Marketing Fraud with Business Impacts: Threats to Performance Advertising

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

Marketing has changed quite a bit in the past few months, but the essence of it still remains: marketing is a relentless optimization effort. It is a constant cycle of learning and improving. Thankfully, marketers have more advanced methods than ever before to reach and convert their desired audiences. As the marketing industry expands into new technologies and tactics, fraudsters expand and adapt their tactics in kind, presenting a number of new threats to marketing campaigns. No matter the space in which the fraud is happening, fraudsters will always follow the money. 

White Ops Marketing Integrity uses the power of our bot mitigation platform to detect sophisticated bots and protect brands from falling victim to marketing fraud. But if a marketer doesn’t know what fraud looks like in their realm, they’ll never know it’s a problem. Up until recently, the first rule of marketing fraud was to never talk about marketing fraud because it was considered a small cost of doing business. We’re flipping the script as the problem is much bigger than marketers thought.

Marketing tactics outside of programmatic remain vulnerable to bot threats. Today’s sophisticated bots look more human than ever: they largely emanate from on-device malware, meaning they live on a real person’s device. These sophisticated bots capable of running scripts that can have deleterious effects, all while going undetected. Performance marketing leaders and security teams work tirelessly to keep up with this ever-evolving adversary, but it is hard to handle sophisticated bots as they change disguises. 

We want to arm marketers with knowledge of how these threats work and how their perpetrators stand to benefit. Our intention is to share what is really happening so marketers can take control of their full marketing efforts, reduce fraud, protect the entire martech stack, and deliver greater success on their campaigns. Every marketer needs to take the time to figure out how they can help in the fight against marketing fraud in order to improve conversion rates and business results by ensuring they are engaging with real humans. 


At This Performance, The Role of “Human” Will be Played by “Bot”

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There’s a lot of money spent globally by brands in digital marketing with projections of digital marketing and advertising spend to hit nearly $390 billion in 2020. So when bad actors look at performance advertising, they see dollar signs. The twin forces of  burgeoning  performance budgets and the low economic cost for a fraudster to perform this fraud, supply their motivation. Advertisers pay for specific outcomes, and they expect to see those outcomes. If you pay for a thousand eyeballs, you want those eyeballs. However, the partners used to bring those eyeballs have their own partners to fulfill the demands. As the “eyeball” supply chain—as it were—expands, some partners will use less ethical tactics to meet their goals. This expectation and commitment to deliver website visitors make performance advertising susceptible to sophisticated bots. Bot operators can make those eyeballs look exceptionally human. In addition to their human-like (humanoid?) appearance, the bots’ manipulation of behaviors is often overlooked because it appears the campaign traffic is meeting their goals, but when you look deeper, the conversion rates are low. 

When ad networks and agencies are tasked with delivering on challenging margin and traffic goals, they sometimes turn to less premium sources to ensure the delivery of campaigns. The result, to which a network or agency may be unaware, can be a hybrid of real and fraudulent bot traffic. There are several different threat models we see fraudsters using to take advantage of marketers:   

Click Fraud: Perhaps one of the most well-known threat models, sophisticated bots get paid to view and click on ads, and the marketer is none the wiser given their human-like tendencies. Click fraud occurs when bad actors seek to leverage bots to deliver ad activity for a campaign. As campaigns dip into less trustworthy inventory sources to meet click and margin goals, the quality drops as does the conversion rates. 

Lead Fraud: As with click campaigns, the possibility for fraud on lead gen efforts also rises when advertisers are under pressure to drive aggressive customer growth. A sophisticated bot living on a real person’s device can put that person’s name and information into forms, making it even more difficult for a marketer to spot the fraud.This is only amplified when the cost-per-lead (CPL) payouts are high, directly attracting fraudsters looking to steal the higher CPL payouts. They drive bot traffic to landing pages, typically with form fills and emulate human behaviors to avert detection. This results in high lead numbers, but lower customer conversion rates.  

Retargeting Deception: This fraud occurs when service providers have driven site traffic from sophisticated bots which then populate data management platforms (DMPs) or customer relationship managers (CRMs), then use this data to retarget bots. The retargeting provider, which can send bot visitors that previously landed on your site, gets paid on completed retargets/returning visitors. This results in fraudsters falsely claiming the referral payments. So, the marketer continues to lose money and time as it retargets a fake lead. Data under the influence of bots can have a wide ripple effect on your budgets.

Competitive Assaults: “Black hat” (think “unethical”) marketers from competitors use click bots to launch automated search queries, click on competitor ads to waste competitor budgets, and diffuse targeted marketing efforts. This is a frequently observed threat model across all verticals including Travel, Automotive and Small and Medium-sized Businesses (SMB) verticals.

Here’s an example of how this plays out in the real world: 

We work with a leading luxury automotive brand and we uncovered a few of their marketing campaigns were driving a high level of bots—some north of 30% of traffic—to their campaign landing pages. This led to lower conversion rates across the board. The advertiser believed they needed to focus on landing page optimization to improve conversion rates and, unfortunately, wasted a substantial amount of their marketing budget and months of work on these efforts. When they started using White Ops Marketing Integrity, they were able to eliminate the sources that were driving high levels of fraud and focused all of their efforts and investment on those that were delivering real, human impressions. As a result, they saw a 6x improvement in conversion rates. 


Fighting Back

Even a seemingly “small” percentage of fraudulent site traffic from sophisticated bots has a massive impact when viewed through the larger marketing lens: campaigns, time, and annual spend. At White Ops, we believe that looking at percentages can be misleading as even 1% can still translate to a hefty sum lost to marketing fraud. Instead, we recommend looking at the sources—just like our automotive partner—to see the full picture of potential fraud. 

While this is a scary reality, knowledge is power here. By shedding a light on the hidden impact of bad actors on marketing efforts, we can start to eliminate these threats. Understanding these threat models is imperative for marketers to improve the quality and effectiveness of their holistic marketing strategy by focusing on real humans, not bots. This makes marketing budgets work more effectively and makes marketers brand heroes.