Advertisers globally were exposed to 30% less app install fraud in the first half of 2020 versus the same period last year—but the picture in Asia-Pacific tells a different story, according to AppsFlyer's annual ad fraud report.
AppsFlyer has estimated that the cost of app install fraud globally in the first half of 2020 was US$1.6 billion. Asia-Pacific accounts for a whopping 60% of this total figure—with the financial exposure of fraud in the region estimated to be US$945 million, up 45% from 2019's US$650 million. The financial-exposure metric represents how much marketers would be out of pocket had they been left without fraud protection.
The mobile attribution platform analysed 7.3 billion installs of 12,500 apps across entertainment, finance, gaming, shopping, social and travel. In APAC, it examined 4 billion installs across 7,200 apps.
The Asia-Pacific region had the highest exposure to fraudulent activity in the six-month period, with an average fraud rate of 20.3%—which is 54% higher than the global average. That means one in every five app installs were fraudulent in the period. By comparison, Latin America's average fraud rate is 10.2%, Europe's is 8.4% and North America's 5.6%. The US has the lowest fraud rate by a considerable margin, of 3.4%. The report notes that North America has a high share of iOS devices— reaching nearly a 50% market share in 2019—and that these devices provide more fraud protection versus Android. In fact, the app install fraud rate on Android is over 4.5 times higher than it is on iOS, according to the report.
Within APAC, South Korea suffered from the highest rates of fraud—more than double the global average (+113% higher), while the average fraud rate in nearby Japan is nearly 10% lower. The situation in Southeast Asia improved significantly, dropping 50% in April through June 2020 versus July through September 2019.
Verticals such as entertainment, casual games, midcore games, and shopping saw drops in the fraud rate across various markets during Q1 2020 when most of APAC was under COVID-19 lockdown.
AppsFlyer APAC managing director Ronen Mense said markets such as Indonesia, Singapore and Vietnam saw a peak of ad fraud in March 2020 due to a rise in activity caused by COVID-19.
"With more people staying at home, the demand for mobile apps increased, leading to aggressive user acquisition activities," Mense said. "This saw a large number of fraudsters be drawn towards this activity, which was notably unsuccessful as seen in a drop of fraud levels in the following months. Indonesia experienced a 28% rate of fraud in March 2020, which dropped to 19% by May 2020, while Singapore levels declined from 35% in March 2020 to 20% in May 2020."
Singapore’s overall fraud rate in the entertainment vertical saw an increase from 54% to 59% year-on-year, representing the highest fraud rate in the region, with Indonesia at 23.5% and Vietnam at 18.6% in May 2020. Despite this, verticals such as entertainment, casual games, midcore games, and shopping saw drops in fraud levels across the regions in APAC due to COVID-19 lockdowns.
Perhaps unsurprisingly given fraudsters always follow the money, there were exceptionally high fraud rates in the finance vertical in Southeast Asia, with four out of five markets exceeding 50%. Vietnam is currently experiencing the highest level of fraud levels in the finance vertical, seeing a fluctuation in rates, with a growth to 64% by May 2020, in comparison to 62.3% in July 2019. Indonesia, on the other hand, saw finance fraud rates fluctuate between 2019 and 2020. In July 2019, fraud rates were 55.9% but dropped to 38.2% by October 2019. These fraud rates seem to have risen by April 2020 to 63.3%, but by May of the same year started to decline to 61.2%.
When it comes to types of app install fraud, in most cases bots are the most common method of attack in APAC, especially targeting finance apps in Japan (87%) and social apps in Vietnam (91%). Device farms, like bots, which automate fake user activity, were deployed among gaming and non-gaming apps but on a relatively smaller scale.
Click flooding is more common among gaming genres such as casual in South Korea (75%) and hyper casual in Japan (86%), but it also shows up in non-gaming verticals such as shopping in India (47%) and social in Indonesia (33%). Gaming apps also have a high share of install hijacking events.