In festive season, fraud app installations touch new high: Study

In October, installation frauds of e-commerce apps in the peak sale season accounted for half of the total downloads according to a study by mFilterlt, a global digital ad and fraud detection and protection company based in India. 

The company handles sites accounting for over 50 per cent of the country’s e-commerce customers which include top global players.  

The share of app installation frauds – in which cheap human labour or automated tools are used to make fake installs which are never opened for use - hit 51 per cent in October. The average between April to November 14th was 47 per cent.

Even frauds involving keeping an app open and putting some products in a cart or removing them (but in which no transaction takes place) accounted for 63 per cent of all downloads in October compared to an average of 56 per cent.

These findings have serious repercussions for business because the number of app downloads – apart from active users - is considered to be one criterion for valuing and investing in a start-up. Fraudsters who indulge in this make significant income from advertisers.  

However, established e-commerce players spend huge amounts by increasing their ad and sales budgets for performance marketing during these peak seasons which goes to waste as it does not bring in real consumers.

Amit Relan, co-founder and director in mFilterIt, said that during the festive season, a brand has a short serviceable window where almost 45 per cent of the ad budgets are deployed to gain more than 50 per cent of the yearly sales which leaves no room for correction.

“Brands need to strike a balance between optimization of ad spends and brand protection to insulate themselves from the bad actions plaguing the digital ecosystem,” said Relan.     

Advertising frauds are not limited to apps and their numbers and usage. mFilterlt says that as much as 12-13 per cent of the digital ad spends in the country in 2021, which is expected to hit Rs 28,000 crore, will go to waste because they are generated by BOTs, domain spoofing (cyber frauds can make advertisers pay more for advertising on the spoofed website), and click injections (putting malware in devices to generate ad clicks).

For instance, 15 per cent of total digital advertising revenues spend this year on social media was wasted by advertisers, says mFilterIt. Social media accounts for 29 per cent of the Rs 28,000 crore digital advertising this year.

In the case of online video (YouTube and the growing OTT channels) which accounts for 28 per cent of digital revenue, money wasted due to ad frauds was much lower, at 10 per cent.

As to paid search engines where controls are far superior, while they account for 24 per cent of digital ads, the fraud average is only 6 per cent. And in display banners, which account for 16 per cent of the ads, the fraud rate is a stiff 20 per cent.

Besides, there are some sectors of the business which are more vulnerable, depending on their exposure to digital advertising. For instance, the BFSI sector accounts for 50 per cent of the spends on digital (both for brand building as well as outcome-based advertising), getting leads, and getting new clients eventually.