Daily Insights

China: The World’s Ad Fraud Capital

By: Liz Flora | Oct 29, 2019

Brands’ battle against digital ad fraud has heated up in recent years, but major challenges still remain when it comes to cleaning up the global digital supply chain. 

The largest of these challenges, by far, is China. According to a recent estimate, a staggering 83% of all global ad fraud occurs in China, comprising an estimated 30.7% of total digital ad spending. Another estimate finds that that 44% of traffic to display ads in China is fake.  

Fraudsters use a range of tactics that not only lose brands billions of dollars but also harm brand safety by placing ads next to inappropriate content. Earlier this year, third-party ad verification company Adbug released a report stating that it had uncovered a massive ad fraud operation in China that created billions of fraudulent ad impressions a day, impacting ads purchased through both programmatic and direct buying on both websites and mobile apps. 

Adbug stated in the report that the operation, nicknamed “RedEye,” generated fraudulent traffic through traffic exchange platforms using a combination of bots and human users. The firm said it found thousands of digital publishers involved, with over 300,000 different URLs and apps connected through up to 99 different nodes that generated fake traffic. 

The report claimed over 100 brands were affected, including Apple, several Procter & Gamble and GSK brands, Dior, Chanel and more, showing screenshot examples in which brands’ ads were shown appearing next to pornographic content on desktop and mobile. 

There have been a range of efforts to fight ad fraud globally in recent years, with the most prominent being Procter & Gamble’s $200 million spending cut to digital advertising after launching a review of its agency contracts. The company has also been active at battling ad fraud in China, joining other major companies like Unilever and Coca-Cola to participate in an open-source SDK test created by the Mobile Marketing Association China.

But ad fraud is still a significant problem, according to Adbug Founder and CEO Martin Zhang, partly because many brands are neglecting China in their efforts. “Brand safety has not been considered to be a major KPI” in China, he says. “Brands are more interested in buying high traffic volume to support ad exposure, and use this as their performance measurement.”

And in response to those that are taking ad fraud seriously and taking steps to fight it, scammers are constantly creating more sophisticated techniques, relying on the traffic exchanges to make fraudulent traffic appear more like human behavior and harder to detect.  

So what can brands do to address this issue? The first thing they should do, according to the Adbug report, is “enhance awareness toward brand safety, ad viewability, and anti-fraud in digital advertising.” In addition, ads should have verification tags throughout the placement process. Finally, “in order to identify the most valuable publishers, advertisers need to enlist the support of transparent and impartial fraud detection firms that use the latest technology, in order to help optimize their media budget to reduce the unnecessary spending.” Battling ad fraud remains an uphill battle both in China and globally, but it’s a problem brands can’t afford to ignore.