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CURBINGAD FRAUDHOW TO ENHANCE TRUST IN DIGITAL ADVERTISING IN CHINA

A FORTUNE?

SMALL TRICKSCOSTING

Advertising fraud is a growing challengethat not just impacts companies financiallybut also tarnishes their brand reputations.The Chinese digital market, thoughmaking phenomenal progress currently, iswitnessing an increase in ad fraud-relatedcases. Invalid traffic is on a high and adviewability is decreasing on personalcomputers and mobile websites of China.

The reasons for such a scenario are quiteevident—a non-transparent ecosystem,invalid traffic and technological limitations.An opaque and biased media supply chainis resulting in potentially underminingbrands’ interests and yielding financiallydamaging results. Unavailable or inadequatetechnological capabilities are making ittough for companies to fully capture InvalidTraffic (IVT).

In such a challenging landscape, Chinarequires a comprehensive strategy tocombat and overcome the ad fraud menaceand its consequences. Accenture offersthe following recommendations to protectbrands and ad investments based on our deep knowledge and experience in the digital marketing space:

• Optimize the media team’s operating model• Develop in-house capabilities• Build internal ad technological capabilities• Leverage latest technologies• Adopt Open Source Industry SDKs recommendations

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EXECUTIVESUMMARY

Global consumer goods companies are cuttingdown on their ad spending due to slow growthrate. The repercussions are being felt amongadvertisement and media companies worldwide.According to a Financial Times article datedAugust 25, 2017, “Magna Global, the mediabuying agency [is] forecasting global growthof 3.7 per cent to US$505 billion this year ascompared to 5.9 per cent in 2016”.1 Accordingto P&G’s Chief Brand Officer, the media supplychain is having its own share of challengescaused by fraudulent and unethical practices.2

The L2 Insight Report 2017 recommends thatbrands must emphasize more on quality andviewability metrics to understand ad viewingpatterns, prioritize where to place ads and seekbetter conversion opportunities.3

However, even in this difficult scenario,the Chinese digital market is witnessingunprecedented growth—it is expected todouble in the next three years. China’s overall admarket is the second biggest in the world andis growing at a high 56.5 percent. It is expectedto reach US$122 billion by the year 2020 fromthe current year 2016. Of this, a large part is

digital: 53 percent of China’s population as onDecember 2016—about 731 million people—areactive Internet users; and the digital ad marketis growing at 56.5 percent.4

Brands are constantly increasing theiradvertisement budgets, especially on digitalplatforms, to maintain market share and capturenew consumers in China’s fast-growing market.The share of digital ad spending in proportionto total ad budget is set to increase from 52percent in 2016 to an estimated 68 percent by2020 (see Figure 1).

In keeping with this trend, advertisers areleveraging data-driven, programmatic marketingtechniques to improve brand engagement andpersonalization with consumers on popularsocial media platforms such as WeChat.Empowered by digital channels, the new digitalconsumers have access to wide range ofchoice, and tend to have low brand loyalty. Bigadvertising companies such as P&G, Coca-Colaand L’Oréal are therefore keen to not only spendon digital advertising, but also ensureits effectiveness.

Chinese Advertising Market - Digital vs. Traditional

2016

DigitalFigure 1

Source: March 2016 - eMarketer (https://www.emarketer.com/Article/Digital-Ad-Spend-Rises-China-Despite-Economic-Slowdown/1013677)

Traditional

2017 2018 2019 2020

INTRODUCTION

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Though the future looks promising, thereare some concerns on how ad frauds arehampering ad effectiveness in China.Challenges such as non-transparentecosystem, invalid traffic and technologicallimitations are posing hurdles in the growthrate of China’s digital advertising market.

ADBUG’s 2017 Q1 China Media Report states that out of 12 billion impressions verified in the Real Campaign, China saw an average of 29.5 percent invalid traffic (71.5 percent direct purchase) and only 25.5 percent viewability rate (4.9 percent direct purchase) on personal computers and mobile websites.5

These figures reveal how the profit and brandreputation of companies with investments in digital advertising in China can get impacted.Programmatic digital advertising was ntendedfor brands to reach out to target consumersand promote the ads at the right moments, inthe right spaces. However, with such umbers,it is quite evident that programmatic or other marketing tactics are facing hurdles inachieving ad goals and may require additionalcompetencies.

