The Hidden Threat Killing Your ROAS
The Hidden Threat Killing Your ROAS
As entrepreneurs and business owners, we pour so much energy, thought, and investment into our marketing. We optimize funnels, test creative, adjust targeting, and carefully watch our metrics. But what if your ROAS—your return on ad spend—isn’t just slipping because of strategy? What if there’s a hidden threat siphoning off your results before you even get a chance to convert?
In a recent conversation on The Amanda Kaufman Show, I sat down with Rich Kahn, a seasoned digital marketer with over 30 years in the industry. What he revealed blew my mind—and made me rethink how we approach online ads entirely.
Wait—What’s ROAS and Why Is It Falling?
ROAS (Return on Ad Spend) is the measuring stick for whether our marketing is truly working. But Rich shared that for many businesses, that number is quietly dropping year after year. Not because your offer is weak. Not because your audience disappeared. But because of ad fraud.
He told me, “Your ROAS is starting to fall little by little, year by year... and it’s going to eventually make your campaign not worth running.”
The Shocking Stats on Fraud
Here’s the part that truly got me: Rich’s team estimated that $140 billion was lost to fraud in the digital marketing space last year. That’s roughly 22% of all ad spend globally.
Let that sink in.
If you’re spending $10,000 a month on ads, more than $2,000 of that could be going straight to fake clicks, bots, and false data—and you’d never know. The traffic looks real. The behavior mimics real users. It can even record "real" interactions on your site. But none of it converts, because none of it is actually human.
How It Happens (and Why You Don’t See It)
One major cause? Traffic from data centers pretending to be real users. Rich broke it down this way: if traffic is coming from a server farm and not from someone’s actual internet provider, there’s a 99.99% chance it’s not real.
He explained, “If traffic comes from a data center... then you know it’s not real with a 99.99% accuracy rating.”
And even more jaw-dropping? There are AI tools that help fraudsters generate fake traffic, write bots, and even teach them how to game the system.
What This Means for Your Marketing
This isn’t just a problem for massive corporations with huge ad budgets. If you’re running Facebook or Google ads—even at a modest scale—you’re still vulnerable. And if you’re a newer business or scaling quickly, this could silently eat away at your budget before you even realize why your cost per acquisition is climbing.
One of Rich’s most practical insights was this:
“When you're building that campaign in Google, uncheck that partner's pages. Don't do that. Don't start off there and don't do the display either. Digital display, even on Google Display Network averages 50% fraud.”
Let that be your first step—uncheck that box. And stay out of programmatic display networks unless you have a solid fraud prevention tool in place.
So, What Can You Do?
Rich was quick to point out that there are tools and strategies we can implement—no matter our budget:
Avoid risky traffic sources. Stick to direct placements and search campaigns over display or partner networks.
Vet your traffic. Look at IP sources and behavior patterns. If something feels off, it probably is.
Start small and scale smart. When you're bootstrapping, every click matters. Make sure each one is legit.
Use tools like Anura. If you’re ready for more advanced protection, fraud detection platforms can help weed out bad traffic before it hits your funnel.
And honestly? Awareness is half the battle. This episode taught me that being vigilant and data-savvy isn't just a nice-to-have—it’s a necessity in today’s marketing landscape.
Final Thoughts
I know we love automation, scaling, and optimizing—but none of that matters if your traffic isn’t real. Your ROAS is one of your most important metrics, and if it's slipping, don’t just throw more money at the problem.
Let’s get curious. Let’s get smarter.
If this opened your eyes the way it did mine, I highly recommend giving the episode a full listen. You’ll walk away knowing how to ask better questions and protect your precious marketing dollars.
Until next time—keep doing what matters.
Chapters List
00:00 Introduction to Digital Marketing and Fraud Prevention
03:12 Understanding Advertising Fraud: The Numbers Game
05:34 Identifying Fraudulent Traffic: Techniques and Tools
08:16 The Impact of Fraud on Marketing Campaigns
10:46 Strategies for Small Businesses to Combat Fraud
12:59 Resources and Closing Thoughts
Full Transcript
Rich Kahn (00:00)
if you look at your ROAS over the last couple years and you start to see it falling, that's because fraud is growing each year, and it's getting to the point where it's going to make your campaign not worth running.
