Mobile Marketers, Beware: Fraudulent App Installs Waste $300M In Ad Spend

Despite highly publicized efforts by platforms to curb fraudulent apps, the problem is still costing marketers a ton of green.

In fact, more than 5% of app installs from non-premium ad networks remain fraudulent, which equals about $300 million in wasted ad spend every year.

That’s according to new findings from security research firm DataVisor, which are based on an analysis of 490 ad networks and publishers, 140 million app installs, and 11 billion user events between January and May of this year.

Like a virus adapting to its host, fraudsters are adjusting to shifting user acquisition strategies, says Ting-Fang Yen, director of research at DataVisor.

In the name of direct attribution, mobile marketers have been shifting to a cost-per-install (CPI) and cost-per-engagement (CPE) model. In response, bad actors are increasingly inserting themselves into the ad supply chain in the form of fake sub-publishers, and using a variety of tactics, including install farms, mobile device emulators, and click injection apps.

“There are more tools available than ever for sophisticated criminals to skirt detection,” according to Yen. “As more money is poured into mobile advertising, the incentive to try and steal it grows.”

As marketers have grown less trusting of “per install” incentive ad campaigns, they have increasingly used campaigns that pay for active users rather than simply installs.

To go undetected, smart fraudsters are becoming better at simulating the behaviors of normal users and performing in-app events -- or opening the app multiple times after download.

Indeed, DataVisor found that more than 84% of fraudulent installs generated at least one in-app event after downloading.

What’s more, 29% of fraudulent installs return to the app during the second day, and 18% return in seven days, the firm found.

The fact that fraudsters are artificially generating app opens and other retention events at a rate even higher than that of legitimate users demonstrates the lengths criminal organizations will go to cash in on ad budgets, Yen warns.

Of note, while the overall fraud rate average across all ad networks is 5.3%, fraud rate varies widely within each ad network.

Many of these ad networks can have upwards of 90% fraud rate for individual campaigns, DataVisor found.

Translation: It’s still a risky world out there for mobile marketers.

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