Ad fraud is when advertisers pay for ad views, clicks or app installs that didn’t come from real people. Most of the time, it’s bots doing the clicking, which is why you’ll often hear the term click fraud. The industry also has a name for all this fake activity: invalid traffic, or IVT.
Digital marketing ad spend has increased exponentially over the past 5 years. It has been in every marketer’s tool box with its ability to reach specific demographics and people with specific interest, while also being able to track the effectiveness of these ads.
However, there has been a significant rise in ad fraud, as dirty players in the digital marketing industry seek to profit off the large budgets that corporations are pouring into the digital marketing industry. A recent report by Gartner found that out of the USD 700 billion digital ad industry, an estimated USD 100 billion a year is lost to ad fraud. Large corporations have reduced their digital ad spend and have seen no change in their sales. For example, P&G cut their ad spend by USD 200 million and saw no change in sales. Uber cut their ad spend by USD 120 million for app installs and saw no change in their rate of app installs.
Where Does Ad Fraud Come From?
So what exactly is ad fraud and where does it come from? Well it comes from 2 sources. Firstly, it comes from click bots that are clicking websites that advertisers put out, giving the impression that there are authentic website visits, when in reality, these are merely click bots. Secondly, there are fake websites that advertisers are being unknowingly placed on through ad exchanges.
The Most Common Types of Ad Fraud
So what does ad fraud actually look like? Well, it takes several forms. The most widespread is click fraud, where bots or low-paid click farms generate fake clicks on search and display ads, draining budgets without producing a single real customer.
Impression fraud is subtler. With ad stacking, several ads are layered on top of each other so that only one is visible, while pixel stuffing squeezes an ad into a tiny 1×1 pixel frame. In both cases, advertisers pay for impressions that no human could ever see.
Then there is domain spoofing, where a low-quality website disguises itself as a premium publisher in programmatic auctions to sell its ad space at a higher price. On mobile, install fraud tricks advertisers into paying for app installs that their ads never genuinely drove, or that never happened at all.
Why Ad Fraud Matters for Marketers
Ad fraud doesn’t just waste money. It also pollutes the data marketers rely on to make decisions. When bots click on ads, they inflate click-through rates and can make underperforming campaigns look successful.
Worse, automated bidding strategies on platforms like Google Ads or Meta learn from this data, so they can end up optimizing toward fraudulent traffic and spending even more of the budget on it. And when ads land on fake or low-quality websites, brands also risk appearing next to content they would never want to be associated with.
How Can Marketers Fight Ad Fraud?
So what can we do as marketers to combat ad fraud? Well, the main thing is to be constantly vigilant of these fraudsters, and continuously review our marketing campaigns/ channels. While there is the temptation to leave our marketing campaigns/channels running and automated, the prevalence of ad fraud requires us to consistently monitor our campaigns KPI and to be weary of any signs of ad fraud.
In practice, this vigilance can be backed by concrete safeguards. In programmatic buying, marketers should favour publishers that use ads.txt and app-ads.txt, two IAB Tech Lab standards that list the sellers authorized to sell a site’s or app’s inventory. In platforms like Google Ads, regularly reviewing placement reports and excluding suspicious websites and apps also helps cut wasted spend.
Some warning signs are worth watching closely: unusually high click-through rates paired with near-zero time on site, sudden traffic spikes at odd hours, and clicks that never turn into conversions. Larger advertisers can also rely on third-party verification tools such as DoubleVerify, Integral Ad Science or HUMAN. Finally, incrementality tests, where a channel is paused for a holdout group, show whether ads truly drive results, the same logic that showed P&G and Uber they could cut spend without losing sales.