Mobile game and app markers are exposed to $5.4B in fraud | AppsFlyer

Mobile game and app developers have been exposed to $5.4 billion in potential ad fraud during the economic downturn, according to a report from AppsFlyer. That’s more than twice amount of fraud compared to 2021 and 40% to 46% higher than in the second half of 2022.

The resurgence can be attributed to three factors, the report said. First, the distraction of marketers with the release of iOS 14.5, diverting attention and resources from fraud protection. Second, today’s marketers are facing trimmed budgets, creating pressure to partner with lower cost ad networks that offer fewer protections. And third, improved fraud detection leads to an increase in reported cases. That is, the industry is finding more instances of fraud.

The report is based on an aggregation of anonymized proprietary global data from 22 billion app installs from 24 thousand apps with at least 2,00 monthly installs from January 2022 to February 2023.

The second half of 2022 witnessed a 40% increase in average iOS app install fraud and 46% rise in average Android app install fraud. The economic downturn combined with the holidays forced marketers to focus less on security precautions in order to hit aggressive holiday KPIs.

AppsFlyer said that bots are responsible for over 70% of fraud across all regions. Fraudsters turn to creating a fake user on a fake device rather than manipulating the attribution of a real user and device, in addition to click flooding and fake publisher fraud.

Gaming apps remain most vigilant against fraud, as non-gaming apps are six times higher in app install fraud. While both gaming and non-gaming sectors have been impacted by fraud, the gaming industry’s data knowledge and emphasis on post-install value optimization weeds out fraudulent activity.

Gaming marketers have in the past struggled with the same pitfalls that emerging app industries are now facing, and this challenge has transformed them into seasoned veterans in the never-ending fight against fraud. Gaming marketers have successfully developed better buying behavior and shorter and more aggressive optimization cycles that help prevent fraud.

“We believe mobile advertisers can therefore draw valuable lessons from gaming pros,” the report said. “Finance app marketers should particularly take note and retain best practices, as the sector continues to remain highly vulnerable: almost half of all fraud exposure impacts the growing finance category.”

Over 50% of total fraud impacts the finance category of $2.6 billion, highlighting the vulnerability of a new and growing industry with soaring costs and often unaware media buyers. Finance marketers tend to be focused on acquiring users who are subsequently screened using KYC (know your customer) protocols.

Rapidly growing finance and fintech players may also be unwilling to pay high market rates to draw high-quality traffic, compelling marketers to explore more affordable media sources with elevated fraud risks.

Fraud exposure is the estimated financial value of fraud prevalent in the market. It is not a measure of actual damage or losses from fraudulent activity. By multiplying the detected fraud non-organic Installs (NOI) by clicks per installs (CPI), and then factoring data.ai market share data in the market in question, AppsFlyer can estimate the total exposure among all mobile measurement partners.

Marketers might be focusing less on security precautions, particularly during the holidays, as they aimed to hit aggressive holiday KPIs.

The last fraud report that AppsFlyer distributed (in 2021) listed $2.1 Billion in install fraud exposure globally. The number was based on H1 2021 fraud rates, and AppsFlyer has seen fraud rates and CPIs increase dramatically since then. For this reason, fraud exposure has increased significantly.

Here’s some other tidbits from the report. The install fraud rate detected in UK campaigns is 22%, a high rate on both Android and iOS. Mexico and Vietnam are the “leading” markets with highest rates of detected fraud.

The casino and betting category have a fraud exposure of $1.2 billion, thanks in part to its high CPI payouts; Shopping follows with $406 million in exposure.