The Biggest Ad Fraud Cases and What We Can Learn From Them
Ad fraud is showing no signs of slowing down. In fact, the latest data indicates that it will cost businesses a colossal €120 billion by 2023. But even more worrying is that fraudsters’ tactics are becoming so sophisticated that even big-name companies such as Uber, Procter & Gamble, and Verizon have been victims of ad fraud in recent years.
So what does this mean for the rest of the industry? The answer is simple: every ad company, no matter their size or budget is just as at risk as the big guns – if not more.
In this article, I summarize some of the biggest and most shocking cases of ad fraud we’ve witnessed over recent years and notably, what vital lessons marketers and advertisers can learn from them to avoid wasting their own budgets.
The biggest ad fraud cases in recent years
From fake clicks and click flooding to bad bots and fake ad impressions, fraudsters have and will go to any lengths to siphon critical dollars from your ad budgets.
Let’s take a look at some of the most high-profile and harmful ad fraud cases of recent years that have impacted some of the most well-known brands around the world.
Methbot: $5 million a day lost through fake video views
In 2016, Aleksandr Zhukov, the self-proclaimed “King of Fraud”, and his group of fraudsters were discovered to have been making between $3 and $5 million a day by executing fake clicks on video advertisements.
Oft-cited as the biggest digital ad fraud operation ever uncovered, “Methbot” was a sophisticated botnet scheme that involved defrauding brands by enabling countless bots to watch 300 million video ads per day on over 6000 spoofed websites.
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Due to the relatively high cost-per-mille (CPM) for video ads, Aleksandr and his group were able to steal millions of dollars a day by targeting high-value marketplaces. Some of the victims of the Methbot fraud ring include The New York Times, The New York Post, Comcast, and Nestle.
In late 2021, Aleksandr Zhukov was sentenced to 10 years in prison and ordered to pay over $3.8 million in restitution.
Uber: $100 million wasted in ad spend
In another high-profile case, transportation giant Uber filed a lawsuit against five ad networks in 2019 – Fetch, BidMotion, Taptica, YouAppi, and AdAction Interactive – and won.
Uber claimed that its ads were not converting, and ultimately discovered that roughly two-thirds of its ad budget ($100 million) wasn’t needed. This was on account of ad retargeting companies that were abusing the system by creating fraudulent traffic.
The extent of the ad fraud was discovered when the company cut $100 million in ad spend and saw no change in the number of rider app installs.
In 2020, Uber also won another lawsuit against Phunware Inc. when they discovered that the majority of Uber app installations that the company claimed to have delivered were produced by the act of click flooding.
Criteo: Claims sues competitor for allegedly running a damaging counterfeit click fraud scheme
In 2016, Criteo, a retargeting and display advertising network, claimed that competitor Steelhouse (now known as MNTM) ran a click fraud scheme against Criteo in a bid to damage the company’s reputation and to fraudulently take credit for user visits to retailers’ web pages.
Criteo filed a lawsuit claiming that due to Steelhouse’s alleged actions — the use of bots and other automated methods to generate fake clicks on shoe retailer TOMS’ ads — Criteo ultimately lost TOMS as a client. Criteo has accused Steelhouse of carrying out this type of ad fraud in a bid to prove that Steelhouse provided a more effective service than its own.
Twitter: Elon Musk claims that the platform hosts a high number of inauthentic accounts
In one of the biggest and most tangled tech deals in recent history, the Elon Musk and Twitter saga doesn’t end with Twitter taking Musk to court for backing out of an agreement to buy the social media giant for $44 billion.
In yet another twist, Musk has also claimed that Twitter hid the real number of bots and fake accounts on its platform. He has also accused the company of fraud by alleging that these accounts make up around 10% of Twitter’s daily active users who see ads, essentially meaning that 65 million of Twitter’s 229 million daily active users are not seeing them at all.
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6 Lessons marketers can learn from these high-profile ad fraud cases
All of these cases demonstrate that ad fraud is a pervasive and ubiquitous practice that has incredibly damaging and long-lasting effects on even the most well-known brands around the world.
The bottom line is this: Marketers and advertisers can no longer afford to ignore ad fraud if they’re serious about reaching their goals and objectives. Here are some of the most important lessons and takeaways from these high-profile cases.
- No one is safe from ad fraud
Everyone — from small businesses to large corporations like Uber — is affected by ad fraud. Plus, fraudsters have no qualms over location: no matter where in the world you operate, you are susceptible to the consequences of ad fraud.
- Ad fraud is incredibly hard to detect using manual methods
Fraudsters use a huge variety of sneaky techniques and channels to scam and defraud advertisers, which means ad fraud is incredibly difficult to detect manually. This is especially true if organizations don’t have the right suggestions and individuals dedicated to tracking and monitoring the presence of ad fraud.
Even worse, when organizations do have teams in place monitoring ad fraud, they are rarely experts, and cannot properly pore through the sheer amount of data that each campaign produces to accurately pinpoint it.
- Ad fraud wastes your budget, distorts your data, and prevents you from reaching your goals
Ad fraud drains your budget significantly, which is a huge burden for any company. However, there are also other ways it impacts your ability to deliver results.
For example, fake clicks and click bots lead to skewed analytics, which means that when you assess advertising channels and campaigns based on the traffic and engagement they receive, you’re actually relying on flawed data to make future strategic decisions.
Finally – and as a result of stolen budgets and a reliance on flawed data – your ability to reach your goals is highly compromised.
- You’re likely being affected by ad fraud already, even if you don’t know it yet
As seen in many of these cases, massive amounts of damage were caused because the brands weren’t aware that they were being targeted by fraudsters. Plus, due to the lack of awareness surrounding ad fraud in general, it’s highly likely that you’re being affected by ad fraud already.
- You have options to fight the effects of ad fraud
Luckily, as demonstrated by these cases, there are some options available to counteract the impact and losses caused by ad fraud, such as requesting a refund or even making a case to sue. In such cases, ad fraud detection solutions are extremely useful to uncover ad fraud and gather evidence.
- But the best option is to prevent ad fraud from the get-go
The best ad fraud protection is ad fraud prevention. The only surefire way to stop fraudsters from employing sophisticated fraud schemes and attacking your campaigns is by implementing equally sophisticated solutions. Anti-ad fraud software solutions that use machine learning and artificial intelligence help you keep fraud at bay, enabling you to focus on what matters: optimizing your campaigns and hitting your goals.