Click fraud is a growing challenge in the digital advertising ecosystem, costing advertisers billions each year. At its core, click fraud involves illegitimate clicks on online ads, either by bots, malicious actors, or even unintentional human actions, that lead to distorted campaign performance metrics, depleted ad budgets, and undermine the trust advertisers place in digital platforms.

The scale of the problem is alarming. In 2023, an estimated 17% of all clicks on digital ads were deemed fraudulent, according to research by Juniper Research. This number is expected to worsen, reaching 19% in 2028, highlighting the urgent need for advertisers and platforms to understand and combat click fraud.

Understanding how fraudsters exploit digital ad systems is the first step toward mitigating this risk. This article explores the main types of click fraud, how fraudsters profit from these schemes, and actionable strategies to safeguard your advertising investments.

The Main Types of Click Fraud

Click fraud comes in various forms, but most schemes can be categorized into two overarching groups: device-driven fraud and content-driven fraud. And how fraudsters make money from click fraud depends on the way that fraud is employed.

Device-driven fraud operates by leveraging computers, servers, and mobile phones to simulate genuine ad impressions and user engagement. Fraudsters deploy bots programmed to mimic human behavior, using sophisticated algorithms to make fake clicks appear indistinguishable from legitimate user activity. The revenue model is straightforward: fraudsters drive artificial traffic to publisher sites or devices and earn payouts for the resulting impressions or clicks.

Content-driven fraud, on the other hand, is more intricate. It involves the creation of fake websites and apps that sell ad space to unsuspecting advertisers. These advertisers believe their ads are appearing on legitimate publisher platforms when, in reality, they’re being displayed on “ghost sites” or “cashout sites.” These sites lack genuine content and exist solely to host ads. Fraudsters then use bot traffic to generate fake clicks on these ads, earning revenue without delivering any real engagement.

Within these categories, several specific methods stand out:

Click Spam

Click spam involves fraudsters flooding an ad network with a high volume of fake clicks, often generated by automated software or bots. The goal is to exhaust the advertiser’s budget without delivering genuine traffic. This tactic is especially prevalent in competitive industries where advertisers bid heavily on high-value keywords. Click spam not only wastes ad spend but also distorts analytics, making it difficult for advertisers to assess campaign performance.  

If you want to know more, visit our “What is Click Spam?” blog post.

Click Injection

Click injection is a sophisticated form of fraud typically targeting mobile app installations. Fraudsters manipulate the ad ecosystem by triggering clicks just before a legitimate app installation occurs. This allows them to claim credit for the installation, pocketing rewards intended for genuine affiliates or publishers.

Click injection schemes exploit vulnerabilities in mobile devices and app tracking systems, making them particularly hard to identify. These scams erode trust in affiliate marketing networks and can lead to significant revenue loss for advertisers.

Think you’re being affected by this tactic? Visit our Click Injection blog post to learn more. 

Domain Spoofing

Domain spoofing happens when fraudsters impersonate premium websites or apps to deceive advertisers into placing ads on low-quality or fraudulent sites. They falsify domain information to appear as reputable publishers, attracting higher ad rates.

This type of fraud undermines the value of programmatic advertising by redirecting budgets to fraudulent sites that fail to deliver the promised audience or engagement. Advertisers may unknowingly pay premium prices for poor-quality traffic, damaging ROI and brand reputation.

Interested in learning more about it? Check our “What is Website Spoofing?” blog post. 

Pixel Stuffing and Ad Stacking

Both pixel stuffing and ad stacking are fraud techniques designed to generate artificial ad impressions, targeting campaigns that prioritize impression volume over clicks. Pixel stuffing involves embedding ads as tiny 1×1 pixels on a website. These ads are invisible to the human eye but are still counted as impressions by advertisers, who end up paying for exposure that never truly occurred.

Ad stacking takes a slightly different approach. Here, multiple ads are layered on top of each other in a single ad slot. Only the top ad is visible to users, but the fraudster charges advertisers for all the hidden ads beneath it, inflating impression counts while delivering zero value to advertisers.

Affiliate Ad Fraud

Affiliate ad fraud exploits cookie-based tracking systems used in affiliate marketing. Fraudsters secretly insert cookies into a user’s browser, falsely crediting themselves as the source of the user’s visit to an affiliate site. When the user engages with the affiliate’s website or makes a purchase, the fraudster gets paid a commission for traffic they didn’t generate, stealing revenue from legitimate affiliates.

Location Fraud

Location fraud manipulates geolocation data to deceive advertisers who target specific regions. Fraudsters spoof the geographic location of traffic to appear as though it’s coming from high-value or targeted areas. In some cases, they deliver traffic from unapproved locations, while in others, they misrepresent cheap traffic as coming from premium regions with higher advertising costs, maximizing their payout while delivering irrelevant or low-quality traffic.

Evolving Tactics of Fraudsters in Click Fraud

Click fraud is a dynamic and constantly evolving threat to advertisers, with fraudsters continuously adapting and innovating new methods to bypass detection systems. 

Fraudsters are using AI to design bots that learn and adapt to behaviors seen in real human users. They can simulate mouse movements, scrolling, and clicks, which makes them more difficult to identify by traditional detection systems that rely on simple pattern recognition. Over time, these AI bots can become more sophisticated, making it harder for advertisers to distinguish between legitimate and fraudulent traffic.

