Click fraud: Understanding the impact on digital advertising

Every day, billions of dollars flow through the digital advertising ecosystem, providing the economic lifeblood of the internet as we know it. At the same time, ad fraud continues to evolve, surfacing in new formats, new threat types, and always hiding in the gray area. As advertising models increasingly shift toward performance-based metrics, such as pay-per-click and pay-per-conversion, fraudsters have found new opportunities to exploit the system, creating complex challenges that affect the entire advertising industry. Throughout these changes, click fraud has emerged as one of the key challenges in the landscape.

Understanding click fraud

Let’s start at the beginning. What exactly is click fraud? 

At its core, click fraud occurs when automated scripts, bots, or human click farms, generate artificial clicks on digital advertisements. Put simply, it’s when human or software entities click on ads without genuine intent. 

While this definition might sound simple, the reality is far more complex. What began as basic scripts repeatedly clicking on ads has evolved into sophisticated operations using advanced techniques such as residential proxy networks, machine learning, and behavior simulation to evade detection. 

The impact of click fraud across the ecosystem

The interconnected nature of modern ad tech means that click fraud affects the entire industry, creating unique challenges for each stakeholder:

For advertising platforms

• The trust of major platforms — from demand-side platforms (DSPs) to retail media networks and walled gardens — hinges on platforms’  ability to maintain marketplace integrity. When fraud infiltrates these systems, it doesn't just undermine individual campaigns; it erodes confidence in the entire ad platform. Platform operators find themselves locked in an escalating arms race with fraudsters, requiring ever-increasing investment in fraud detection and prevention systems.

For publishers

• Content creators and publishers face a precarious position. Their business models depend on advertising revenue, yet they bear an outsized burden in maintaining traffic and click quality. A single surge of fraudulent clicks can trigger automated quality control systems, potentially creating account suspensions or revenue clawbacks (where reimbursements are required for false clicks and, thus, siphon revenue). Smaller publishers are especially vulnerable, as they may lack the resources to implement sophisticated fraud prevention measures while facing the same level of scrutiny as larger players.

For advertisers

• The damage to advertisers extends beyond wasted ad spend. Invalid clicks pollute analytics data, leading to costly optimization mistakesdecisions. When fraudulent activity skews performance metrics, advertisers might inadvertently increase investment in compromised campaigns while cutting back on genuinely effective strategies. This corruption of data can impact marketing decisions months or even years after the fraudulent clicks occur.
  
  
  

Trust and measurement 

One of the most significant aspects of click fraud is how it undermines trust in advertising measurement and performance. In today's landscape, trust is built on reliable data:

• Advertisers trust click data to measure campaign effectiveness and make multimillion-dollar optimization decisions
• Publishers trust click metrics to demonstrate value to advertisers and guide content strategy
• Platforms rely on accurate click data to maintain trusted marketplaces where both buyers and sellers can transact with confidence

When fraudulent clicks enter this ecosystem, they not only compromise data but also erode the trust in the machine learning models and optimization algorithms that power modern advertising platforms. This creates a cycle in which compromised trust prompts hesitant investment and cautious optimization, which in turn creates new opportunities for fraudsters to exploit.

Protecting against click fraud

As digital advertising continues to grow and evolve, protecting against click fraud becomes increasingly crucial. The industry needs collaborative solutions that combine advanced detection technologies with proactive monitoring and swift response capabilities.

Standards development. Creation and adoption of new industry standards that promote transparency and accountability throughout the supply chain as well as the creation of a click fraud taxonomy similar to the standardized IVT taxonomy.

Industry collaboration. Platforms, publishers, and advertisers must share intelligence and best practices to create a united front against fraud.

Technology investment. Continued development of advanced detection systems that can identify and prevent fraudulent activity in real-time.

As digital advertising continues to evolve, addressing challenges such as click fraud will be a step closer to building a transparent, efficient, and trustworthy advertising ecosystem that delivers value to all participants.

This is part one of a series on the definition and market impact of click fraud.