What marketers need to know about tackling ad fraud in China

China’s internet population recently hit the 800 million mark. Of those, 98% - or 778 million - are mobile internet users.

That’s a huge percentage, which also underlines how central mobile is to the Chinese population, and how many opportunities there are for marketers in the industry. For context - and as noted by Bloomberg - China’s user-base is larger than the combined populations of Japan, Russia, Mexico and the U.S.

But such a rapidly-evolving market comes with its challenges. Here, it’s in the shape of increasing ad fraud. We’ve been seeing particularly high rates in China for several years. Globally, we estimate fraud affects around 20% of an app’s paid user acquisition budget. That figure is higher for many campaigns in the Chinese market. And, with more and more users coming online, advertisers could stand to lose a bigger amount of their budget than ever before.

By decimating ad budgets, damaging data integrity, and creating flawed feedback loops, these high rates of fraud risk undermining industry growth and its development. Without addressing the issue head-on, China’s mobile ecosystem could become a race to the bottom.

Luckily, technology has advanced enough that comprehensive fraud prevention tools can stop the majority of fraudulent activity in its tracks, and as the global push for transparency reaches Chinese markets, more will need to be done to win the fight.

What's different about ad fraud in China?

While anti-fraud tools have gained a lot of momentum in many markets around the world, they’re not being adopted with the same frequency in China as elsewhere. Before looking at what can be done to solve such widespread fraud, it’s worth looking into the reasons behind why it’s become an issue in the first place.

The first has to do with Android’s popularity in the market. The most used operating system by far, it’s also especially targeted by various methods of fraud.

Click injections are a key example. An alternative form of click-spamming, click injections happen when fraudulent apps - usually free, simple apps like a solitaire game - have access to Android operating system functions that report a new app’s install on a device. These functions notify every app (that cares to listen to this information) on a user’s phone when a new app is downloaded and installed - so if a user has a fraudulent app installed, fraudsters can then create legitimate looking “ad clicks” from their portfolio of available tracking links, and claim money for the install.

Another reason for high fraud rates is due to the country’s heavily fragmented mobile ecosystem.

Forget Apple and Android’s duopoly - China has several hundred app stores. That means apps aren’t subject to such stringent vetting processes as if they were added on the Apple or Google Play store, and fraudulent ones can more easily slip in. As such, users are more at risk of downloading fraudulent apps, especially pirated version of games.

Finally, many marketers still use rudimentary ad tracking instead of working with providers who can evaluate each click or impression for fraud - so while their numbers look good on paper, they’re often not legit. The sad truth is, much of the market often views fraud as a good thing. A lot of people care about quantity of users over quality. However, with more and more brands demanding transparency and the end of a black box model, that mentality is slowly changing.

Fraud can’t be ignored forever

Beginning to solve the issue will require some industry education about why fraud is damaging - how anti-fraud measures give you an advantage over your competitors; the app developers, publishers and networks who want to improve the quality of their traffic; and how to begin disincentivizing it. For many companies, it’ll require a big shift in how they report, manage and evaluate practices. This change needs to be fed from the top down, rather than the bottom up.

But there are also more practical, immediate measures marketers can take to fight fraud. Closely vetting the networks they work with and app stores they distribute on will go some way to alleviate the issue.

Of course, if you’re really set on eliminating fraud completely - or at least stop it from damaging your datasets - working with a reliable anti-fraud solution is key.

Not that anyone would believe it’s an unbiased view, but, in the anti-fraud space, we believe there’s no one who can come close to the solution we offer. A big part of that is because of our speed to market. Fraudsters don’t stand still, and are constantly looking for new workarounds or an entirely new method to steal budgets. Prevention is a real cat-and-mouse game, so we’re constantly evolving and enhancing our filters to stop the most common methods of fraud from poaching clients’ budgets.

Fraud won’t disappear overnight, and as fraudsters become increasingly sophisticated, we may never actually be able to eradicate fraud completely. But tackling the issue head-on, adopting best-practices, and putting in place preventative measures will go a long way to reducing it, and putting up as good a fight as possible.