Q and A with TrafficGuard's VP Customer Growth: Ad fraud and invalid traffic in the sports-betting industry

TrafficGuard holds that the best advertising performance comes from decisions based on accurate data. It also helps brands distinguish real traffic from the false ones, making brand spend really count. In this interview,  VP for customer growth Patricia Frejio talks about how ad fraud and invalid traffic specifically affect one popular industry in the Philippines:  sports-betting.

What are the main components of ad fraud affecting the sports betting industry in the Philippines?

Sports betting and the NBA make up a huge part of Filipino culture. In fact, the Philippines consistently ranks the highest in terms of NBA viewership. This love of the game also contributes to the popularity of sports betting making up a large portion of the PHP$30,026,771,615 per quarter betting industry. In order to differentiate from competitors, it is not uncommon for sports-betting companies to spend large amounts on Google Ads as a core customer acquisition method.

Ad fraud is very familiar to the advertising community, but, like anything, it remains an ever-evolving threat. Bad bots and click farms are the most prevalent and familiar forms of ad fraud. However, more recently, other menaces have emerged, including click spamming, whereby fraudsters execute clicks for users who haven’t made them and steal organic users. Geomasking, where fraudsters hide the location of clicks they have generated, has also become more sophisticated. While there are many forms of Ad Fraud that affect betting companies in the Philippines, there are three main drivers we have identified that significantly decrease a large portion of marketing revenue.

The first would be the high customer acquisition cost. Betting companies are bidding in a very competitive market with restricted targeting. Most betting companies invest large sums of money to secure the best advertising spots over competitors. This includes offering high amounts for credible websites and paying relevant websites to feature the company on the recommendations list. Bad actors hosting these websites may direct bots to click spam these ads or affiliate links which increases the amount that these betting companies have to pay to them.

The second would be free bonuses abuse. Companies typically  offer attractive no-deposit sign-on bonuses of sometimes, up to PHP 7,000. These are huge drivers of new customer acquisition. However, they are also very attractive to fraudsters with automated bots developed to create fake accounts and steal bonuses. These bonuses are then used to make multiple bets for both sports teams increasing the chances of winning. Sophisticated networks of bad actors can leverage millions of IPs to commit bonus fraud almost entirely undetected by betting companies.

Lastly, when searching for the company, existing customers are using the brand search campaigns as a front door to its website - over and over again. These are customers that would have accessed your website regardless of the presence of an ad, resulting in a huge inefficiency in the advertising.

How are betting companies in the Philippines running pay-per-click campaigns being affected by ad fraud?

Betting companies largely run Google Ad Campaigns that use the sign-up bonus as a customer acquisition strategy. They also partner with websites to be on recommendations list so as to enable greater brand discovery. However, bonus abuse may result in high bonus acquisition and low conversion. At TrafficGuard, we see many cases where companies invest huge amounts into marketing spend without seeing the conversions. For one of our clients, we found that:

• This equated to approximately PHP 1,225,000 wasted on invalid traffic (IVT).
• 83% of invalid clicks were due to bots generating clicks on its ads. This would mean the majority of their click spend were wasted on bot activity instead of organic activity that drives conversion and real engagements.

Overall, with our clients,  we identified that 2,498 of 6,563 weekly clicks were invalid and if prevented and replaced by valid traffic,  this would increase the conversion rate by 38.24%.

How can businesses identify the effects of ad fraud - such as bonus abuse?

While ad fraud may fly under the radar of many betting companies, there are ways to identify invalid traffic. Companies can use features such as Predicted Smart Ranges that condense millions of IPs down into smart ranges that give a good benchmark indication to marketers. Next, businesses could utilise a combination of anomaly, classification and predictive machine learning algorithms to analyse traffic and determine its validity in real-time. From this, the brand can effectively block known and unknown types of fraud as they emerge.

With a clearer understanding of where the invalid traffic is  coming from, brands can  drive a higher return on ad spend with greater confidence in their marketing data. This helps companies to identify sources of ad fraud and take necessary action to prevent draining its Google Ads budget.

What are the customer acquisition and ad fraud detection strategies that brands/businesses in the Philippines should adopt ?

While there are many existing toolkits in ad fraud prevention, there must first be an awareness that it exists and a willingness to make prevention a core part of their marketing toolkit. By tackling Invalid Traffic, sports betting companies could optimise close to 10% of wasted budget towards other efforts to generate genuine ad engagements. This is compared to other verticals at 3%.

The strategy implemented must be one that is suited to the Sports-betting industry. The one-size-fits-all approach by traditional legacy companies has the tendency of being aggressive and possibly wiping out genuine clicks and conversions.

Lastly, it is important to take campaign statistics with a grain of salt. Oftentimes, conversion rates that are too good to be true are often just that… too good to be true. We also found that often the cleanest traffic comes from bot activity which makes detection difficult. Hence, there is a need to run PPC campaigns that are proactive with a multipoint approach to the detection and prevention of Ad fraud.