Studies by Statista say global digital ad fraud costs are expected to almost double from $88 billion in 2023 to $172 billion by 2028, growing around 14% per year. While its share of overall ad spending may stay the same, fraud tactics are becoming more advanced.
A clear example is the BADBOX 2.0 scheme, which has infected over a million devices worldwide, from smart TVs to Android tablets. This malware enables large-scale ad fraud, fake clicks, and scams that cost advertisers millions. As programmatic advertising grows, fraud detection struggles to keep up, making it easier for criminals to take advantage.
Advertisers and publishers must stay alert and invest in better fraud protection to avoid wasting ad budgets.
What Is Ad Fraud?
According to the IAB ad fraud definition, ad fraud (also referred to as invalid traffic (IVT), is the fraudulent representation of online advertising impressions, clicks, conversions, or data events, to generate revenue. These activities manipulate delivery channels, significantly impacting an advertiser’s return on media investment, often jeopardising brand reputation.
Fraudsters use various deceptive techniques to make it seem like ads are being viewed or interacted with, when in reality, the engagement is coming from bots, automated scripts, or fake traffic sources.
This means businesses end up paying for ads that are never actually seen by real customers. In other words, digital ad fraud is stealing money from advertisers without delivering any real value or results. It’s a growing problem in digital advertising that can waste a lot of money and mess with the data businesses rely on.
Example of Advertising Fraud
One common example of ad fraud is click fraud, where fraudsters use bots to generate fake clicks on pay-per-click (PPC) ads. Here’s how it works:
Imagine a business is running an online ad campaign and paying for every click their ad gets. Fraudsters set up a network of bots or click farms—real people hired to click on ads repeatedly—to artificially inflate the number of clicks. This makes it look like the ad is performing well, but there are no real customers behind those clicks.
As a result:
- The advertiser wastes money on fake clicks that never turn into actual sales.
- The campaign data is skewed, making it hard to measure real performance.
- The fraudster profits from the ad spend while providing zero value.
Click fraud is just one of many ways scammers exploit digital advertising. Other forms include ad stacking (hiding multiple ads on top of each other), domain spoofing (impersonating legitimate websites), and install fraud (tricking advertisers into paying for fake app installs).
How Ad Fraud Works
Ad fraud happens when bad actors manipulate the digital advertising system to generate fake impressions, clicks, or conversions—stealing ad budgets without delivering real engagement.
Malvertising Key Stats from 2024
According to 2024 Ad Quality Report, malvertising surge increased by 10% in 2024, with forced redirects being the most common attack method (81% of malicious ads in October).
- 70%+ of users find online ads untrustworthy, due to scams like clickbait.
- North America (55%) saw the most malicious ads, with lower rates in Europe and APAC.
- Mobile had 56% of malicious ads, with redirects being more successful on phones.
- Clickbait (31%), tech support (23%), and financial scams (22%) peaked in Q4.
- Gambling-related content was globally the most blocked; APAC regions focused on restricting tobacco and mobile gaming ads.
- Fraudsters used fingerprinting and cloaking methods, with video ads becoming a key channel for auto-redirect attacks.
What Are the Effects of Ad Fraud?
Ad fraud can really mess things up for businesses. Here’s how it can affect you:
1. Losing Money
When fraudsters fake clicks or views, businesses end up paying for ads that no one actually sees or interacts with. This means companies waste their advertising budget on fake traffic, which doesn’t help them make sales or grow their brand.
2. Bad Data & Wrong Decisions
Digital ad fraud messes up the numbers. Businesses might think their ads are doing well because the data says so, but in reality, the clicks and views are fake. This leads to bad decisions, like continuing to spend money on campaigns that don’t actually work.
3. Damaged Reputation
If advertisers or publishers get caught in fraud, they lose trust. Advertisers might stop using certain platforms, and users could avoid websites that show too many fake ads. This can hurt relationships and result in less revenue over time.
4. Wasting Resources
If an advertiser or a website gets caught in ad fraud, they lose trust. Advertisers may stop working with certain sites, and users may avoid them. This can hurt a business’s reputation and make it harder to build relationships with real customers and partners.