So, the question arises, why are the resultsnot visible? The answer lies in the manner inwhich the digital advertising market works. Tounderstand this, let us break the problem intothree main points:

• Non-Transparent Ecosystem• Invalid Traffic and Brand Safety• Unavailable or Inadequate Technological Capabilities

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AD FRAUDS –A GLOBAL REALITY

NON-TRANSPARENT ECOSYSTEM

Charlie Wang, Chief Operating Officer ofReachMax, in his four-part online article,“Practical Guide to Programmatic Planning inChina,” throws light on how the buying platformcould be biased towards its own inventory poolselection. China’s Demand-side Platforms (DSP),due to its initial resistance to transition into anexchange inventory, adopted a hybrid model,DSPAN. This type of model allows to pick froma fixed ad network publisher list to fulfil theneeds of an advertiser, while also buy inventorythrough the exchange for performanceorientedadvertisers. As a result, DSPs weregiven preference to sell their own ad networkinventory to buy on the exchange, underminingbrands’ interests and yielding financial losses.

Besides, non-transparent transactions also jeopardize companies' investments and commercial reputation when it comes to dealing with DSPs. For example, artificially inflating the CPM (Cost per Mille) to falsify payments from advertisers. Companies can avoid such embarrassing situations by encouraging transparency and taking preventive measures.

Jasmine Xu, president of P&G’s E-Business& Branding in Greater China region, in theChina Mobile Marketing Association (MMA) Forum in Shanghai of August 2017, urged companies tolook beyond the excessive commercial interestsand bring in more transparency in the digitaladvertising industry.

INVALID TRAFFIC AND BRAND SAFETY

As many as 78 percent of ads seen on thescreens are invalid traffic that does not meetthe quality or completeness criteria, and areartificially inflated impression counts that theadvertisers pay for.6 Unlike the general nonpurposeful invalid traffic, Sophisticated InvalidTraffic (SIVT) deceptively manipulates the adserving process. Some of the different types ofSIVT are:7

Multiple tracking tags: multiple tags on a singlecreative ad results in the real number beingmultiplied by the number of tags.Ad stacking: multiple ads stacked onto eachother with only the top-most ad visible.Pixel-stuffing: ads stuffed in a 1x1 pixel that areinvisible to a human eye.

A study by the Association of NationalAdvertisers once found 85 ads on a single page,of which very few were visible to consumers.8

This means massive ad inventory spaces on adnetworks/exchanges were unavailable but soldnevertheless. This violates the rules laid outby the Interactive Advertising Bureau (IAB) inthe Media Rating Council’s (MRC) Viewable AdImpression Measurement Guidelines.

According to the AdMaster’s White Paper, TheWorld Federation of Advertisers, estimates that“10 to 30 percent of online advertising slots arenever seen by consumers because of fraud,” andit forecasts that marketers could lose as muchas US$50 billion a year by 2025.9

Brand safety is another challenge companiesface on a regular basis. For example, an airline company's ad injected into a webpage about a piece of aircrash news, or worse, placed in a pornographic website will tarnish the brand reputation tremendously.

UNAVAILABLE OR INADEQUATETECHNOLOGICAL CAPABILITIES

Accurate measurement of viewability gives boththe demand and supply sides a clear picture onthe actual impact of ad spending, and therebybringing transparency to the entire operations.The IAB has suggested that brands utilize:“front-end and back-end techniques… requiringsources of information made from multidatapointassessment of transaction sets”.10 However, the reality is that most of the current ad-verification solutions have severe limitations.

Pixel can only receive limited information and can be easily manipulated. Similarly, IP addresses can only provide third-party information, which can be manipulated on the device that the ad is being viewed (network interface identification).

