How AI can Help in Improved Fraud Detection

A study claims that ad fraudsters will purloin approximately USD 5.8 billion from digital advertisers by the end of 2019. However, considering that the technology tracking and blocking these fraudsters is still in its nascent state and a majority of ad frauds are comparatively hard to identify; the actual damage is probably much higher.

Let’s understand ad frauds and what you can do (as a digital advertiser) to avoid being scammed.

Advertisement (Ad) Frauds

When a perpetrator uses fake traffic, fake clicks, ineffective ad placement, and fake conversion events to dupe an advertiser into believing said traffic to be genuine and pay for it. Hence, the advertiser pays money for something worthless to them.

Consequences of Ad Frauds:

Advertisement frauds damage a marketing campaign along with causing direct financial losses.

• Damages Data Integrity: the data acquired from visits/clicks on the ad is used to identify customer segments. If an advertisement fraud has been committed, it is impossible to separate the organic data from the fake data regarding the site traffic.

Such data, when used in the decision-making process, leads to bad marketing and business decisions. Further, it becomes harder for marketing managers to decide which adverts to continue using and which to discard.

• Higher Average Conversion Cost: Due to the fake visits/clicks, you’ll believe that you are receiving more footfall and hence better sales. However, in-time, you will realize that the conversion rate is dropping. Consequently, the amount of money you spend on an average for a conversion increases and your profits from sales decrease. You might even reach a point where the returns no longer justify the investment.
• Hampers Business Growth: In extreme cases, where businesses start losing money on their marketing campaigns due to ad frauds, advertisers might decide to stop the digital marketing campaign entirely. The advertisers are now forced to look for other channels of advertisement. The business thus loses the potential it could have tapped in otherwise. Consequently, the growth of the company is negatively affected.

Considering the grave and long-term effects of advertisement frauds on an organization; it is imperative to have a fraud detection and prevention framework in place.

Detecting Frauds with Artificial Intelligence (AI)

An AI-powered fraud detection system follows a machine learning (ML) algorithm with a rule-based approach at its core. Using this ML algorithm, the system learns from suspicious activities (clicks, ad placements) and builds layers of protection.

Such a system not only improves and adapts itself to tackle latest kinds of ad frauds (due to self-learning capabilities), it can also recognize patterns in a much more extensive set of data points as compared to traditional systems.

On an average, an AI(ML)-based fraud detection system can analyze more than 80 dimensions at a time and hence can detect even the most sophisticated ad frauds, such as the Methbot ad fraud.

Based on your business type and the extent of your online campaign’s exposure to ad frauds, it is recommended that you consult AI (machine learning) specialist, to identify the kind of fraud detection system suitable for you.

Takeaway

Advertisement frauds currently are highly sophisticated in nature and damage the online marketing industry in billions. The methods used to commit ad frauds are evolving at a much faster rate than the traditional approaches to detect and counter them. However, an AI-powered system evolves at a much faster rate than the conventional alternatives due to its self-learning capabilities. Consequently, the AI systems are the better and more reliable options to counter ad-fraud.