5. Increased Costs
Since fraud inflates the number of fake clicks or views, advertisers may end up paying more for their ads. They’re paying for interactions that don’t bring in any real results, which makes their advertising more expensive.
In short, digital ad fraud wastes money, skews data, ruins trust, and makes it harder to reach the right audience. Fighting it is important to keep your ad campaigns working and protect your budget.
Common Types of Ad Fraud (And How Scammers Steal Your Money)
Running online ads is a great way to reach customers—but scammers have found ways to cheat the system and waste ad budgets. Here are some of the most common tricks they use:
Click Fraud & Bots
Scammers use bots to repeatedly click on ads, making it look like people are interested. The result? Advertisers pay for fake clicks, and fraudsters make money while real customers never see the ads.
Click Spamming & Click Injection
- Click spamming: Your ad gets clicks, but users never actually see it. The fraud happens in the background while they use an app or website.
- Click injection: A scammer tricks an advertiser into thinking they caused an app download, so they get paid for installs they had nothing to do with.
Ad Stacking & Pixel Stuffing
- Ad stacking: Multiple ads are placed on top of each other—users only see one, but advertisers pay for all of them.
- Pixel stuffing: Ads are shrunk down to be invisible, so they technically “load” but never actually get seen.
Fake Websites & Location Tricks
- Domain spoofing: Scammers make a low-quality website look like a premium one, tricking advertisers into overpaying for ad space.
- Geo masking: Ads meant for a specific location get shown somewhere else, wasting money on the wrong audience.
Cookie Stuffing
Cookies track ad performance, but fraudsters sneak in extra ones to steal credit for sales or leads they didn’t actually generate.
Fake Installs & Redirects
- Install farms: Bots or real people are paid to install apps to fake engagement.
- Forced redirects: A user clicks on an ad and is sent to a shady website full of malware instead.
Ad Injection
Scammers insert or replace ads on websites and apps without permission—sometimes even stacking multiple ads on top of each other to make more money.
Impact of Ad Fraud on Advertisers & Publishers
Ad fraud isn’t just a minor inconvenience—it’s a massive problem that drains ad budgets, skews marketing data, and damages reputations. Both advertisers and publishers suffer, making it harder to achieve real business goals
Digital ad fraud is a multi-billion-dollar issue. Advertisers pay for fake impressions, clicks, and conversions, while fraudsters pocket the money without delivering real engagement.
- Wasted budgets – Companies spend money on ads that are never seen by real users.
- Higher CPAs & CPCs – Fake interactions drive up the cost per acquisition (CPA) and cost per click (CPC), making campaigns less effective.
- Lost revenue for publishers – Trusted publishers miss out on legitimate ad deals because fraudsters flood the market with low-quality inventory.
Accurate data is crucial for optimizing ad campaigns, but fraud corrupts analytics.
- Skewed metrics – Bots inflate impressions and clicks, making it hard to measure real engagement.
- Misleading performance reports – Advertisers might think a campaign is successful when most interactions come from fake users.
- Wasted retargeting efforts – Fraudulent clicks can cause brands to retarget bots instead of real potential customers, further draining budgets.
Also, when ad fraud goes unchecked, it damages relationships across the digital advertising ecosystem.
- Advertisers lose trust in Ad Networks: Brands may reduce spending or pull out entirely if they suspect fraud, impacting legitimate publishers and platforms.
- Publishers lose credibility: If publishers unknowingly host fraudulent traffic, advertisers may blacklist their sites.
- User experience declines: Malicious ads (like forced redirects and malware-infested banners) create a poor experience, leading users to install ad blockers or avoid certain platforms.
Why It Matters
Ad fraud doesn’t just waste money—it weakens the entire advertising ecosystem. Advertisers struggle to reach real customers, publishers lose revenue opportunities, and users face disruptive ad experiences.
To fight fraud, platforms like Adtelligent integrate AI-powered detection, real-time monitoring, and traffic filtering to protect advertisers and publishers from these costly threats.
