Group M: China home to 83% of global ad fraud

Lack of verification, limited measurement and unfamiliarity with concept of brand safety are contributing to problem, Group M finds.

Ad fraud: risk of global fraudulent advertising valued at $22.4bn
Ad fraud: risk of global fraudulent advertising valued at $22.4bn

More than 80% of the world’s advertising fraud originates in China, according to Group M, which has valued the risk of global fraudulent advertising at $22.4bn.

There is an estimated $18.7bn of fraudulent inventory in China, representing 83.4% of total ad fraud globally, according to Group M’s estimates, which collated data from DoubleVerify, Integral Ad Science (non-China), RTB Asia, AdMaster and AdBug (China).

On a global level, fraudulent inventory represents 10.8% of total digital adspend, but this number rises to 30.7% in China.

This vastly outpaces the next highest market, the US, where 3.4% of the country’s total digital spend is estimated to be fraudulent.

Since measurement standards are not yet widespread in China, this presents challenges in benchmarking any areas of risk and determining with certainty if brands appeared in a fraudulent environment, the agency said in its report.

Overall, the total cost of fraud is 3.8% of the forecast $591bn global advertising spend in 2019, according to Group M’s June forecast.

The agency cited several market-specific challenges that may be contributing to China’s fraud problem, including:

  • Clients are unfamiliar with the practice of brand safety and need to be educated on the technology involved and the business ROI for measurement accuracy in the digital supply chain.
  • Chinese tech vendors have yet to mature on the verification front, as demonstrated by a lack of accreditation by the Chinese trade bodies (this auditing process is being addressed by the China Media Assessment Council). More so, global vendors that may be MRC-accredited are not fully realised/operational in the Chinese market.
  • Support for JavaScript tagging is lacking among Chinese publishers, which in turn limits analysis and measurement capabilities of sophisticated invalid traffic.
  • Chinese associations such as the China Advertising Association and their endorsed parties, such as the China Media Assessment Council and Mobile Marketing Association, are still working on better solutions for digital media regulation and accreditation.

In addition, the "walled" nature of the Chinese internet – whereby three main players control the majority of online media – means it theoretically is not as complex for the industry to adopt one open-source SDK for mobile. Given that mobile accounts for 80% of the digital spending, viewability and IVT measurement will be "significantly increased and improved" if this were to happen, the agency said.

Excluding China, Group M estimates fraud to be worth $3.7bn, or 1.8% of total digital adspend. Several developed Western markets (the UK, US and Canada) have higher levels of ad fraud than the global benchmark, with the US contributing 65% of the total estimated fraud.

These markets are more open to fraud than Asia-Pacific and Latin America, because there is a higher value of adspend, a higher volume of inventory traded programmatically and a greater legacy of desktop display advertising, which is more accessible for bots.

In general, bot fraud is more difficult to perpetrate in closed app environments, so this type of fraud is more prevalent on connected TV/OTT (represents 86% of bot fraud) and desktop (represents 45% of bot fraud).

Asia-Pacific has a higher level of mobile app and video advertising. The majority (54%) of fraud seen in mobile apps is classified as app fraud. App fraud consists of ad impression fraud or invalid traffic practices such as misrepresentation, laundering and hidden ads.

The estimates come from Group M’s Brand Safety Book, a report highlighting best practices and risks in advertising, compiled by executive vice-president of global brand safety John Montgomery, managing partner of brand safety, Americas, Joe Barone and others.

This report follows the creation of the Global Alliance for Responsible Media announced at Cannes this year, in the industry’s newest attempt to moderate content across platforms. Group M is a founding member of the alliance.

A version of this story first appeared on Campaign Asia-Pacific

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