Deep learning algorithms are also being used to analyze large datasets, allowing fraudsters to refine their tactics continuously. These algorithms can scan data from various sources to understand ad network behaviors and design click fraud strategies that are harder for detection systems to spot. The ability to learn and adapt in real-time gives fraudsters an advantage in staying one step ahead of traditional fraud prevention measures.

How Fraudsters Make Money from Click Fraud

Click fraud isn’t just a nuisance—it’s a thriving underground economy. Fraudsters exploit advertising networks by generating fake traffic and making money for every click they produce, regardless of whether it’s a real customer or a bot. 

Ad Revenue from Fake Clicks

One of the most straightforward ways fraudsters profit is through fake clicks on ads displayed on their websites or apps. They deploy bots or incentivized human activity to create a high volume of clicks, tricking advertisers into thinking their ads are engaging real users. While each click may only earn a small amount, automation allows fraudsters to generate thousands of clicks daily, turning pennies into substantial earnings over time. This is how fraudsters earn money by clicking ads—by inflating traffic with automated systems that mimic human behavior.

Using bots is particularly advantageous for fraudsters, as they require minimal effort to operate once the scheme is in place. Even if their activities are detected, they can quickly adapt, deploying new bots or setting up different fraudulent websites, making it an ongoing game of cat and mouse. Fraudsters are constantly looking for ways to get money by clicking ads on a larger scale, ensuring that their fraud remains undetected.

Draining Competitors’ Budgets

Click fraud isn’t always about generating revenue for the fraudster. Sometimes, the goal is to harm a competitor by draining their ad budget. Fraudsters can repeatedly click on a competitor’s ads in a pay-per-click (PPC) campaign, depleting the budget without delivering any real customer engagement. This tactic can cripple small businesses or disrupt campaigns in competitive markets, giving the fraudster or their affiliates an unfair advantage.

Selling Fraudulent Traffic

Another way fraudsters profit is by selling fake traffic to advertisers or ad networks. By promising high traffic volumes at competitive rates, fraudsters attract advertisers looking for exposure. The traffic, frequently generated by bots or low-quality sources like click farms, inflates metrics without delivering genuine user engagement. Fraudsters make money by clicking and selling these inflated impressions to advertisers who believe they’re receiving legitimate exposure.

The Consequences for Advertisers and Platforms

Click fraud isn’t just a financial setback—it affects the integrity of digital advertising as a whole. Its ripple effects compromise performance, data accuracy, and trust within the ecosystem. 

At its core, click fraud drains ad budgets by generating fake clicks that offer no real value. Advertisers pay for these fraudulent interactions without gaining genuine engagement or conversions, leading to a significant reduction in return on investment (ROI). For businesses with limited budgets, this can cripple campaigns and derail marketing strategies.

Skewed Campaign Data and Poor Optimization

Click fraud distorts campaign metrics, such as click-through rates (CTR) and conversion rates. When fake clicks inflate engagement data, advertisers struggle to identify which strategies are working and which are not, leading to poor optimization decisions, wasted resources, and underperforming campaigns.

Reduced Trust in Digital Advertising

As advertisers become more aware of click fraud, confidence in digital advertising reduces. Businesses may hesitate to invest in online campaigns, fearing their efforts will be undermined by fraudulent activity. Ultimately, this loss of trust can lead to reduced ad spend and slower growth for advertising platforms.

Can You Stop Click Fraud?

Click fraud is a lucrative but unethical business. It thrives because it’s relatively easy to execute and difficult to detect. Advanced automation, coupled with gaps in international legislation, allows fraudsters to operate with minimal risk of prosecution. Unless advertisers employ robust click fraud prevention tools, the fraudulent activity often goes unnoticed, making it a lucrative business for bad actors.

Here are some best practices for stopping click fraud in its tracks:

1. Monitor Campaign Performance Regularly: Keep an eye on your ad metrics—unusual spikes in CTR or sudden drops in conversion rates could indicate fraudulent activity. 
2. Set Up Geographic and Device Targeting Restrictions: Limiting where and how your ads are shown can reduce exposure to fraudulent sources, particularly when targeting high-risk areas or devices used in click fraud schemes.
3. Use IP Exclusion and Fraudulent Traffic Filtering: Exclude known IP addresses associated with fraud or click farms from viewing your ads. Additionally, filtering out suspicious traffic sources will help ensure only legitimate users interact with your ads.
4. Leverage CAPTCHA and Verification Tools: Adding CAPTCHA or other user verification mechanisms to your landing pages can prevent automated bots from engaging with your ads.
5. Collaborate with a Trusted Ad Network: Working with reputable advertising platforms that monitor for click fraud can help you identify and avoid fraudulent traffic.

Use ClickGUARD for Real-Time Protection

While manual monitoring and best practices help mitigate some risks, fraudsters are constantly evolving their tactics. To effectively fight click fraud and keep your campaigns profitable, investing in specialized tools is essential. 

ClickGUARD, for example, provides advanced protection by automatically detecting and blocking fraudulent clicks, ensuring only real users interact with your ads. With its sophisticated algorithms and real-time monitoring, ClickGUARD helps you safeguard your Google Ads, Microsoft Ads, and Meta Ads campaigns from the ever-evolving threat of click fraud.

Conclusion

Click fraud doesn’t have to be a constant threat to your advertising efforts. By adopting best practices and investing in robust tools like ClickGUARD, you can protect your campaigns, optimize your budget, and maintain the integrity of your ad data. Proactively addressing click fraud ensures your advertising dollars are spent where they matter most—on real customers, not bots.

Take control of your digital marketing today—invest in click fraud prevention and safeguard your campaigns for long-term success.