Best Practices for Preventing Ad Fraud
Ad fraud is a persistent issue, but advertisers and publishers can take proactive steps to minimize its impact. Here are some key strategies to protect your ad spend and ensure your campaigns reach real audiences.
1. Choose reliable ad partners
Not all ad networks and platforms prioritize transparency. Working with reputable partners reduces the risk of fraud.
Use trusted SSPs & DSPs – Platforms with fraud prevention measures, like Adtelligent, use AI-driven filters to block invalid traffic
Demand transparency – Request detailed reports on where your ads appear and who’s engaging with them.
Work with reliable partners – Look for companies that adhere to standard IAB (Interactive Advertising Bureau) & MRC (Media Rating Council) practices.
2. Implement fraud detection tools
Technology is one of the best defences against fraud. Advanced fraud detection tools can identify and block suspicious activity before it drains your budget.
Protecting your ad spend starts with simple but effective steps:
- Use IP & Geo-filtering – Block traffic from high-risk regions and ensure your ads are shown to real users in your target locations.
- Set up Allow lists & Block lists – These are free and easy ways to control where your ads appear, preventing exposure to fraudulent sites.
For deeper protection, leverage advanced solutions:
- Enable ad verification services – Platforms like MOAT, IAS (Integral Ad Science), and DoubleVerify help detect fraudulent impressions and clicks.
- Use AI & ML-based fraud prevention – Automated tools analyze traffic patterns in real-time, spotting and blocking anomalies before they drain your budget.
3. Conduct regular audits & Analyze traffic
Regular traffic analysis helps detect fraud before it impacts your budget. Watch for sudden spikes in clicks, impressions, or conversions from unusual locations, as these could indicate fraudulent activity. Abnormal engagement metrics—such as a high click-through rate with low conversions or unusual session durations—may also signal bot traffic. Cross-checking data with third-party tools like Google Analytics ensures reported impressions match real user engagement, helping you spot inconsistencies early.
Key Takeaways
Ad fraud is a growing problem in the industry that wastes billions in advertising budgets by tricking systems into counting fake views, clicks, and conversions. Fraudsters use bots, fake traffic, and deceptive tactics to make ads seem more successful than they are, stealing money from advertisers.
So, advertisers and publishers need to stay vigilant and implement fraud prevention tools to protect their campaigns and data. Transparency, reliable partners, and real-time monitoring are essential to minimize the impact of ad fraud.
FAQ: Ad Fraud Explained
What is Google Ads fraud?
Google Ads fraud, or click fraud, happens when someone clicks on your ads without any real interest in your product or service. This can be done by automated bots, competitors aiming to drain your budget, or even accidental clicks from legitimate users.
How do you deal with digital fraud?
To fight digital fraud, use verified platforms and block lists. Block bad IPs and report issues to your partners. Keep an eye on your ad campaigns for unusual activity. If needed, avoid paid partners who don’t protect against fraud. These steps help protect your ad spend.
Who is behind ad fraud?
Ad fraud is often carried out by fraudsters—companies or individuals who exploit system vulnerabilities for financial gain. These can include people or groups who find weaknesses in the system, allowing them to create fake traffic or use bots to click on ads. In some cases, shady websites or businesses are behind the fraud, manipulating the system to steal money from legitimate advertisers.
How much money is lost to ad fraud?
A huge amount of money is lost to ad fraud each year—billions of dollars. In fact, by 2028, it’s expected that ad fraud could waste $172 billion worldwide. That’s a lot of money that could’ve been spent on real ads and real customers.
How are most frauds detected?
Most ad fraud is detected using fraud detection tools that track unusual activity, and generally, anomalies are the first sign. These tools look for fake clicks, bot traffic, or impossible behavior, like clicks from strange locations or at odd times. AI and machine learning are often used to spot these patterns automatically. However, there are also researchers dedicated to studying these issues, like AdAnalytics, who manually analyze data to identify fraud.
Is ad fraud a problem?
Yes, ad fraud is a big problem. It wastes money, messes with data, and makes it harder for businesses to know if their ads are actually working. But with the right tools and strategies, businesses can reduce the impact of fraud and protect their advertising budget.