Report: CMOs Overwhelmed By Cost of Mobile Ad Fraud

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Instances of mobile ad fraud are growing so quickly that enterprise marketers are struggling just to identify the most costly forms. According to a new report by Forrester Consulting, mobile ad fraud has become an accepted part of doing business, with 69% of marketers citing that at least 20% of their budgets are being exposed to fraud on the mobile web.

“In a year when the digital advertising ecosystem got tangled in issues related to potential Russian meddling in the 2016 elections, brand safety problems and fake news sites, mobile advertising fraud became even more systemic and more costly to the multi-billion dollar app advertising business,” says Ari Rosenstein, senior marketing director at AppsFlyer, the mobile marketing analytics platform that commissioned the Forrester survey. “In 2017, one out of every 10 non-organic, advertised, app installs came from fraud. This not only drains marketing budgets, but it pollutes the data that marketers use to make both strategic and everyday decisions.”

Despite the challenges, mobile is still growing at an extraordinary pace. Seventy percent of marketers say they plan to increase their mobile ad budgets in the next 12 months, and 88% cite their top objectives as growing direct revenue/sales through mobile channels.

Although brands are dedicating more resources to mobile, instances of fraud are still on the rise. Forrester’s survey found that 43% of marketers have seen an increase in mobile fraud over the last 12 months, but only 19% of enterprise marketers currently have systematic fraud prevention in place.

Forrester’s survey also found that brands are significantly underestimating how much they’re losing to fraud. Most marketers who are accepting some mobile fraud estimate that it’s costing them 1% to 2% of their budgets, when in actuality that figure was closer to 10% in 2017.

“As someone working to identify the most advanced types of fraud every day, we were surprised to see how many advertisers are still lacking comprehensive mobile fraud protection despite increasing their investments in mobile marketing,” Rosenstein says. “Marketers clearly need better education from their vendors and partners and better access to their fraud data.”

Rosenstein sees 2018 as a pivotal year for the mobile app marketing industry. With fraud continuing to evolve, from install hijacking and click flooding to device farms and increasingly, DeviceID Reset Fraud, marketers are finally beginning to wake up and question things like the incremental lift from paid media and where they are most exposed to fraud.

Survey results seem to back up Rosenstein’s belief, with 32% of marketers now identifying fraud as one of the top challenges that prevent them from reaching their mobile advertising goals, just behind lack of inventory transparency and lack of knowledge about programmatic buying and mobile ad buying.

“At present, many marketers accept a degree of fraud as the cost of doing business,” Rosenstein says. “However, this perspective is perhaps shortsighted. Fraud loss isn’t the cost of doing business. Fraud loss can cost you your business.”

Those protections that marketers do put in place seem to be paying off. According to the survey, “mature organizations” have taken steps to detect and mitigate fraud, and 63% of those advertisers and agencies say they’re finally beginning to see more efficiency on their ad spend. Sixty-percent of advertisers and agencies also say they’ve gotten better campaign insights through mobile fraud prevention tactics.

“This survey shows that marketers know that they need to be doing more about fraud and educating themselves on just how much of an impact it has on their decision-making,” Rosenstein says. “Marketers should demand more data visibility from vendors and better transparency into their business practices.”

Stephanie Miles is a senior editor at Street Fight.

Stephanie Miles is a journalist who covers personal finance, technology, and real estate. As Street Fight’s senior editor, she is particularly interested in how local merchants and national brands are utilizing hyperlocal technology to reach consumers. She has written for FHM, the Daily News, Working World, Gawker, Cityfile, and Recessionwire.