Mobile app install fraud will cost marketers almost $13 billion in 2019, according to a new report. That totals 26 percent of total global mobile app install ad spend, and it's up from $7.3 billion in fraud loss in 2018.

In the U.S., however?

Fraud will "only" be 13 percent.

Fraud is cyclical, according Scalarr, the company behind the report. Fraudsters and mobile attribution companies are continually engaged in an arms race as the bad guys find new ways to cheat the system, and the good guys find new ways to stop them. Changing ad pricing models also impact fraud rates.

One thing's for sure: when you think you've eliminated fraud, that's when fraud is most dangerous.

"So while we may be living in a bubble, thinking that fraud is gone, we only think so because we don't see it," says casino games-maker Huuuge's head of marketing operations, Lukasz Kwiecien. "That's where, in fact, fraud has changed its form. Currently, we seldom see the types of fraud that we used to see before, and that everyone learned to avert already."

How do the fraudsters cheat advertisers?

According to the report, they're getting smarter, using smart bots to emulate real people, and intelligent device farms that aren't as easy to catch as they once were. New methods recently seen include modified click spam, which doesn't just flood attribution providers with thousands of clicks, hoping to be identified as the cause of an install, but sends fewer, more intelligently timed clicks, and mixing multiple methods of fraud with some real people's app installs and events.

The highest categories for fraud probably won't shock you: they are the ones with the highest potential reward.

  • eCommerce: 21.8 percent
  • Finance: 20.6 percent
  • Entertainment: 19.8 percent
  • Games: 14.2 percent
  • Travel: 13.7 percent
  • Health & fitness: 11.8 percent

Scalarr says the biggest source of fraud in 2019 will be smart bots, which emulate real users in your app. That's a switch from 2018, where attribution fraud -- tricking your mobile attribution provider to attach an install to the wrong source -- was the largest category.

How do you avoid fraud? A good attribution vendor is the first step, but you can also pay attention to the following techniques used in detecting mobile app install fraud:

  • 41 percent: post-install anomalies (e.g., non-human in-app behavior)
  • 21 percent: events time outliers (e.g., oddities like installs at 3AM local time)
  • 17 percent: click to install time outliers (e.g., the click that supposedly drove the install was too early or too late)
  • 9 percent: hyper-engagement (e.g., too many clicks from one source)
  • 5 percent: IP anomalies (e.g., the IP address of the impression and the click are different)
  • 4 percent: device blacklisting (e.g., the install happens on a blacklisted device)
  • 3 percent: install validation (e.g., the App Store install validation details are incorrect)

It's not easy, however. Fraudsters learn fast, according to Scalarr. The fastest adaptation to new fraud detection methods that the company found in 2018 was just 18 hours. In other words, 18 hours after a particular fraud detection capability was unleashed, it was already being bypassed by the most sophisticated bad guys.

Ultimately, what a marketer needs to do is monitor the results of their installs and shut down bad sources. Marketers also need good vendors to catch fraud early, because misattributed installs can include significant amounts of organic traffic, which looks perfectly normal.

The full report is available here.