identifying and addressing the sources of fraud on brand sites can keep it from impacting marketers’ efforts. The first step is learning and understanding what marketing fraud is. So, we welcome you. Now it’s time to take action. We are here to help.