As CMOs Spend More on Mobile, Budgets Are Eaten Up by Fraud

What: Mobile Fraud: Marketers’ Massive Hidden Threat, a Forrester Consulting “thought leadership paper” commissioned by AppsFlyer, looked at how CMOs are tackling the ever-evolving challenge of ad fraud, and the cost that ineffective prevention has for businesses.
Why It Matters: The study found that while investment in mobile ads is increasing, only one in five advertisers said they’re able to systematically combat fraud with the right tools and expertise. Why aren’t marketers taking this growing risk head-on?

For the study Mobile Fraud: Marketers’ Massive Hidden Threat, Forrester and AppsFlyer conducted an online survey with 250 marketers whose companies spend at least $1 million dollars a month on digital advertising and found that mobile is attracting more and more ad spend: 70% of the enterprise marketers surveyed for this report are increasing their budgets for mobile advertising over the next 12 months.

But with ad fraud eating up a bigger chunk of many organizations’ budgets, a more focused and deliberate approach to prevention is needed. Why aren’t organizations doing more to better equip themselves to fight this growing threat?

Despite Risk of Fraud, Marketers Increasing Investment in Mobile Ads

The data from Forrester reveals that resistance to ad fraud is sub-par across the board, as 69% of marketers cite that at least 20% of their budgets are exposed to fraud on mobile web ads. But this doesn’t correspond with lower investment in mobile ads.

According to the report, over the next 12 months, 70% of firms that spent over $1 million per month in digital advertising in 2017 said mobile ad spend budgets will increase in the coming year, and 39% of companies that spent over $5 million per month on digital advertising plan on increasing their budgets by more than 30%.

In the meantime, too many organizations are left completely vulnerable: the study found that only 19% of enterprise marketers claim to have systematic fraud prevention in place. The reasons for this are quite simple: a lack of access to transparent data and a lack of knowledge about programmatic buying.

Almost half (45%) said they lack the understanding of mobile ad frauds that exist and then lack the types of solutions that exist to combat those mobile fraud types, and 51% of marketers cite a lack of data transparency. Marketers also seem to believe that many distort data in this complex ecosystem for their own benefit, with 46% of marketers reporting that “players in the media buying ecosystem benefit from artificially inflated KPIs.”

As a result, a huge slice of the market is left accepting fraud’s impact as a given, unable to keep up with the way approaches to fraud evolve and become more difficult to shut down. But the study suggests that marketers know they must change their ways if they are to stay afloat: 92% of advertisers and agencies cited fraud prevention as a critical or high priority over the next 12 months.

CMOs Don’t Think They Can Keep Up with Ad Fraud

The research from Forrester seems to suggest that many CMOs simply don’t believe there is a way to keep up. Ari Rosenstein, Senior Marketing Director at AppsFlyer asserted that often, organizations “accept fraud as ‘the cost of doing business’ because they don’t believe they can effectively protect themselves against all types of ad fraud.” The data supported this assumption, as 40% of those surveyed agree that “those who try to combat fraud are faced with a fast-evolving problem which makes it hard to identify and often even just understand.”

And since these CMOs are often ill-equipped in the data analytics department, they have a hard time even estimating how much of their budgets they are really losing to fraud, often estimating around 1-2% when the average, Rosenstein suggested, is more like 10%.

Mobile Enables Novel Approaches to Ad Fraud Prevention

The benefits of investing in a solid ad fraud prevention plan are varied: the study asserted that benefits include improved ROI, better campaign insights, easier optimization, and increased user engagement.

And luckily, Rosenstein argued, mobile is offering CMOs some of the most user-friendly, flexible fraud prevention tools ever: “As mobile fraud has continued to evolve -- with the emergence of install hijacking, click flooding, device farms, DeviceID Reset Fraud, etc. -- so have the technologies and processes to identify fraud.” But CMOs must make fraud a significant priority through investing in data transparency and education for their teams.

Marketers ‘Must Become More Educated’ and ‘Demand Increased Transparency’

 A common practice is for marketers to turn to legacy technology tools and platforms for help instead of seeking experts: 48% of those surveyed reported using enterprise marketing software vendors for help with measuring and combatting fraud, and 38% reported relying on ad verification vendors. The suggestion is that CMOs should recognize that fraud prevention merits its own investment, and that specific expertise in fraud is necessary for fighting such a serious threat.

For 53% of marketers, a basic strategy is to assign fraud-related KPI’s to their agency or ad networks. But the study reminds us of the importance of following up and ensuring that those KPIs are met. While 60% of advertisers and agencies cite better campaign insights from improving mobile ad fraud prevention, the study provides evidence that “prevention” must mean educating internal teams about the latest strategies in fraud prevention and asking for more information and collaboration from vendors. It is also essential that organizations add “independent, mobile-first tools” to their arsenals, the report suggests.

Those who are serious about lessening the impact that fraud is having on their business should be deliberate in pursuing a fraud prevention plan that works for their organizations. For AppFlyers' Rosenstein, education and transparency must take on central roles in all marketing departments. “Marketers must become more educated on the topic and demand increased transparency and data visibility from their vendors and partners,” he said. “Through these mobile insights, marketers can become more informed and make better decisions for their businesses.”


Gretchen Gardner @gardnergretchen

Gretchen is a communications specialist and owner of GMG Strategic Communications. She currently lives in Buenos Aires, Argentina, where she works with Argentine and international ventures on shaping their content, branding and marketing strategies to position them for success in global markets. She is also a lover of all things information and has worked consistently in journalism since college, most recently as a writer at Portada and as the deputy editor of The Bubble, the first informal, English-language news portal in Buenos Aires. She hails from Washington, D.C. and has a bachelor's degree in history and Hispanic studies from Hamilton College as well as a master's in international relations from the Argentine university Universidad Torcuato Di Tella.
Gretchen is a communications specialist and owner of GMG Strategic Communications. She currently lives in Buenos Aires, Argentina, where she works with Argentine and international ventures on shaping their content, branding and marketing strategies to position them for success in global markets. She is also a lover of all things information and has worked consistently in journalism since college, most recently as a writer at Portada and as the deputy editor of The Bubble, the first informal, English-language news portal in Buenos Aires. She hails from Washington, D.C. and has a bachelor's degree in history and Hispanic studies from Hamilton College as well as a master's in international relations from the Argentine university Universidad Torcuato Di Tella.

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