June 15, 2024

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App Install Fraud: What It Is and How It Nets Billions Annually

App Install Fraud

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What is the first thing you would probably think of if someone asked you about ad fraud? Many people would immediately think of click fraud, the practice of generating fake clicks on ads in order to increase revenue. Others would think of things like ad stacking and accidental clicks. But there is a type of mobile fraud that is just as profitable despite not being discussed much. It is known as app install fraud.

App install fraud is a huge problem for both the iOS and Android ecosystems. So much so that estimates suggest that developers and advertisers lost some $5.4 billion to app install fraud between January 2022 and February 2023. And still, that $5.4 billion is a drop in the bucket compared to the total losses attributed to click fraud in its many forms.

The Basics of App Install Fraud

App install fraud is a form of mobile click fraud that targets Android and iOS apps. A fraudster’s goal is to ensure that a targeted app is downloaded and installed as often as possible. The app doesn’t even have to remain on a device for any length of time. It just needs to be downloaded and installed.

Fraudsters use bots the majority of the time. Bots are small pieces of computer software programmed to perform limited tasks. In this case, they are programmed to download and install the apps targeted by fraudsters. And because they are automated and operate 24/7, they can accomplish a lot of installs in a short amount of time.

How They Generate Revenue

Understanding how app install fraud works is the easy part of the discussion. Understanding how it generates revenues, not so much. But let’s start by discussing ad publishers and what they do.

Ad publishers are third-party entities that run online publishing networks. Many of them sign up for publisher accounts with Google Ads. Being an active Google Ads publisher means having access to that vast library of ads companies purchase through Google.

As a publisher, the fraudster gets paid every time an ad is clicked. The more clicks, the more money an ad generates. When we apply this model to mobile app downloads, things get a little bit murky. But stick with it. You are about to read as simple an explanation as can be offered.

Downloads Inflate Ad Spend

A publisher perpetrating app install fraud is trying to artificially inflate download numbers. Why? Because those numbers partially determine how much an advertiser pays to display its ads within a targeted app. According to Fraud Blocker, the most downloaded apps command higher bid prices in much the same way as PPC advertising’s most competitive keywords. Both click fraud and app install fraud rely on inflated numbers to make money.

Imagine you are a fraudster operating a third-party publishing network that specializes in mobile apps. Not only do you want your victims paying the highest possible price for their keywords, but you also want them advertising in the most popular mobile apps. Convincing them to choose those apps is a matter of presenting big download numbers.

It is not uncommon for fraudulent publishers to operate low-cost networks that are more attractive to advertisers on limited budgets. Offering a low-cost alternative drums up business. It also makes victims of advertisers and app developers looking to save a buck.

App install fraud might not get a lot of attention in the tech media, but it is a serious problem, nonetheless. It’s a problem that needs to be addressed if advertisers and app developers want to stem the losses.