Ad fraud vs ROI which relationship ?

Ad Fraud Vs ROI : Which relationship ?

Your ad campaigns doing great ? Awesome ! But what if we told you you can make much more out of it ? We got your attention let’s deep dive into it.

ROI : a question of relationships between costs and revenues.

You are used to the following formula :

$$ ROI = \frac{Net\ Return\ on\ Investment}{Cost\ of\ Investment} * 100$$

But what does it mean on a larger approach ? Each and every cent of unnecessary spend will negatively affect the ratio of money you pull out of an ad campaign.

Let’s now take real numbers to make it more sensitive :

$$ \frac{1000}{700} * 100 = 128\%$$$$ \frac{1000}{500} * 100 = 200\%$$$$ \frac{1000}{300} * 100 = 333\%$$

Simple Computations so far, but as you can see dramatic results.

Ok but what is the amount of ad fraud ?

Ad frauds are by definition, unnecessary costs. What defines an ad fraud is the fact that the ad is not displayed to actual buyers, but rather made by automated process and / or of stolen data. Or as defined by wikipedia :

Ad fraud (also referred to as Click Fraud or PPC Fraud) is concerned with the practice of fraudulently representing online advertisement impressions, clicks, conversion or data events in order to generate revenue. Ad-frauds are particularly popular among cybercriminal.

Source : https://en.wikipedia.org/wiki/Ad_fraud

Now that we understand the ad fraud phenomenon, what is the average weight of fraud on each campaign ?

The value of digital advertising spend lost to fraud is set to reach $68 billion globally in 2022.

Source : https://www.juniperresearch.com/researchstore/content-digital-media/digital-advertising-fraud-research-report

In other words : 30% of each ad campaign is touched by fraud.

More simple computations, but more tangible impacts.

If we apply this to our first hypothesis with frauds our ROI is 128%, now let’s see how much it is without fraud :

$$ \frac{1000}{(700-700*30/100)} * 100 = 204\%$$

So we went from 128% to 204% ROI. Not so bad. Now let’s imagine that the money saved is reinvested in fraud-free investment, what should be our net return

$$ 700*204/100 = 1428$$

So, just by eliminating unnecessary costs and with the same investment, we made 42,8% more money out of the same campaign.

Conclusion

You are now able to understand our focus here at Knytify, our goal is to make you more successful in your ad campaigns by eliminating at the most early stage frauds. In more subsequent articles we will begin to be more technical on how we do so. Now what is left ? Start computing what could be your very own ROI with a proper fraud prevention solution ? And if you want us to help you understand and even give you free fraud analytics on your campaigns hit the contact button !

Aurélien Savart - Knytify CEO, 2022-11-14