Amanda Kaufman (00:29)
Well, hey, hey, welcome back to the Amanda Kaufman show. And in today's episode, I am delighted to introduce you to Rich Kahn. Rich is a digital marketing veteran and serial entrepreneur with over 31 years of experience in the industry, which is remarkable because he's only 40 years old. He is the co-founder and CEO of EZenga.com and Anura.io.
And Rich has established himself as a leading expert in digital advertising and fraud prevention. I'm really so excited for this show because I have all kinds of nerdy questions for you as a digital marketer and advertiser and someone who teaches it. His journey began back in 1993, and since then, he's built five multi-million dollar Internet companies through bootstrapping, which means he didn't get outside investment.
That's incredible, Rich. Wow, what a pleasure to have you on the show today. Thanks for coming.
Rich Kahn (01:28)
Thanks for having me today.
Amanda Kaufman (01:30)
Yeah, so good. So, catch me up on this concept, this idea of fraud prevention with advertising. Why is it necessary? Is this something that like, honestly, I go to a lot of marketing events and I talk to a lot of nerds in marketing. This is a topic that is not discussed, probably not enough. I'd love to hear, know, what is it? Why is it such an important thing for us to talk about today?
Rich Kahn (01:57)
Alright, well let's talk, let's talk, put a, a picture on it, okay, because everybody likes numbers. So, last year...
you probably know the statistic, the digital marketing sector as a global whole spent over $700 billion in digital marketing, which is huge. That's a big number. And that's across all digital marketing. So that's your connected TV stuff, your programmatic, your search, your social, all these different influencer marketing, all the different challenges you can possibly spend money on. was over $700 billion was the estimated amount that I got off of some resource. Based on our data, depending
a picture on fraud last year was a hundred and forty billion dollars lost to fraud that's like 22 %
of every dollar spent was lost to fraud. And people don't realize this. know, people get online and they spend money with different sources and they're like, you know, my cost per acquisition isn't quite what I want. This is what it is. I'm just going to have to deal with this. And they get used to it. And people get used to certain things, especially because fraud has been creeping up slow and steadily. But I always talk about it. Like when I talk to a company, say, okay, we scan their network. Let's say they have the average of 25 % fraud. You know, we catch 25 % fraud. They know they have a problem.
there's something going on there, what's going on. I always tell them like, what's your number before you shut down? And I go, what do mean? I go, how much fraud would it take for your business to be non-viable? Like we all know if it was 100 % of the traffic that you were buying and selling was fraudulent, it would shut you down. there's a number before that. And how fast are you getting there?
And what are you doing to prevent that? And AI is out now and a lot of people don't talk about this, but we all use chat GBT for all kinds of uses. It was kind of neat. My wife took a picture of our hallway because we wanted to put some decorative molding up and ask for chat GBT to come up with the design. And my God, the stuff it came up with is amazing. Right. So it's just kind of cool. Like, rearrange the furniture in this room and it comes back with a couple of different designs and one looks really cool. But did you know about fraud GBT?
There's a new software out there, AI driven, will actually write bots to basically defraud advertising.
And if you're not that technical, you'll ask it how to install and run this and it'll tell you step by step how to run it, where to go, what to set up and how to get the thing launched. And it's just, it's able to identify weak points in all kinds of networks very fast. And some of the stuff we're catching now is like, I don't know if, I don't believe that every company out in the marketplace is catching this kind of stuff. It's just going unnoticed. It looks real, feels real.
real user interaction. So if you're recording the screen using Microsoft Clarity Insights or HotJour or something like that, it looks like it's a real person, but in the end, it's a fraudulent visitor who's basically stealing your marketing budget.
