Advertising fraud is evolving. Brands are paying the price.

Sophisticated ad fraud is damaging businesses and often goes by completely unnoticed, weakening consumer trust in brands. Here’s how to fight back.

Mathew Ratty, the CEO and Co-Founder of TrafficGuard, examines how the ease-of-access to advanced technologies like AI-powered bots has also made ad fraud more popular and accessible than ever. He offers strategies marketers can deploy to counteract growing ad fraud.

Advertising fraud continues to plague the marketing industry, weakening consumer trust in brands and damaging their budgets. It is becoming increasingly sophisticated, leading to the rapid growth of a criminal industry that is being widely overlooked.

According to recent internal documents reported by Reuters, Meta projected that around 10% of its 2024 advertising revenue, roughly US$16 billion, came from ads promoting scams or prohibited goods. These included fraudulent e-commerce and investment schemes, illegal online casinos, and the sale of banned medical products.

The report also noted that Meta’s ad-delivery model, built to maximise engagement and impressions, can unintentionally reward bot activity, as fake clicks signal demand and act as an impression magnet that drives continued ad serving.

The situation with Meta points to a broader issue that extends across the advertising industry. Advertising fraud is simply too lucrative for threat actors to resist, and companies aren’t aware of the real danger it presents. The proliferation and ease-of-access to advanced technologies like AI-powered bots has also made ad fraud more popular and accessible than ever.

Despite Forbes projecting advertising fraud to cause $172 billion in lost ad spend in 2028, brands are largely unaware of the issue and just how quickly losses are adding up. It’s crucial that marketers address the ad fraud challenge, or they risk drained budgets and damage to their reputations.

Evolving fraud tactics

Unlike conventional cybercrime, advertising fraud causes no immediate system failure or alert. Its impact is gradual, embedded within campaign performance and amplified by automated ad platforms. AI-driven bots can now simulate legitimate user behaviour at scale, allowing fraud to persist, optimise, and monetise without detection.

These bots generate fake clicks and impressions on campaigns to deliberately consume ad budgets and trigger paid outcomes, even when no real customer exists. Every fraudulent interaction still generates revenue for someone in the ecosystem, whether through ad network payouts, arbitrage schemes, or resold traffic. Promotional campaigns and free trials are prime targets, as Large Language Model (LLM) bots can create and rotate convincing fake user profiles, repeatedly exploiting offers, incentives, and attribution models without ever intending to convert.

Fraudulent traffic like this can easily appear human in the CRM, even down to mimicking cursor jitter, scroll depth and even dwell-time. This helps cover fraudsters tracks, and as they create high click-through rates, brands assume their campaign is performing well and don’t look into their traffic in deeper detail. In reality, the advertiser’s customer acquisition costs (CACs) are secretly ramped up alongside the publisher’s ad revenue.

Brands are also facing a drop in new users visiting their sites, as PPC campaigns have a set budget. Bots rapidly use up this budget with fake engagement, leading to it being taken down before users get the chance to see or interact with it. Brands then lose out on potential revenue to bots that offer nothing in return. Ad fraud is underestimated as a legitimate danger to advertiser’s and bad actors are taking advantage of it for their own gain.

Protecting campaign integrity

To tackle a rapidly growing fraud problem, advertisers need to prepare. To protect their budgets and campaigns, a strategy is key:

• Robust Identity Verification: Setting up stronger identity verification methods is an effective method to deter fraudulent bot accounts. More difficult CAPTCHAs or requiring more details at sign up can halt AI bots trying to create multiple accounts as they struggle to generate all of the information required.

• Proactive Monitoring: Click fraud has led to an influx of fake traffic attempting to enter systems. Marketers should monitor and track their campaigns closely to look for any early warning signs of fraudulent traffic they can then act against. In the case of bots, these signs could be a sudden spike in traffic, especially if it’s from a suspicious location or at strange times of the day. A high bounce rate is another sign, as bots typically won’t stick around after exploiting a campaign.
• Deploy Ad Fraud Detection Tools: Implementing ad fraud detection tools is an extra step marketers can take to identify if a click is fraudulent. These tools can detect clicks from non-human sources after their first interaction with a campaign and block them from interacting any further to safeguard budgets.

Ensuring future growth

Ad fraud on platforms like Meta is not an isolated problem. It points to a systemic issue across digital advertising, where evolving fraud tactics can exploit brands without clear warning signs. Just as businesses rely on antivirus software to protect their networks, advertisers must actively safeguard their digital channels against a growing wave of ad fraud and bot activity.

Ad fraud succeeds because it often goes unnoticed, but with the right strategy, advertisers can uncover and stop these threats before they cause damage. Protecting against bots and fraudulent activity not only secures current spend but also preserves the integrity and growth potential of future campaigns.

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Read the full article at Performance Marketing World.