For internet users, one of the big threats is that they will click on a link or open an email that infects their computer or mobile device with the aim of stealing personally identifiable information that the thief can use either to steal cash or goods or to hold for ransom. For companies that buy advertising, one of the main threats they face is that they are being defrauded by their ad networks. This is a particular problem for advertisers using mobile ad networks to place ads.
According to a recent report from Tune, a provider of mobile analytics and performance software, the firm combed through 24.3 billion clicks on more than 700 mobile ad networks and found that eight of the ad networks were totally fraudulent and another 35 were at least 50% fraudulent. The average fraud rate across all ad networks is about 15.2%, or 3.6 billion of the 24.3 billion clicks analyzed.
There are three main types of app install fraud, according to Tune: click fraud, where clicks are fake and users are genuine; install fraud, where both the clicks and the users are fake; and compliance fraud, where both clicks and users are genuine, but the information about them is fake. Other types of non-app install fraud, such as bot fraud, where ads are directed to bots instead of real people and the bots click on the ad, are also stealing advertising dollars.
The Tune report indicated that dollar losses in 2016 totaled $7.2 billion, according to a study by one digital security firm. Another firm has projected 2017 fraud losses of $16.4 billion.
In addition to the eight networks that are 100% fraudulent and the 35 that are at least 50% fraudulent, nearly a quarter of all ad networks have fraud rates of over 20%.
For internet users, rampant fraud threatens to cut ad spending by top tier advertisers, which may seem like a blessing but is, in fact, a mixed one at best. For example, without advertising, neither Facebook nor Google would be able to provide the web services that billions of people use every day. To some, that may not sound like a bad thing, but if consumers had to pay a subscription fee for every web service they use, the web would not be worldwide, but just another toy for those who can afford to buy such toys.