Amanda Kaufman (04:29)
Wow, okay, so unpack this a little bit more for me. Can you give us an example of what advertising fraud actually looks like? how do you, because these are significant numbers, like 25%. I don't do math in public very well, but just quick math on the 700, it sounded like it was close to 20 % of the total spend. Help me understand what that really means. What does it mean when,
Rich Kahn (04:31)
I'll sit a lot there.
Amanda Kaufman (04:58)
we consider advertising spend has been wasted due to fraudulent activity. Like what kind of activity? How is that even happening?
Rich Kahn (05:06)
So there's a couple ways of identifying it. Basic ways that are not a foolproof. Like our system we built is designed to find as much fraud as possible with the accuracy level that you need. But for example, most people don't look at this, but if traffic comes from a data center, generally that's fraud. Now you gotta be careful because some people use VPNs.
And VPNs bounce off of data center in order to give you that virtual private network. So you can bounce off and maybe watch Netflix when you're overseas. So there are some legitimate purposes of it, but most people realize that when you're using VPN, it slows your network, your internet connectivity down because it's got to bounce off another server, go to the server, get the data, come back and bounce back to you. So most people don't generally do that unless they're using a VPN to get into a environment like a private network or something that they don't want people seeing.
security is more important than speed. But when you're on the internet, generally speaking, as a marketer, know speed is everything. You want your site nice and fast, everything's quick. Otherwise, the audience nowadays drops off. It takes two seconds for your site to load. So speed is everything. So most people don't generally use a VPN. So we're a certified fraud solution through TAG, which means that we're certified to follow the industry standards for a fraud detection company. And one of those things, they basically tell you, if it comes from a data center,
Amanda Kaufman (06:13)
So speed is everything.
Rich Kahn (06:26)
as to mark it as fraud. Now how many people look at the IP addresses and identify that?
Amanda Kaufman (06:29)
Hmm. Now, like.
And forgive my very layman desire here, but if we were to explain this to somebody who's maybe just now starting into using the web and doing digital marketing, they're stepping into ownership, why would a data center send all that traffic to their website? What's the end goal? What are they trying to accomplish by sending all of that fraudulent traffic?
Rich Kahn (06:57)
The idea at the end of the day is they're trying to make money. So let's look at this way. From over 30 years of experience in the internet, I've got two truths about the internet that I talk about all the time. One, people don't read, they skim and scan.
looking for information and eventually when they find what they're looking for, they'll read. that's why your titles are important, not the body, but the titles are important. You want to capture their attention. I mean, even come out with a TL, what is it? TRTD or something like that. has too long to read. So they have those little blurbs because people don't like to read full content. They want to skim and scan, get the information they want. Then when they want details, they'll drill in. Again, it's important. The second thing is if you pay people on the internet to do something, the cheaters will find a way to cheat.
Amanda Kaufman (07:23)
Mm-hmm.
Rich Kahn (07:37)
I like there's a story, it talks about fraud, but it talks about fraud in different way. So I don't know if you remember this back in the day when PayPal first came out, they wanted to try to grow the network. So they decided to become, offer an affiliate network. So basically if you sign up for an account and you refer somebody else that signs up for an account, and the only request was they had to sign up for an account, you get paid $5. So it was affiliate based marketing back. This was early on, right?
Amanda Kaufman (08:04)
too simple.
Rich Kahn (08:07)
So here's where it gets complex. There was an 18 year old, if I have the story correct, there was an 18 year old that came up with an idea who's going to do a pyramid scheme using PayPal. So essentially, if you sign up to a software, basically it says, okay, you sign up for PayPal, now you refer somebody to it. They would keep track of everything. It says when you sign up, you have to pay a dollar of the $5 to this person, a dollar to this person. Like they had a whole thing laid out. And in a short period of time, he took over a million dollars in cash out of the system.
while paying other people money to commit this pyramid scheme using the five dollars that PayPal was paying. And it was it happened in like two months. It was so quick. And PayPal had shut the whole thing down because they didn't know what was going on and where. But that's example of fraud. He was getting paid to do something. Five dollars for signing up an account. And he found a way to cheat the system. So it's the same way. Like, let's take it down to the marketing side of things. And we use Google because they're a big target, big company, right? A couple hundred billion.
