Short windows, big opportunity: The multi-billion seasonal opportunity cost of ad fraud

This article was written by TrafficGuard Founder and COO, Luke Taylor for Marketing Magazine.

Consumers across APAC are forecast to spend billions this coming holiday season. But if your ad budget is being impacted by ad fraud, then you’re not reaching these high-intent shoppers.

As the festivities and shopping extravaganzas beckon, brands are investing significant time, effort and dollars on campaigns ready to capitalise on seasonal waves of shopping intent. From the globally-recognised likes of Black Friday, Cyber Monday and Christmas, to local holidays and events that continue to gain traction throughout the APAC region, such as upcoming Shopfest (SEA), Diwali (India), Click Frenzy (Australia), Harbolnas (Indonesia) and Singles’ Day (APAC), we’re entering prime time for shopping intent.

Indeed, there’s a lot riding on these short windows of big opportunity. For example, an eMarketer report on shopping holidays in APAC reported that Australia’s 2017 edition of Click Frenzy attracted over 2.5 million retail site visits. Meanwhile, Singles’ Day, often thought of as a Chinese event, sees buyers from over 200 countries. Southeast Asia’s Lazada alone reported $123m in sales in 2017 during Singles’ Day, up by 171% from the previous year.

The problem, however, is that spending big during these events, and successfully navigating the myriad of digital avenues that are now available, doesn’t necessarily result in the returns a brand may hope for, or even deserve. Because where the money goes, ad fraud is sure to follow. This is something that is regurgitated in almost every article about ad fraud, but its significance during the holidays is compounded by the fleeting nature of shopping intent at these times.

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The looming saboteur

Ad fraud continues to be a persistent threat globally. In APAC, awareness and prevention efforts remain low in comparison to the more mature North American market. In fact, according to research by TrafficGuard, an average of US$17 million a day was lost to ad fraud in 2018 across the APAC region. And as ad spend increases with each shopping event, so too does the amount that fraudsters are able to siphon off of campaign budgets.

However, it’s not necessarily the wasted media spend that brands should be most concerned about – after all, with fraud detection, these costs can often be recovered at billing time. Rather, the most significant cost of ad fraud is the cost of missed opportunity.

Consider that these perishable events mean that the window to engage captive audiences is short. Yet every fraudulent click represents inflation of numbers, and budget taken away from reaching an actual, potentially revenue-generating customer. By the time advertisers realise that they were hit by fraud, the ad spend has already been diverted from the eyes it was meant to reach, and the opportunity for growth has passed.

In simple terms, poor Aunt Mabel has gone and decided to buy a pair of sneakers for her nephew instead of your product, simply because she didn’t see your ad and now her intent has passed along with your revenue opportunity. If 20%-30% of your ad spend is going to ad fraud which wouldn’t be uncommon for the region, that is a lot of Aunt Mabels. The real cost is the missed sales in these short windows of big seasonal opportunity.

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Take a preventative approach to fraud to reach your seasonal shoppers

It’s time brands started to think differently – because while campaigns might be planned around seasonal hooks, ad fraud is ever-present. Sticking heads in the sand and pretending the threat will go away in due course only gives fraudsters a longer runway to make off with the stolen spend, and the funds and time to reinforce their operations, only to become more resilient. We then end up in a vicious cycle where the more they win, the more sophisticated they become. Prevention, therefore, needs to be a constant.

There are immediate steps that any brand can take in order to protect ad spend and returns – for example, ensuring that the advertising platforms they use have a trustworthy, comprehensive fraud prevention solution in place capable of removing fraud before attribution so that the money does not end up in the fraudsters’ hands. Brands can also employ solutions themselves.

However, perhaps the most important hurdle to overcome is mindset. Brands need to be proactive, and not reactive in the fight against ad fraud. For example, up until now, most efforts to combat ad fraud have seen brands scrambling to recover their budgets after they find fraudulent activity in campaigns. But in waiting until billing time, that portion of your ad spend never reaches the high-intent shoppers splashing the cash on Shopfest, Singles Day, Diwali, etc. And that is the biggest cost of ad fraud – not the 15% of budget, but the return that the 15% could have generated if it went towards real users and not ad fraud.

Instead, proactively mitigating fraud makes it both less appealing by preventing fraudsters from getting paid in the first place, and ensures that your seasonal campaign results aren’t just a holiday dream. Stopping the ad fraud in real-time means that 100% of your budget reaches those shoppers that are spending billions on consumer products.

But it doesn’t stop at consumer products. Many of these holidays, like Christmas, afford consumers more free time – time that might be spent in your mobile app or consuming your services. Others like Diwali will result in an increased demand for travel purchases; Ramadan? Entertainment, rideshare and food delivery. Seasonality impacts demand for different products and services. But they share one commonality and that is the opportunity cost of ad fraud.

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Wrapping up

Brands looking to capitalise on increased shopping intent during this year’s festivities need to be well-prepared when advertising – remember that preventing ad fraud ultimately leads to additional sales and growth because campaigns are reaching that many more eyeballs, instead of bots.

However, that’s not an excuse to wait for seasonal opportunities to come around – fraudsters are always waiting in the wings, ready to stifle advertiser growth to fund their own operations. They, therefore, need to be stopped in their totality if we want the gift of giving to bring joy to brands in the years to come.

For an in-depth exploration of APAC’s ad fraud, download ‘Addressing Ad Fraud with Machine Learning’. Download Whitepaper

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