Fraud in your pocket: How apps are conning advertisers out of $1bn

7 Aaron Falloon

An investigation by the online fraud prevention company Forensiq has revealed a widely-used form of advertising fraud is potentially costing businesses upwards of $1 billion a year – and its all taking place on smartphones and tablets.

A vast collection of mobile apps are using malicious techniques to load ads that are hidden from the user. Essentially meaning advertisers are paying for trillions of ‘unviewable’ ad impressions.

During the ten day investigation, Forensiq found that 12 million devices were affected and up to 700 invisible ads were being served per hour per device.

The way the fraud works is; once an app is installed to a device and then opened, a piece of code will begin to register impressions and clicks for ads running in the background (these cannot be seen by the user). In some cases, adverts continue to run even when the app is closed.

It was found that a staggeringly low percentage of around 10% of paid ad impressions are actually viewable. Meaning display advertising, which is generally seen as a cost-effective channel for increasing brand awareness, costs 10 times more than previously thought.

The news has raised questions on the limited amount of control marketers have over their display campaigns.

Most would concede that the channel has had a somewhat shady reputation; a reputation which seemed to be on the up since the introduction of concise-targeting technologies, namely programmatic buying, to the market. But the report will surely shake up many marketers as the problem has now moved from targeting to the altogether more serious matter of fraud.

Although its unclear what action will be taken against the companies accused of partaking in the scam, we predict they could find themselves at the centre of a criminal investigation. On top of this, app sites such as Apple’s App Store and Google Play, where many of the tested apps are available for download, will need to look at advertising policy and practice across their networks.

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