Amanda Kaufman (08:56)
Hmm.
Rich Kahn (09:04)
a couple hundred million dollars a year. No, I'm sorry, a couple hundred billion dollars a year. right. Getting my math screwed up here, right? So essentially, they're a big player, big space, everybody spends money on Google. But do most of the audience know that Google doesn't generate all the traffic that you buy from them? Remember when you're setting up a campaign, there's a little check box that's pre-checked that says, include partner networks?
Amanda Kaufman (09:11)
Yeah ⁓
Mm-hmm.
Rich Kahn (09:30)
Well, that means
the majority of traffic coming from that campaign is going to come from their partner network. Now, there is a sector of the internet where there are literally thousands or I should say millions of websites out there driving traffic to Google that get paid for driving clicks to Google and get paid a percentage of the click. There's a whole area people that do this type of marketing. ⁓
Amanda Kaufman (09:48)
Thinking about clicks, you're
just like watching things click into my head. if you've got this data center, this data that's farming out all these clicks to these partnered networks, it's replicating ad traffic that never occurred, but the business pays for that impression. They pay for those clicks even though they weren't real. Am I tracking right?
Rich Kahn (10:10)
Yes, so going back to the first question just to clarify that up.
When you connect to the internet, right? How do you connect? You connect through your ISP, your Verizon files, your cell phone, your device connects to the internet and it's a device on the internet. If traffic comes from a data center, that means a server, because a data center houses servers, a server is acting like a real person connecting to your site, which is not real. On the rare occasion you have a developer that might be plugged into the cloud, into the server,
Amanda Kaufman (10:35)
Mm-hmm.
Rich Kahn (10:42)
server farm might be served from the web. That's a rarity for the most part. If it's coming from a data center and you can know this because the data center owns the IP address, but that belongs to that data center where all the servers exist. So if you can identify that the IP address belongs to a server farm or data center, another term for it, then you know it's not real with a 99.99 % accuracy rating. It's not real. So
Amanda Kaufman (11:05)
Mm.
Hmm.
Rich Kahn (11:11)
How many people actually look at every single click that came to the website, researching every single IP address that came to the website. You can do it. And if you're suspecting stuff, there's ways and free tools out there to help you do this. But at the end of the day, mean, you want to look at it. If you've got a client that's got 100,000 clicks, a million clicks, how do you do all that work? You got to have some automation. And that's kind of what we step in and help do. Because that's just one aspect. And that's not even the most
Amanda Kaufman (11:32)
Wow.
Rich Kahn (11:35)
craziness. mean there's there are certain there are actually human fraud farms around the globe that will spoof the IP address make it look like it's coming from somebody's you know Verizon Fios box out in Middletown Delaware. They'll use that that IP address bounce off that they'll spoof their device ID and make it look clear and then of course they got a human behind it so the actions the recordings if you're looking at recordings all look real. How do you identify that?
Amanda Kaufman (11:58)
Mm-hmm.
Rich Kahn (11:59)
it's just it's getting
and then of course now you have AI we talked about AI getting involved AI is doing all this stuff making it look even more real so what's happening is your ROAS which we all know as return on ad spend is starting to fall little by little year by year that climbs and it's going to eventually if it doesn't
Amanda Kaufman (12:06)
Yeah.
Because the cost of all this
traffic is getting distributed among all of the buyers of the advertising, right? And it's just getting kind of passed on to the end business as a cost, yeah? Yeah.
Rich Kahn (12:25)
Right, so.
then your ROAS falls. Yeah and your ROAS
falls. So what happens is one of the signs you start looking at especially if you've been doing a campaign or running a group of campaigns for the last couple years for the same company, if you look at your ROAS over the last couple years and you start to see it falling, that's because fraud is growing each year, know a couple percentage points every year, and it's getting to the point where it's going to make your campaign not worth running.
eventually, and I'm predicting this, if we don't get a handle on fraud and it continues to grow exponentially like it's been over the last 10 years, 20 years, it's going to eventually shut down one company at a time. Because let's face it, if you're buying from Google right now and Google does a decent job of cleaning up the traffic, I still see about an average of 10 % fraud coming from Google. Let's say they stop working on it.
