COVID-19 Makes the Problem of Ad Fraud More Complex for Retailers

Marketing strategies developed for a pre-COVID world are, in the most part, not optimal for the realities of today. Brick-and-mortar retailers will be grappling with the challenges of strengthening their online presence and customer acquisition efforts. Strong online retailers will be facing more competitors, while likely also observing impacts of reduced consumer confidence.

In this new normal, online advertising is critical to success for retailers. However, many retailers are also seeing their budgets slashed — nearly seven in 10 brands expect to decrease ad spend in 2020 in the wake of the coronavirus.

When online advertising is increasing in importance but decreasing in budget, it’s essential for retailers to get an understanding of how to maximize advertising effectiveness. With ad fraud and invalid traffic estimated to be consuming as much as 30 percent of ad spend, this makes a logical starting point.

COVID-19 Makes the Problem of Ad Fraud More Complex

For many retailers that are relying on digital advertising as a new channel and potentially singular source of new business, the effectiveness of their digital advertising will determine whether they survive this crisis. For those businesses, now it's more important than ever to make every dollar count.

Here's what you need to know about ad fraud during the COVID-19 pandemic:

1. Bad actors love more prey. After nearly three months of business disruption, we haven’t seen direct evidence of a rise in ad fraud. However, we have seen an increase in the number of potential targets. With more small-to-medium businesses (SMBs) shifting marketing efforts toward digital — many for the first time — fraudsters are eyeing an influx of new and often unaware digital properties as prey. There are less tools for SMBs to use to protect their advertising, and much less education on the problem of ad fraud targeted to them. So while there may not be an absolute increase in fraud observed, there's very likely to be an increase in fraud successful in stealing ad spend. SMBs should get up to speed on the threats that exist, and also consider investing in tools that can identify invalid traffic and help minimize losses.
2. The “new normal” includes how we think about metrics. Key performance indicators (KPIs) that previously pointed to normal or abnormal performance of marketing efforts are no longer reliable because of the extreme changes in consumer behavior and consumer confidence that have accompanied the pandemic. With the yardstick that measures “good” and “bad” performance broken, detecting ad fraud can be even more difficult. For retail marketers looking to reduce their exposure to ad fraud, it's even more critical to focus on identifying fraud rather than symptoms of fraud like performance benchmarks.
3. Think before buying cheap. It’s a natural impulse when marketing budgets are cut to try to find cheaper ways to advertise. However, that approach can create more risk. Marketers that choose to chase lower cost-per-thousand impressions (CPMs) in an effort to stretch their shrinking budgets make themselves a target for ad fraud. Additionally, if you already have a fraud prevention solution, now isn’t the time to cut that in order to save money. If anything, evaluate if it’s really doing its job — the right solution should help to reduce costs by minimizing spend wasted on invalid traffic, not just reporting on ad fraud.

Ad fraud is constant and everywhere. It has always been critical for marketers to understand its impact on their efforts, and COVID-19 is shining a spotlight on how much damage it may have been doing all along. As retailers adjust to a new business reality, ignoring these kinds of threats is simply a luxury no one can afford.

Luke Taylor is chief operating officer and founder of TrafficGuard, a company that provides game-changing digital ad fraud protection.