While the online advertising market in China continues to grow, losses to advertisers due to ‘non-human’ or fraudulent traffic have been following suit.
Since the launch of online advertising in China in 1997, the sector has posted impressive growth and the value of this market reached $20 billion in 2013. With 591 million Internet subscribers at end-June 2013, the Middle Kingdom clearly has a sufficiently large audience for further development in this field. Online advertising is rapidly replacing all other publicity channels apart from television, but suffers from a major drawback: risks to the business arising from non-human traffic, including fraudulent impressions and clicks generated by web-bots, are increasing accordingly. Now a study carried out by Chinese third-party advertising technology specialist Miaozhen Systems has analysed ‘anomalies’ in geography, time slots and ad positioning and estimates the relevant losses to advertisers at $1.6 billion per year. Moreover, quite apart from the actual losses, the credibility of the entire online advertising industry is now at stake.
Fraud levels analysed by media type and business sector
Given such losses, advertisers are now placing more emphasis on anti-fraud technology. In terms of media type, vertical search sites registered the largest volume of non-human traffic, with abnormal impressions and fraudulent click-through rates (CTRs) working out at 21.67% and 33.35% respectively. Meanwhile on horizontal portals, 11.18% of all impressions and 23.72% of the CTRs were found to be ‘abnormal’, i.e. generated by web-bots. Video sites saw the least non-human traffic, with the two indicators standing at 9.4% and 19.42% respectively. Looking at these fraudulent practices by sector, the auto industry and telecommunications were hardest hit during the July 2012 - June 2013 period covered by the report with abnormal impressions standing at 32.12% and fraudulent clicks at 23.5%. The fast-moving consumer goods industry saw the lowest rates of cheating, at 8.52% and 11.88%. The Miaozhen Systems report also points the finger at ad publishers that have been airing web campaigns during dead time between midnight and 8am, on unpopular programmes, or in geographical zones judged ‘second tier’ from an advertising point of view. Some 4.2% of all ad campaigns were affected by such practices.
Mobile advertising also affected
With 464 million consumers using mobile Internet, many Chinese advertisers are now shifting expenditure to this channel. According to the report around 51.1% of online campaigns have a mobile component, and almost a quarter of advertisers spend the whole of their budget on mobile Internet. Meanwhile, non-human traffic has also been transferring from PCs to mobile terminals. Similar to the cheating tricks used on PC terminals, some mobile publishers displayed advertising on platforms judged inferior in terms of expected audience, or displayed ads on mobile terminals with different operating systems to those agreed with the client. Miaozhen Systems also found that for cost-per-click (CPC) or cost-per-action (CPA)-based advertising, fraudulent click-through rates and registered users were also a major aspect of traffic cheating. However, mobile standards such as APIs and SDKs are now helping to improve monitoring and evaluation of mobile advertising, with a view to promoting the healthy development of the industry.