3 Steps Retailers Can Take to Detect and Defend Against Ad Fraud

As a technology vendor, I have rare insight into the day-to-day of online retailer consumer traffic. So I regularly help customers identify and fight a hidden drag on their growth: ad fraud. I spend hours speaking with customers about their ecommerce businesses and the challenges they face. We discuss it all, from product design to logistics to digital marketing.

The latter is among their largest costs — because of ad fraud. Ad fraud is a collection of tactics that fraudulently represent online advertising impressions, clicks, conversion or data events in order to generate revenues for publishers or exhaust advertising budgets for competitors.

The problem is bigger than most retailers realize. Ad fraud is any online advertisement cost you pay for a non-targeted buyer. For every $5 spent on digital advertising, $1 is lost to advertising fraud (some estimates are even higher, at $1 in $3 ad dollars lost). For retailers looking to keep their businesses in the black, identifying ad fraud and combating it is critical.

Here are the three steps retailers can take to fight back and reduce losses today.


Step 1: Identify Invalid Traffic

Look at the percentage of engaged visitors by acquisition method and figure out what percentage of visitors are actually engaged. “Nobody arrives at the website for free” is a common phrase in ecommerce. That means you’ve either paid with hard dollars (advertising and affiliate marketing) or soft dollars (content creation and public relations).

Brands are surprised when we see the percentage of users actually engaged with their site. An engaged user meets one the following criteria:

  1. Stays on the site at least 10 seconds
  2. Visits more than one page
  3. Completes a conversion event

To differentiate all users from those who are engaged, this Google Analytics segment uses this criteria. If the difference is significant (i.e. more than 20%), many visitors arrive at the site and leave.

This isn’t always ad fraud: It can also be the content itself or a slow page load. It is, however, a proxy to identify how much of a click-and-bail problem exists. The below example shows that six out of 10 visitors had no engagement — a sign of costly mistargeting.

Tag automated or bot traffic: Now that we understand how many users aren’t engaged and have a breakdown by channel, let’s use additional data. Bot protection services are often provided by security companies to defend against these bad players. In advertising, blocking the page view doesn’t really save money. Paid advertising channels are pay per click — so a bot clicking on advertising links has already done the damage.

A better solution is investing in an enterprise-grade bot protection system to help identify automated traffic draining ad budgets or inflating advertiser revenues. In our recent study, we found that more than 5% of all paid clicks from the three major advertising platforms — Google, Facebook and Microsoft — were fraudulent ones easily identified as bot traffic.

Step 2: Combat Ad Fraud

Integral to combating wasted ad spend is a process of identifying, reporting and restricting advertising activity to engaged users. Reviewing results on a bi-weekly basis allows retailers to identify material changes in conversion and engagement rates — while not subjecting the team to the natural fluctuations involved with online retail.

Review the engagement rates on a more frequent basis — weekly — when adding new advertising campaigns and/or channels. Look at more granular levels, like hourly data, during these new changes, and watch for changes in click rates that have low conversion. Often, automated activity arrives in bursts. This allows you to quickly identify when bad players are in the mix.

Report bad clicks: Retailers rarely do this, but most major advertising platforms provide a system to report fraudulent clicks. The platforms have internal systems to weed out ad fraud — adding your data helps fine=tune advertising campaigns’ efficacy.

Google Ads provides a simple online form where customers can submit fraudulent click data. It requires logging information and is most effective when you include the Google Click ID, date, time and the source IP address of the invalid click.

Be proactive and add IP restrictions: You want to stop showing advertisements to locations that generate fraud activity. Geographic restrictions are good, but criminals can evade them pretty easily. A much better strategy is to exclude IP addresses that have generated fraudulent activity in the past, and then update them in your campaigns. Adding a restriction to not show advertisements to known data center and cloud computing networks can dramatically impact bot activity. And you can do this with minimal potential impact on enterprise clients who use on-cloud VPNs.

Step 3: Go Beyond IP Restrictions and Engage in Un-targeting

When traffic is bot- or fraud-oriented, tag the user with a method that can be used by your advertising partners. A common way to do this is to change the reported page the customer visited to something like “”

You can then use the retargeting functionality of the ad system to “un-target,” meaning exclude from your targeting. You can do this with anyone who visits This allows you to use one of the most sophisticated parts of the ad platform — the retargeting engine — as an adaptive fraud-prevention system.

And there you have it: A 3-step plan to better equip brands to fight ad fraud and increase the overall effectiveness and ROI of digital advertising campaigns.

Jacob Loveless has had a 20-year career in making things go faster, from low latency trading for Wall Street to large-scale web platforms for the Department of Defense. He is a two-time winner of high-performance computing awards and a frequent contributor to the Association of Computing Machinery. Today, Loveless is CEO of Edgemesh, the global web acceleration company he co-founded with two partners in 2016. Edgemesh helps ecommerce companies across multiple industries and platforms (including headless) deliver 20%-50% faster page loads to billions of users around the globe.

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