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Fraud Will Cause Your CPI Costs to Increase, Soon

Ad Fraud Will Cause Your CPI to Increase Soon
Reading Time: 5 minutes

You are being punished, instead of the fraudster

Maybe you use a fraud tool and/or maybe you have internally developed a notably sophisticated fraud detection mechanisms that are enormously strong, and you are comfortably sure that you do not pay even $1 for fraud.

Should you still care about preventing fraud?

The answer is, a very strong YES!

It is not an ethical point of view, but you are financially losing money when you have fraudulent traffic, even if you are not paying for it. But how?

In order to answer this question, you need to be clear about the following concepts that will be explained respectively:

  • Attribution
    • What is attribution?
    • How does attribution work?
    • Click redirection
  • How does an ad network earn money?
  • What is attribution fraud?

If you are already aware of the concepts above, you can directly jump to the topic “Fraud will cause your CPI costs to increase”.

Attribution

You may be

  • Using one or more channels,
    • One or more campaigns in each channel (even different creatives)
      • One or more publishers in each campaign in order to promote your app.

To determine which specific combination of channels, campaigns, publishers, creatives (will be called as “source” in order to simply the definition) should be credited, it is needed to match the activity of performing user with the source who delivered it. This is called attribution. So, simply you need attribution to decide who you will pay and to see how the sources are performing (called optimization).

In mobile industry, very widely, attribution is performed by attribution tools (MMP’s – mobile measuring platforms). Attribution tools are using redirections in order to determine which source should be credited for every action.

Please keep these simple definitions in mind:

Adnetwork: is the entity who has arrangements with many publishers.

Advertiser: is the mobile app who wants to promote its app. Advertisers should integrate an Attribution tool’s SDK in order to run a mobile ad campaign.

Publisher: is the mobile app in which the ad is shown. Publishers should integrate Adnetwork’s SDK’s in order to serve an ad in their app.

User: is the mobile app user, who is clicking the ad and installing the app.

 

A simple illustration is as follows, for click redirecting:

 

Although, there are other ways, the most accepted methodology is crediting the owner of the last click, for the activities of the corresponding user-is called last click attribution.

On the illustration above, Publisher Y will get credited, and Publisher X is not credited for the install.

What is attribution fraud?

Attribution fraud is stealing the credit of another publisher/organic user, by using the bugs of the attribution methodologies. Most commonly used attribution fraud methods are:

  • Click injection or Click hijacking: Creating malicious apps or code to monitor app install activity in the background and when a new app install takes place the app/code sends a serie of clicks to the MMP before the install is complete to get credit for the install even though it was most likely to be an organic install.
  • Click flooding or Click spamming: Sending large numbers of fraudulent click reports in the hope of delivering the last click prior to install.

(Source: https://www.mmaglobal.com/news/why-attribution-tools-themselves-are-not-enough-combat-mobile-ad-fraud-0)

Please note that, this is a very hidden fraud, compared to other tactics. You can think that fraud sources, will provide bad quality and you will be able to detect them easily. But, it is completely wrong for attribution fraud. Since, fraudsters are stealing your organic install and/or legitimate sources’ installs, the quality (events performed, sales, retention etc) is quite high for attribution fraudsters.

How does an ad network earn money?

There is a very challenging optimization problem for the ad networks that are selling traffic with cost per install (CPI) cost model. Mostly, they are getting paid by the advertisers for the installs, but they are paying its publishers on cost per impression (CPM).

In order to maximize their profit, they have to decide which campaign to serve for which publisher, and they need high conversion rates (more installs, with less impressions).

 

Profit = Revenue – Cost, where

         Revenue = # of conversions*CPI  for a CPI campaign (conversion = install)

         Cost =  Total Impressions/1000*CPM

 

Again, as a very simplified explanation, we can say that an ad network selects the campaign to be shown to a publisher, according to the campaign’s potential revenue.

When the conversion of a campaign decreases, the motivation of a legitimate ad network that is serving the campaign decreases as well, unless you are willing to pay more for a single install.

You should be concerned about the traffic you are receiving from the adnetworks, that has no concerns about the conversion rate of your campaigns. Most probably, you not are being provided direct and/or clean (not fraudulent) traffic.

Fraud will cause your CPI costs to increase

Recall Revenue formulation.

 

Revenue = # of conversions * CPI

 

Profit optimization means maximizing revenue, while minimizing the cost (that is # of impressions under the same conditions).

As it can be easily seen in the formulation, the revenue is directly proportional to # of conversions and CPI. Assume, there are two campaigns with the same payout (CPI). The ad network gives priority to the campaign with high CR*CTR (high conversion rate to install from impression).

There any many factors affecting the click through rates(CTR) and conversion rate(CR) (like targeting, creatives etc); but in order to understand attribution fraud effect, let’s assume that other factors are constant.

On the other hand, assume you are paying 2 times more than your competitor. If your conversion from impression to install is 2 times lower, it does not mean too much for the ad network that you are paying double.

And that is the point, where you are being punished when your campaign is being subjected to attribution fraud. Even, if you are not paying for fraud, legitimate ad network interpreted the situation as your campaign is not converting, and your campaign’s preferability is decreasing with the each stolen install.

(1) The clean publisher (X) requests and ad from Ad Network to show its user.

(2) Ad Network priorities campaign in order to maximize its revenue.

(3) Ad Network selects campaign A (with the highest expected revenue), to be served by publisher X

(4) Publisher X shows the ad A, to its user.

(5) User clicks the ad and is redirected to attribution tool

(6) Fraudster publisher Y sends a fraudulent click (attribution fraud)

(7) User is redirected to attribution tool, with the last click from Publisher Y

(8) User is redirected to store and install the app

(9) The app is downloaded & the information is sent to attribution tool

(10) The attribution tool decides to credit publisher with the last (but fraudulent) click

(11) No credit for the clean publisher X

(12) When another ad is requested by a publisher, Ad Network’s motivation to select campaign A will be decreased, since Ad Network could not earn money with it. (When this cycle is repeated many times)

 

So, let’s turn back to the question that: “If you are not paying for the fraudsters, should you still care about preventing fraud?”

Analysing the sources and financial sanctions against them prevents you from paying the fraudsters, for today. On the contrary, it does not prevent you from being hurt by them. The probability that you are being able to reach clean sources with the same CPI’s will be decreasing day by day.  And if you will not be able to prevent your campaigns from fraud in real time, your overall marketing costs will continue to carry the risk of increasing.

 


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