Ad Fraud: Why you Need More Meaningful Metrics

According to a report released by the Interactive Advertising Bureau (IAB) in December 2015, ad fraud now costs U.S. digital marketing, advertising, and media industry $8.2 billion a year. To put that into perspective, that's roughly equivalent to the GDP of the Bahamas.

Ad fraud expert Augustine Fou summed up the ad fraud situation nicely: "[It’s] a more lucrative organized crime than credit card fraud, counterfeiting goods or being a Somali pirate, where the reward far outweighs the risk of being caught.

Both brands and advertisers depend on accurate KPIs in order to create efficient and effective budgets, which is why click fraud and impression fraud are lucrative opportunities for fraudsters. Many fraudsters earn their money with bots that spoof key performance indicators (KPIs) used to measure campaign success; think click through rate (CTR) and cost per thousand impressions (CPM).

Fraudster success depends on advertisers using easily manipulated KPIs for campaign benchmarks, which is why advertisers should move to more meaningful digital metrics. A shift to metrics that are difficult for bots to spoof at a profitable scale could help advertisers recoup financial losses due to ad fraud.

Here are a just a few examples of more meaningful metrics to drive your next campaign:

• Cost per conversion (CPC/CPCon): This metric measures clients who complete a desired action, like filling out a form or adding an item to a shopping cart.
• Cost per acquisition (CPA): This metric is focused on making an individual a customer. Social Media Explorer has a great formula for determining CPA, which you can see here.
• Overall ROI: This metric compares increase in sales to the amount invested in a campaign. It’s especially effective for launch campaigns.
• Cost per Thousand Viewable Impressions (vCPM): This metric measures impressions where at least 50% of your ad shows on the screen for at least one second. It ensures that you're paying for ads that actually appear and can be seen.

To learn more about ad fraud, check out the team orange "ad fraud (and you)" brief:

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