And that 10 % became 20%, became 30%. What percentage does it have to be before the average advertiser stops spending money with them? I can't tell you how many people I talk to on a regular basis. My goal is to drive traffic to my site and have them fill out a form so I can get them on the phone and sell them a product, whatever the product is. Car insurance, a widget, it doesn't matter.
Amanda Kaufman (13:23)
Mm-hmm.
Mm-hmm.
Rich Kahn (13:36)
how
many of those leads that they get are filled out that are fraudulent or spam. Nobody answers the phone. The email bounces back or the email, nobody ever responds. The response rate gets less and less. And what happens eventually, you get to the point where it doesn't make sense. your ROAS is non-existent or negative.
and you decide, you know what, I'm gonna stop advertising on this source, whether it's Google, Facebook, it doesn't matter, whatever the source might be, and you stop spending money there. What happens if that happens globally? Digital marketing is gonna change significantly in some fashion.
Amanda Kaufman (14:06)
Mm-hmm. Yeah, absolutely. So, goodness. I know I've encountered, I've been doing digital marketing for about the last six years. know, first couple of years, my business was very word of mouth. Really got serious about it about six years ago. And, you know, we've done a good amount of digital spend.
I noticed, I did notice, was like, I've got to like really filter for is this email verified? Is this like a real email that belongs to an actual person already even just, know, and I consider my business to be relatively small in the space. So, Rich, what would you say newer business owners or even like smaller business owners who perhaps are like,
I've got so many things to worry about. It sounds like a macro problem, but it also sounds like it could be a real micro problem. Like it could actually devastate a small business. would you recommend that they have in place as like good practices to guard against the fraudulent activity if they can? Or just be proactive in their design of their marketing and what it is that they do. Like what are some of the things that they could do even if they feel like they're a little...
Little tight, bootstrapped.
Rich Kahn (15:12)
Bootsh- oh look, this is what I've done over the last three decades. I mean, everything's been bootstrapped. one of the first recommendations I'll make, and this is fine when you're small, but you can't sustain it because as you grow, you need more traffic and you need to find it. So when you're building that campaign in Google, uncheck that partner's pages. Don't do that. Don't start off there and don't do the display either. Digital display, even on Google Display Network averages 50 % fraud.
Amanda Kaufman (15:16)
Mm-hmm. ⁓
Don't do preferred partner networks.
Rich Kahn (15:43)
So you want to stay away from that initially. Yeah. We have tested programmatic networks across the internet from publicly traded companies. I won't mention names, but publicly traded companies and every programmatic network. if you're to do a programmatic buy, just know that 50 % of your traffic is going to be fraudulent. If you're going to play in that space and you have the money to play there, you need a company like us to help you identify where it's coming from and how to avoid it. But if you're a smaller network and you're to start on
Amanda Kaufman (15:44)
Wow. Okay.
Mm.
Rich Kahn (16:12)
Google, great source to start with. Facebook, good source to start with because they don't have outside networks like Google does. Still have fraud because people buy, you you've heard of fake accounts on Facebook, Right?
Amanda Kaufman (16:18)
Mm-hmm.
Totally.
Rich Kahn (16:25)
So what do they do? In order to evade being shut down because Facebook is very vocal about shutting down fake accounts, they do all the stuff that people would do as a real user to keep their fake accounts on so they can make money outside of, know, indirectly. For example, you can go to Fiverr, I think it's still, buy 10,000 likes to your new website that you just created for 100 bucks or 50 bucks or whatever they charge. And they do that using the fake profiles that they have on Facebook. So they still have fraudulent traffic there. But if you hit those two sources, they generate
around 10 % fraud so it's gonna kill you but when you start spending some money, 10,000, 50,000, 100,000, that 10 % really adds up and then at that point you can afford a service like us to be able to help you jump in there and solve those problems but when you're small stick to the big boys Facebook, Google, make sure you uncheck the box on Google to get the cleanest possible traffic and
ride that for as long as you can. But the nice thing is even the smaller players, we have a relationship with one of our clients. We can send small clients to and you just pay by the the scan. So it's really inexpensive. ⁓ I think they're charging two or three cents per visitor scanned and there's no minimum. So like you can go there and hey, you're only buying 100 visitors from Google and you're spending two, 300 bucks. You can still use that. We can still make the recommendation to them and they'll work with you as you're growing your business. So it's a great, you know, we realized
Amanda Kaufman (17:25)
So it really looks like that.