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CHALLENGES PLAGUINGTHE CHINESE DIGITAL AD SPACE

China’s ad market expected to reach US$122 billion by the year 2020

10 to 30 percent of online advertising slots are never seen by consumers because of fraud, and it is forecasted that marketers could lose as much as US$50 billion a year by 2025

In 12 billionimpressions, China saw 29.5% average invalid tra�ic and 25.5% viewability rate on pc and mobile websites

CAPABILITIESREQUIRED

HOW COMPANIES CAN IMPROVETHEIR DIGITAL MARKETINGOPERATIONS

Collaborate with trusted partners to adopt a new digital advertising approach

Encourage industry leaders to support Open Source Industry software development toolkits (SDK)

Align with certified publishers to improvea brand’s marketing campaigns

Create new products and business models to optimize the e�iciency and e�ectiveness of their internal operations.

A strong cybersecurity approach using deterministic proof and threat modeling to prove human exposure on an impression level.

Leverage the expertise from digital marketing strategy and transformation to improve customer experience, operating models and on-going operations, organizational design, and technology strategy and platforms.

Align with organizations such as Accenture that o�er services through the core capabilities of their media management and digital marketing teams in addition to their patented technologies and strategic partnerships.

Develop in-house capabilities

Build internalad technology capabilities

Leverage latest technologiesOptimize the media

team’s operating model

11 Non-TransparentEcosystem 22 Invalid Tra�ic

and Brand Safety

33 Lack of ViewabilityMeasurement 44 Unavailable or Inadequate

Technological Capabilities

55 Lack of AdequateCyber Security

Keep an eye on emerging technologies in the digital space

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5ACCENTURE SERVICE OFFERINGS IN DIGITAL MARKETING

- Digital Innovation- Content Development and Management- Consumer Data Management and Analytics- Digital Campaign Optimization- MROI Optimization- Digital Media Audit- Search optimization- Social Media Monitoring- Customer Loyalty Management- Dashboard Development- Internet of Things

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and Brand Safety





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and Brand Safety





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5ACCENTURE SERVICE OFFERINGS IN DIGITAL MARKETING

- Digital Innovation- Content Development and Management- Consumer Data Management and Analytics- Digital Campaign Optimization- MROI Optimization- Digital Media Audit- Search optimization- Social Media Monitoring- Customer Loyalty Management- Dashboard Development- Internet of Things

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China needs a comprehensive strategyto combat the challenges caused bya non-transparent ecosystem, invalidtraffic, lack of viewability measurementand brand safety, and inadequatetechnological capabilities. MMA hasrecommended to actively develop andpromote its software development kitin China. Accenture offers the followingrecommendations based on our deepknowledge and experience in the digitalmarketing space:

Optimize your media team’s operating modelMichael Tiffany, CEO of White Ops, says“you need to make sure your own house isin order first. We have found… huge mediacompanies buy traffic because someone at thatorganization… is going to third parties to buytraffic”.11 All stakeholders must jointly formulatea foolproof strategy and mechanism to fightagainst these unethical practices.

Develop in-house capabilitiesChina must build a long-term programmaticstrategy, insource technology, adjust theoperating model, improve internal capabilities,build COEs and upskill staff through trainings toincrease internal ownership of digital strategyand strengthen governance of agencies.

Build internal ad technology capabilitiesDesign a global ad technology stack and bringcontracts in-house to increase direct controlof digital marketing costs and strategy, whileincreasing transparency and ownership ofdata. By doing so, companies can reduce thecomplexity of the ecosystem and eliminateparts of the opaque fee structures and rebatesystems.

Adopt the right technologyJavaScript is a function-based scriptinglanguage and an effective tool to helpcounteract IVT, measure viewability and findads around brand unsafe context. It activelygathers information such as page appearance,visitor information and much more that arecross-referenced to find true viewability. Though

Embrace the industry’s fraud-fighting resourcesCompanies must register with the TrustworthyAccountability Group (TAG) and becomeTAG-certified. At a minimum, verificationvendors should be accredited by Media RatingCouncil (MRC), while publishers must havethe Demand Alliance for Audited Media (AAM)Quality Certification. The Ad Fraud practicesand their implications need to be addressedbased on the recommendations of OpenSource Industry SDKs.

