• by Omri Halamish , Columnist, July 12, 2018

This year, advertisers are projected to lose $16.4 billion in fraudulent spend, making mobile ad fraud one of the most critical issues plaguing the industry today.

Although we’d assume that advertisers would do everything in their power to fight fraud so that their campaigns remain impactful, this unfortunately isn’t always the case.

Setting the scene: attribution manipulation today

The mobile ad industry today relies on attribution companies to determine which network or ad source gets the credit for an install. But mobile attribution today is far from perfect, and fraudulent publishers exploit loopholes to misattribute organic installs as paid ones. This means advertisers will pay them for installs they didn’t actually drive — we call this “organic poaching.”

Generally, the industry uses a last-click attribution model, and this window typically lasts seven days so, for example, if a user sees multiple ads for the same app, each served by a different network, clicks on one of them, and finally downloads the app four days later, the last ad he clicked on would get compensated for the install.

This model is problematic because it has led to a rise in attribution manipulation fraud such as click-stuffing, in which publishers generate clicks for ads that were only ever viewed, or even ads that were never viewed.

Facebook and Google effectively solved this by leveraging their market share to become a self-attributing network, performing attribution on their own traffic. But while this lets them more easily block instances of attribution manipulation, it leaves the rest of the industry's ad networks, which don’t have the same clout, to deal with a problematic reality.

Turning a blind eye

In addition to the lost budgets, the prevalence of attribution manipulation also makes it more difficult for advertisers to measure campaign efficiency and ROI.

So why do we see advertisers — or more specifically, the user acquisition managers in charge of ad spend — actually ignore, if not inadvertently encourage, this type of fraud?

Because many user acquisition (UA) managers care about one thing: Return On Ad Spend (ROAS). They get rewarded when ROAS is high, because that’s how UA managers are measured. So if organic installs that are misattributed as paid positively impact ROAS, what’s the harm in letting it slide? They have an incentive to “acquire” as many users as they can within that seven-day attribution window, whether the users really installed because of a mobile ad or because they saw a great commercial on TV. This is what drives up ROAS.

The thinking is that the misattributed install will be cheap and significantly lower than what they would usually pay, which in turn will lower the average cost per user. This not only makes it seem like they were able to reduce overall ad spend, but that they reduced it without compromising on quality. After all, in reality the user is likely organic, and organic users generally have higher lifetime values than paid users.

Key takeaways

First, it might sound like a good deal to pay $1 for an install that a bad actor “snipes” from a network that would otherwise charge you $15. But know that it’s all a cost-per-thousand game, and by doing so, you’re inflating your rates with legitimate sources and networks. The fewer installs you attribute to a legitimate network, the more you’ll need to pay per single install down the line.

Second, you're paying for organic installs. Stop wasting your money, it will never be worth paying for organics.

Finally, you are the first and last line of defense for showing executives why your app is worth money. Executives want to see a scalable (UA) model that’s profitable, because that’s what demonstrates overall business health. Inflating these numbers risks taking everything down.