How Click Fraud Impacts Performance-based Advertising

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Click fraud hinders ad revenue growth by creating the illusion of more traffic, signups, installs, and other forms of engagement than there actually are - conveniently inflating those metrics and skewing your data in more ways than one.

When performance marketers run profitable campaigns on social media or the web, they achieve that by evaluating the reach, engagement, and conversion rates of their ads and adjusting accordingly. As their campaigns mature, the demand for acceptable performance metrics only becomes more important.

Click fraud affects different ad platforms differently, which presents a challenging issue to navigate for businesses. The threat lurks in every corner of what performance marketers need in order to make better decisions about their ad campaigns, which undermines the very measures they need to improve ROAS.

This article will examine how click fraud impedes performance marketing, the damages it causes for businesses looking to generate results from running performance-based ads — particularly those spending over $10k per month on advertising — and how to deal with it.

Prevents ads from reaching the right targeted location

Geomasking is one of the location-data frauds that prevents ads from running in an intended geographic area — or reaching people who live outside that area. Fraudsters achieve this by bypassing the geoblocking restrictions placed on a website. While geotargeting provides an excellent opportunity for several brands to reach a highly targeted audience, fraudsters use geomasking to hijack and exploit this system for their own profit.

The implication of fraud in corrupting location data extends beyond monetary losses. It robs you of the ability to draw valuable insights about your customers based on their location, thereby limiting your ability to use such data to create stronger marketing strategies.

If users mostly convert from within a certain geographical area, for instance, and your business is solely targeting the said area, geomasking frauds will rig the information about which location tends to convert the most, thus hampering your company's long-term goals. 

Impacts bounce rate

Fraud-infested traffic is delivered through bots, so advertisers can expect a potential increase in bounce rate on their websites if they were to fall victim to click fraud. But this is not always the case especially for bots imitating real user behavior. Even if one doesn't hold bounce rate to be a significant indicator of ad performance, a high bounce rate could motivate marketers to make unnecessary changes to their landing page — changes that might end up hurting the business.

The phenomenon creates a misleading impression of users intending to buy a product — or sign up for a mailing list, fill out a survey, etc. — only to abandon the process shortly afterwards. This could have you asking tough questions about your company's value proposition, which may leave you less confident about your ability to connect with potential customers.

Skews the data acquired from ad campaigns

Some competitors will resort to any lengths in an attempt to cripple the competition. One of the unethical ways they accomplish this is to flood the other player's clicks and other actions. These companies will make it more difficult for you to run optimized A/B tests, adjust strategy, and track performance and sales. They make it impossible to measure the effectiveness of a campaign or how precisely the resources you've invested are contributing to your bottom line.

Staggers conversions even when ad budget is increased

An ineffective ad campaign depends on more than just its budget. The friction behind optimal campaign performance can be anything from SDK spoofing to an attack by click farms — depending on whether the company is running ads on a social media or web ad platform.

Increasing ad spend might not necessarily fix anything. Click fraud interferes with how you determine which of your keywords or ad groups or other verticals are more likely to convert. As a result, you may be left to wonder which strategies are more effective and if investing in them is worthwhile.

Lowers acquisition rate for hot leads

Paid lead acquisition campaigns are meant to capture information about users that are potentially interested in a business. Ultimately, they are designed to engage users and convert them into paying customers. 

The idea that these types of ads would be resistant to bots and fraudulent traffic would make sense. In an effort to capture high-quality traffic — signing up to an email list, for instance — companies resort to only pay per action. Yet, that would be an incorrect assumption. Not even these performance-based campaigns are immune to click fraud.

Fraudsters have evolved to devise methods of getting around this hitch, directing their bots to mimic human-like behaviors to different ad variations on different landing pages. With lead generation ad campaigns, fraudsters use clever schemes to get bots to, often unintelligibly, fill out the forms. When you consider the time and resources wasted in following up on these non-existent leads, it becomes clear how much your business is losing.

» Learn more: How Porters Reduced Invalid Leads by 95% with Spider AF

Inflates junk traffic

This affects those running ads on Google Ads and other web ad platforms. Platforms that run display ads, especially, push ads to traffic sources that tend to deliver users who behave like hot leads.

Often, fraudsters set up numerous fake sites on sketchy domains. They use these sites to send in traffic to the landing pages of company websites running performance-based ads. When your ads get plagued with such elaborate fraud, you'd essentially be paying for garbage traffic that can't even generate decent leads, let alone convert them into paying customers.

Next steps

For every $100 spent on performance-based ads, as much as $40 is wasted on bots and other fraudulent traffic. Click fraud slows ad revenue growth by creating the illusion of more traffic, engagement, installs, etc., than is actually there, conveniently inflating those numbers in ways that are nearly impossible to detect. 

The most effective and sustainable way to address this menace is to integrate click fraud prevention tools. Fraudulent activities within your marketing operation not only cost you money, but they also cost you valuable time and your hard-earned reputation. With these anti-click fraud solutions, you can take all the necessary measures to protect your brand from this expensive and infuriating threat.

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