Figure 2

Comparison Chart – JavaScript, Pixel and IP

IVT

Bran

d Sa

fety

View

abili

ty

PixelJavaScript IP

JavaScript technology exists in China, it is yet tobe widely accepted. As compared to Pixel andIP, JavaScript is the most effective technologyin preventing IVT, measuring viewability andensuring brand safety (see Figure 2).

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THE ROADTO TRANSFORMATION

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PROTECTYOUR BRANDAND AD INVESTMENTS

Unethical and fraudulent practices arenot just making Chinese companieslose considerable revenue, they arealso eroding their trustworthiness inthe market. The lack of appropriatetechnological capabilities has alwaysbeen a concern for Chinese companiesin bringing transparency and efficiencyinto the country’s media buying space.Inadequate collaboration betweencompanies and media partners along withthe absence of credible certifications forpublishers is resulting in an opaque systemthat is complex and full of malpracticesand conflict of interests.

Accenture’s deep knowledge andexpertise in the digital marketing spaceenables companies to overcome theirdiverse challenges and help them deliverpowerful and innovations solutions to theircustomers. Our recommendations willhelp companies drive better transparencyinto the complex digital advertisingprocesses, weed out invalid traffic andother fraudulent practices, improvecredibility and bring technical prowess tobuild a robust and transparent system.

HOWCOMPANIESCAN IMPROVETHEIR DIGITALMARKETINGOPERATIONS

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Case Study: How AccentureOptimized a Hotel Group’sProgrammatic Digital MarketingCapabilities

Accenture set up and managed an inhousetrade desk for one of the world’slargest hotel groups and managedto achieve a 25 percent higher ROIfrom programmatic digital marketingcompared to external trading desks.We built a new global marketingteam, added advanced technologies,leveraged our partnerships andimplemented tools to ensure alldecisions are revenue-driven basedon an ROI model. Accenture playedthe role of a DSP/DMP/Ad exchange/network and resolved the hotel group’secosystem and technological problems.

COLLABORATE WITH TRUSTEDPARTNERS TO ADOPT A NEWDIGITAL ADVERTISING APPROACH

Companies must leverage capabilities in theareas of marketing services, analytics services,mobility services and digital transformation tobring overall transparency to the media supplychain. A new media buying model with an inhouseor trusted partner managed servicecan bring huge benefits, such as taking partialownership of your agency work that includes itsDMP and trading desks, bringing innovation totraditional core models.

LEVERAGE JAVASCRIPT TO MANAGE IVT, BRAND SAFETY AND VIEWABILITY

Companies need to support safer programmaticpurchasing and promote global standards in theChinese market through technologies such asJavaScript. JavaScript tags are especially codedto measure programmatic campaign viewability.Companies can complement this technologywith smart strategies such as contextualanalysis to yield the best outcome.

ALIGN WITH CERTIFIEDPUBLISHERS TO IMPROVEA BRAND’S MARKETING CAMPAIGNS

Companies need to align with certifiedpublishers to achieve greater transparency inthe system. In China, agencies usually hire thirdparty vendors to verify content and processes.However, instead of self-auditing, industry mustmove toward third-party vendors with crediblecertifications, bringing better transparencyand a new level of trust among publishers andadvertisers.

ENCOURAGE INDUSTRY LEADERSTO SUPPORT OPEN SOURCEINDUSTRY SDKs

In one of the highlights of Shanghai’s MMAforum, leaders from various parts of themedia buying chain, stemming fromagencies to publishers, stood together toform a commitment to better the ecosystem.The result is for example the MMA-approvedSDK project toolkit. The toolkit contains documents, technological processes and standards to increase transparency. Mobile media embedded in SDK provides an effective approach for ad validation, helping media outlets prove their own value while building confidence for advertisers’ media purchase. Industry leaders should enhance transparency in mobile ad ecosystem through advocating SDK, so as to break false prosperity and establish a fair and equitable media evaluation and purchase mechanism.

