Does fraud give your competitors an advantage?
Senior Content Manager
Posted Sep 19, 2018
Today, the biggest unspoken truth of our industry is this: the market often views fraud as a good thing.
An uplift in acquisition, an improved conversion rate, or consistent user behavior, are all metrics that are driven by purchasing fraudulent traffic. On the flip-side, real users are much harder to convert through real advertising, buying for legitimate users is more difficult to get right, and maintaining the fight against fraud can be exhausting.
However, though fraud might look good for your numbers, is it actually a potential disadvantage versus the people who protect their campaigns with active fraud prevention?
We spoke to Cyrus Lee, Senior User Acquisition Manager at Playstudios, to get his point of view. In 2017, Cyrus joined us on stage at Mobile Spree, to share his views on fraud, and had some real insights into how marketers behave, and how fraud can affect their day-to-day.
We returned to him with the question we led from: does fraud give the competition an advantage? Or, by not activating some kind of fraud prevention, are you potentially giving your competitors the upper hand?
The first advantage: Buying better users
To put it simply, active fraud prevention results in more users (more, real users) seeing your ads.
By filtering fraud, you (or your competitors) will be more effectively buying up users, reaching real users, and driving share of voice up. The party benefiting from fraud prevention will also be spending much more efficiently, not losing budget to fraud in the first place.
Opposition to this view might be fearful of an impact on conversion rates, or an altered intake of new users. However, when viewed through the lens of a competitive advantage, it’s no longer about your own milestones, but how much better (or worse) you’re performing against the average. If you want to know more, you can always consult our app benchmarks tool to better understand where you sit. You can also talk to us to get a clearer view of where you could be with the Fraud Prevention Suite.
The second advantage: No wasted time
“It’s a big time sink to go backwards”, says Cyrus. “The more fraud you (or your competitors) buy, the more conversations you’ll have at the end of each month that go to a chargeback.” These meetings can mount up. Each new debate over potential lost revenue comes more stress, and more time getting to know each publisher’s fraud team instead of getting on with the real work.
Beyond wasted time, you also have to think about even more lost spend as well. It’s no guarantee that the party buying fraud would receive the entirety of their budget back, and “in the end, you may end up splitting the difference out of your own sanity or out of a need to move forward so we don’t have to deal with this problem anymore.”
The saddest point here is that a lot of networks might count on that fact, and are well used to the conversation. As Cyrus mentions: “even if they discount 90% of the traffic, they’re still getting a cheque for that additional 10%, which gives you barely any value on an ROI basis.”
It’s not just time and money, but also reputation and relationships that are on the line. For every meeting about fraud, that’s one more negative conversation. “This industry is very small, so it’s dangerous for your own reputation, or personal “brand”, let’s say, if there’s any dubiousness in any way or form. You don’t want to blow up your relationship with a network and let your ego get the better of you. That can be hurtful in the long term.”
The third advantage: Prevention benefits your partners
A couple of app businesses look at fraud very differently, and - across the ecosystem - we’re aware of how, and why, they try to game the system.
Some companies buy fraud en masse and don’t care that the installs are rejected. “They bank on feeding bad data to ad networks”, says Cyrus, “so that (for example) their ad impressions gets pushed higher and higher into the ad waterfall. Fake conversions do have an advantage - they inflate an ad’s IPM.”
The scheme works like this: ad networks rank ads to give the publisher the most money. For every 1000 impressions shown, whichever ad has the highest number of installs will simply be shown more than others. This means that in spite of the high levels of fraud, the advertiser will reach more users (in theory) than others.
This tactic might seem effective as an individual advertiser until you think about the problem as an ecosystem. Fraudulent installs keep the money flowing for the fraudster, in the short term. It hurts legitimate publishers when we feed ad networks bad signals that they then use on their ad serving algorithms.
If you want to spend smart, fraud prevention is the best way to go.
The fourth advantage: Clean data for better decisions
We’re not kidding when we talk about fraud prevention keeping your data clean.
“Getting rid of fraud, especially attribution manipulation, enables an advertiser to work from of real data and KPIs,” says Adjust’s Head of Fraud, Andreas Naumann.
“The company without fraud will know their own eCPCs and eCPMs, and they can work off of their true CPIs. Therefore, if your competition has fraud prevention, they can actually balance out spend vs. revenue on real data, whereas you wouldn’t be able to do so.”
“This means, your competitors can be very on-point in mitigating risks and finding niches in supply that work especially well. And, even better, they know where they can compete against the brand marketers that are willing to pay higher CPMs naturally.”
It could be that your competitors are stealing big gains on you, as we speak. Or, you might want to get ahead and take advantage of what fraud prevention can offer in terms of market success.
If you want to know more, get in contact with us today, and set up a demo with our Fraud Prevention Suite.