With its data-driven approach and measurable outcomes, performance marketing promises to deliver a higher return on investment (ROI) than traditional advertising methods. However, lurking in the shadows of this dynamic industry is a pervasive threat known as ad fraud. Ad fraud poses a significant challenge to the integrity of performance marketing, siphoning off billions of dollars annually and eroding the trust between advertisers and their audience.
Ad fraud is not a monolithic phenomenon; rather, it takes various forms, each with its own modus operandi. It can take the face of clicks, conversions, impressions or even ad stacking and pixel stuffing, in which multiple ads are stacked on top of each other, with only the top ad visible to users. Advertisers are charged for all the ads, even though only one is viewable.
The repercussions of ad fraud in performance marketing are far-reaching and detrimental to all stakeholders involved. Ad fraud in performance marketing can lead to financial losses for advertisers, loss of trust between advertisers and their performance agencies, create discrepancies in data analytics and even adversely affect publishers as they may unknowingly host fraudulent ads, damaging their reputation.
As per Chandraket Mall, Account Director, FCB/SIX India, businesses across industries have allocated substantial budgets to performance marketing due to its scalability and data-driven insights. “However, this journey has faced challenges like growth plateaus, duopolistic dominance by Google and Meta, data privacy issues, and intensifying competition, leading to rising ad-serving costs and declining engagement rates,” he added.
Throwing light on some of the discrepancies and manipulations that can affect a performance marketing campaign’s authenticity, Karan Kumar, Group Chief Marketing and Growth Officer, ART Fertility Clinics pointed out that because compensation is connected to desired actions, it is practices such as click fraud, conversion inflation, cookie stuffing and low traffic quality and attribution manipulation amongst others that become prevalent issues in performance marketing.
Sharing one of his pet peeves with regards to performance work, Karthi Marshan, Advisor, Kotak Mahindra Bank also stated that at times, what happens is some digital platforms want to claim credit for a large number of the leads/conversions that don’t happen directly via their platforms as well.
“There’s lots of random explanations to justify it. While I can buy some of it, because attribution, like everything else about humans, is a messy business. but, a lot of it doesn’t make sense. And that’s why I think spenders are better off buying plain vanilla impressions, and doing their own regressions to arrive at their CACs and so on. As Australian Marketing Science professor, Byron Sharp, puts it, every marketer’s goal at all times should be to maximise reach,” he added.
Gaurav Mehta, Chief Marketing Officer, Noise, opined that when working with media arbiters, it can be a little bit of a temptation for them to not play by the rules. “What happens sometimes is that affiliates also start bidding against one on their own keywords, putting inflationary pressure and competition, so much so, that there's a double cost or value, whereas that person might have come organically to the platform,” he said.
“There's nothing wrong in what they're doing because eventually it's all coming down to the business, but then there need to be certain safeguards that you build in at the contracting stage itself restricting such implications as not everything is unethical and there are some unethical practices that you just need to understand better,” Mehta added.
According to Sumeet Singh, Group Chief Marketing Officer, Info Edge India, over a decade ago, when most of the performance marketing used to be over Google and ad networks, there used to be a lot of fraud. In her case, it was mainly about automating the process of filling in registration forms, fraudulently or introducing bot traffic to the system.
But now, she continued, “Since we at Info Edge are highly data backed, we set up our own data science and business intelligence teams who then developed an algorithm internally for quality. We extensively monitor our traffic through performance campaigns and mark the red flags accordingly. That being said, today large publishers have all started giving you very good AI-backed solutions which are very conversion-driven rather than just click-driven, so we also try and optimise them for our customers.”
Seconding Singh’s statement, ART Fertility’s Kumar suggested that brands should verify campaign metrics' authenticity by employing fraud detection software to identify irregularities in traffic and conversion patterns, continuously monitor campaign performance and examine data for unusual spikes, prioritise quality over quantity when selecting affiliates and enter into clear contractual agreements with them to outline performance expectations and penalties for fraudulent activities.
“Marketers should also demand transparency from affiliates regarding their traffic sources and methods and consider third-party audits to validate campaign performance,” he added.
In FCB/SIX’s Mall’s viewpoint, a balanced approach encompassing top-mid and bottom-funnel campaigns is essential to navigate these challenges and while performance marketing is vital, neglecting brand-building efforts can erode loyal audiences which is why brands must allocate budgets wisely and avoid solely relying on performance campaigns to sustain interest.
“Specifically, Google and Meta dominate the advertising space for performance campaigns, offering unique strengths in user intent and preference understanding. But having said that, Data Management Platforms like Lotame and PayU also provide valuable audience cohorts, and affiliate partnerships can drive scale and cost certainty,” he said.
As per Ronak Jain, Director, Performics India, too, it is imperative for every brand to establish a robust technological ecosystem capable of detecting and mitigating fraudulent activities, thus avoiding unnecessary media spends.
“There exist multiple tools for both web and app ecosystems, MMPs like Appsflyer and Branch offer a range of options to tackle fraudulent activities in app-based businesses. Similarly, companies like mFilterIt possess the capabilities needed to address this issue for web-based brands. Thus, monitoring these activities at a granular level becomes important for any brand, as it not only safeguards their media spends but also enables them to harness affiliate marketing effectively to drive their online business,” he said.
Ad fraud remains an ever-present challenge in the world of performance marketing. To harness the full potential of this dynamic industry, advertisers must remain vigilant and proactive in their efforts to combat fraudulent activities. By implementing robust fraud detection mechanisms, fostering transparency, and staying informed about emerging threats, advertisers can safeguard their budgets and uphold the integrity of performance marketing in the digital age.