More than 80% of the world’s advertising fraud originates in China, according to GroupM, which has valued the risk of global fraudulent advertising at US$22.4 billion.
There is an estimated $18.7 billion of fraudulent inventory in China, representing 83.4% of total ad fraud globally, according to GroupM’s estimates, which collates data from DoubleVerify, Integral Ad Science (non-China), RTB Asia, AdMaster, AdBug (China).
On a global level, fraudulent inventory represents 10.8% of total digital ad spend, 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 forecasted $591 billion global advertising spend in 2019, according to GroupM’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 realized/operational in the Chinese market.
• Chinese associations like the China Advertising Association (CAA) and their endorsed parties, such as the China Media Assessment Council (CMAC) 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, GroupM estimates fraud to be worth $3.7 billion, or 1.8% of total digital ad spend. Several developed Western markets (UK, USA 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 ad spend, 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).
APAC 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 GroupM’s Brand Safety Book, a report highlighting best practices and risks in advertising, compiled by its EVP 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. GroupM is a founding member of this alliance.
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