In October, e-commerce app installation fraud during peak sales season accounted for half of total downloads, according to a study by mFilterlt, a global digital ad and fraud detection and protection company based. in India.
The company operates sites representing more than 50% of the country’s e-commerce customers, which include the major global players.
The share of app installation frauds – in which cheap human labor or automated tools are used to perform bogus installations that are never open for use – reached 51% in October . The average between April and November 14 was 47 percent.
Even frauds involving keeping an app open and putting certain products in a cart or deleting them (but in which no transactions take place) accounted for 63% of all downloads in October, compared to an average of 56%.
These findings have serious repercussions on companies because the number of application downloads – apart from active users – is considered a criterion for valuation and investment in a start-up. The fraudsters who engage in it derive significant revenue from advertisers.
However, established ecommerce players are spending huge sums of money increasing their advertising and sales budgets for performance marketing during these peak seasons, which is wasted because it does not attract real consumers.
Amit Relan, co-founder and director of mFilterIt, said that during the holiday season, a brand has a short service window where nearly 45% of advertising budgets are deployed to earn more than 50% of annual sales, which leaves no room for correction.
“Brands need to strike a balance between optimizing ad spend and protecting the brand to protect themselves from bad deeds that affect the digital ecosystem,” said Relan.
Advertising fraud is not limited to applications, their number and their use. mFilterlt says that up to 12-13% of digital ad spend in the country in 2021, which is expected to reach Rs 28,000 crore, will be wasted because it is generated by BOTs, domain spoofing (cyber frauds can make advertisers pay more for advertising on the spoofed website) and clickthrough injections (putting malware into devices to generate ad clicks).
For example, 15% of the total digital ad revenue spent this year on social media was wasted by advertisers, explains mFilterIt. Social media accounts for 29% of Rs 28,000 crore digital advertising this year.
In the case of online video (YouTube and the growing OTT channels) which accounts for 28% of digital revenue, the money wasted due to ad fraud was much lower, at 10%.
As for paid search engines where checks are far superior, while they account for 24% of digital ads, the fraud average is only 6%. And in display banners, which account for 16 percent of ads, the fraud rate is 20 percent.
In addition, certain areas of the business are more vulnerable, depending on their exposure to digital advertising. For example, the BFSI industry accounts for 50% of spending on digital (both branding and results-based advertising), to get leads and potentially new customers.