Home Business Insights & Advice Lunio’s record funding round validates need for digital ad fraud solutions

Lunio’s record funding round validates need for digital ad fraud solutions

by John Saunders
30th Sep 22 11:02 am

Digital marketing is a staple for companies of every size. Current digital marketing platforms and ad networks offer marketers a wealth of information about clicks and traffic. However, malicious and unknown clicks continue to drain ad budgets, decreasing return on ad spend (ROAS).

One Manchester-based startup, Lunio, believes it has a solution for these issues. With the announcement of a $15 million Series A round led by Smedvig Capital, the largest in the digital ad fraud space, the company will now need to prove its thesis. “To have raised the largest Series A round in the digital ad fraud space to date is a strong validation of the fraud prevention platform we have developed and its success,” says Neil Andrew, CEO and co-founder of Lunio. “This funding allows us to open up significant opportunities for Lunio to gain market share and scale.”

So what does Lunio do, and how does its solution help digital marketers?

The status quo focuses on conversions

Talk to any marketer or martech platform operator about invalid clicks, and you’ll find that the conversation quickly turns towards optimising funnels for known clicks. In the digital marketing context, a known click arrives from a source that has provided enough data to validate itself.

For instance, a returning customer or a prospect that has offered enough information to identify its demographic, interests, and source is a known click. While optimising this cohort of clicks is a good idea, the majority of clicks that ads receive are either malicious or unknown.

Malicious clicks, understandably, are disruptive to any acquisition funnel. They waste money and drain ad budgets, which is their sole purpose. Current martech platforms adopt a cybersecurity-like approach to preventing click fraud of this kind.

However, marketers still face substantial issues when dealing with unknown clicks. These clicks represent a significant portion of ad spending. The status quo of simply discarding or ignoring them is shortsighted, one that is driven by a lack of data.

What if marketers had more data to play with and can turn those unknown clicks into known ones? The impact on ROAS and conversions would be significant. Lunio’s research reveals that 36% of ad clicks are either fraudulent or unknown. Removing or qualifying those clicks will optimise ad spending considerably.

Lunio’s focus on turning unknown clicks into known ones makes it a cost-effective solution for marketers, as ad fraud and unknown clicks don’t seem to be going away any time soon.

Eliminating incorrect ad optimisation

So what is the impact of an unknown click on an ad campaign? PPC ads optimisation relies on click data to optimise an audience selection. Unknown clicks skew audience profiles, misleading ad network algorithms and introducing more variance into ad campaigns.

For instance, if about a third of clicks an ad receives are unknown, an ad network’s algorithm cannot accurately assess the interests and browsing patterns of those that made the clicks. If given enough time, the algorithm might make an accurate assessment. However, this analysis costs money – funds that a marketer would rather not spend.

An unknown click therefore creates trickle-down effects that pollute the entire campaign. Lunio prevents this by logging all click data as first-party clicks, giving marketers full access to information.

As marketers crunch these datasets, they can feed the results back to their channels via Lunio, optimising their targeting and ad campaigns.

The focus on turning unknown clicks into known ones does not come at the cost of cybersecurity. Lunio’s cybersecurity experts and data analysts evaluate traffic patterns to isolate dangerous traffic. The result is lower click fraud and better ad campaigns.

Preventing wasted spending

Ad networks offer significant protection against fraudulent clicks. However, their compensation model does not always suit a marketer’s objectives because the monetary damage far exceeds any compensation amount. Lunio mentions that ad networks typically refund all the nefarious clicks they find.

Despite these refunds, the average marketing team spends 30-40% of their budget on fraudulent clicks. Even if a team receives a full refund for the fraudulent clicks, the ramifications of an incorrect click entering the ad funnel are significant. The clicks skew targeting options, and subsequent ads are less effective, increasing ad spending needlessly.

Lunio offers out-of-the-box protection thanks to a database of analysed clicks. With this feature, marketers can begin preventing fraud and needless spending quickly after implementation. Teams do not have to wait for Lunio’s algorithm to get up to speed during the initial weeks as a result.

Rapid growth beckons

Lunio plans on using its recent capital raise to expand its solution and strengthen its processes.

With reputable partners in Smedvig Capital and representatives from Google and Warner on board, Lunio is expected to stand by its mission to protect ad campaigns and help marketers preserve their budgets.

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