Rich Kahn (17:41)
is that our support department costs too much to be able to offer it on a basis like that. But when you're first getting started out, look, we forgot to bootstrap five different companies from the ground zero, you gotta find the ways to make it work. we built a relationship with one of our customers to be able to set that up and support the smaller customer so they can still get great technology without blowing the bank.
Amanda Kaufman (18:01)
I love that. love that. dear listener, listen to how Rich is talking about, know, he's like really focused on what he does in his business. He's using relationships to be able to serve people, you know, more broadly and really keeping his eye on the prize. So I just really wanted to call that out because I think a lot of the people that I work with, they want to do everything for everybody all at once all the time. And that is the fastest path to burnout. Rich, feel like it could be amazing to have you back at some point to talk about how does one go about
bootstrapping multiple million dollar businesses. But sadly, I think we may be out of time for our appointment today. if people wanted to follow you, find out more, what's the best way to do that?
Rich Kahn (18:39)
So I'm gonna give you two quick resources, which I know are gonna be in the show notes, but I'm easy to follow on LinkedIn. I'm posting video snippets all the time. I've got all kinds of stuff. And then I publish stuff about fun stuff like my family growing and my grandkids and as things are happening and growing in my life, just to kind of mix it up so it's not just all work, right? All work and no playmates, Johnny Adele Boy, right? So we wanna have a little fun on what we post. So post some fun stuff too. But if you want resources, you wanna learn about this space, you wanna learn any information, just go to our site.
Amanda Kaufman (19:00)
Yeah.
Rich Kahn (19:09)
We give, we probably have a dozen ebooks on there you can download. have articles that are coming out probably two or three a week. Plenty of resources on there. And then if you want to talk to one of our fraud specialists, you can click a book, a book, demo and they'll walk you through how it all works. And like I said, if they need to, you're, we're, pricing model doesn't work for you guys, we can direct you to our other client that will be more than happy to take you on, especially as a startup, get you started, get you're growing. And then if it makes sense down the road,
and we'll work together. not, that model works for you, that's great. But there's a lot of resources just between the LinkedIn and our website direct would be good.
Amanda Kaufman (19:42)
Yeah, I can't wait to nerd out on your website. It sounds like you've made it very resource rich and like just even this short episode has been so educational. So I can't wait to dive into those details in a deeper way. Rich, thank you so much for taking time out of your schedule to teach us something so valuable.
Rich Kahn (20:01)
Well, thanks for having me on. I'm happy to come back anytime and we can go into bootstrapping 101.
Amanda Kaufman (20:06)
It sounds like a plan, man. I love it. And dear listener, you know, if you love this, the best way to say thank you is to pass it on, pass it forward. If you have like three friends that have been wanting to, you know, expand their digital marketing footprint, their digital presence, you should definitely send this to them because I know I didn't just incidentally bump into this in many different masterminds. I've learned a lot of digital marketing over the last eight years. And this this topic is
very, very important and Rojas is king. We want to make sure that we're getting our return on our advertising and our marketing efforts. So make sure you grab the link to this episode, text it over to your friends, send it through Messenger, however you happen to share your stuff, just send it over to them so they can have a quick listen. And hey, if you can take 30 seconds more, leave a review of the show. Because if you do that, then when people are trying to decide whether to list to us or something else, they might just choose us. And we always appreciate a great review.
And finally, make sure you hit subscribe yourself. Don't miss another episode. And until the next one is out, do what matters.