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Accenture Digital has the capabilities in digitalmarketing, analytics and mobility to help clientsunleash the power of digital to transformtheir businesses. We help clients use digitaltechnologies to deliver more meaningful andrelevant customer experiences across allchannels and customer segments, as well as tocreate new products and business models andto optimize the efficiency and effectivenessof their internal operations. We are one of theworld’s largest end-to-end digital providers withmore than 36,000 digital professionals servingclients in 49 countries. With 50 AccentureInteractive design studios, R&D offices and

TRANSFORMYOUR BUSINESSTHROUGHDIGITALTECHNOLOGIES

Centers of Excellence, we have developed morethan 1,000 mobile applications for 400+ clientsin the past three years.

We help companies with a multitude of servicesthrough our capabilities in Media Managementand Digital Marketing, such as ContentDevelopment and Management, ConsumerData Management and Analytics, DigitalCampaign Optimization, Digital Media Audit,MROI Optimization, Digital Innovation, Analyticsas a Service, Technology Implementation andAccenture Assets.

Accenture is unique in its ability to bringtogether leading digital and industryexpertise from digital marketing strategyand transformation to customer experience,operating models and on-going operations,organizational design, and technology strategyand platforms. We are number one12 in world’s 15largest digital agency networks and the world’s25 largest consolidated agency networks.We offer our services through the corecapabilities of our media management anddigital marketing teams in additionto our patented technologies andstrategic partnerships.

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GLOSSARY 13

• Impressions: An event where the audience views an ad on the web page.

• Cost per Mille (CPM): Unit of price for 1,000 impressions on a web page.

• Programmatic purchase: A process of aggregating and analyzing data to optimize the best target audience for advertisers to reach consumers through digital automation or physical agencies.

• Direct/Programmatic Direct Buy (PDB), where advertisers purchase impressions directly from the publisher and are measured by CPM.

• Real Time Bidding (RTB), where online impressions are the bought and sold through real-time auctions that occur in the time while a webpage is loading.

impressions.

impressions): intentionally deceptive practices that were designed to manipulate legitimate ad serving processes.

• Viewable impression: a served ad impression that is contained in the viewable space of the browser window based upon pre-established criteria such as pixel size and length of the time the ad is shown.

• Demand Side Platform (DSP): A software used to purchase advertising in an automated fashion. They are most often used by advertisers and agencies to help them buy display, video, mobile and search ads.

• Trading Desks: Optimizes strategy and helps advertisers

by using the information from DSPs. DSPs and trade desks usually have annual contracts in which the former need to guarantee a certain level of performance.

• Ad Networks: A market between ad exchanges, publishers and advertisers. It acts as an online platform of arbitrage that aggregates available publisher inventory and sells them to advertisers. The key di�erence between ad exchange is mostly bulk selling from publishers side and is much more enclosed; usually only a certain group of publishers will use ad networks.

• Ad Exchanges: A digital marketplace that enables advertisers and publishers’ to buy and sell advertising space, often through real-time auctions. They are most often used to sell display, video and mobile ad inventory.

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1 https://www.ft.com/content/4ead1bee-8978-11e7-bf50-e1c239b45787

2 P&G’s Chief Brand Officer at the Interactive Advertising Bureau’s Annual Leadership Meeting 2017

3 L2 Insight Report 2017

4 TechCrunch (https://techcrunch.com/2017/01/23/china-internet-half-population-mobile/)

5 China Media Report done in Q1 of 2017

6 ADBUG

7 Advertising: Digital Advertising Fraud (Innovation in Magazine Media 2015-2016)

8 Advertising: Digital Advertising Fraud (Innovation in Magazine Media 2015-2016)

9 AdMaster WhitePaper

10 Invalid Traffic Detection and Filtration Guidelines Addendum

11 FIPP Innovation in Magazine Media 2015-2016, “Advertising: Digital Advertising Fraud” article

12 Advertising Age Agency Report 2016 and 2017

13 All definitions sourced from IAB, Digiday and ADBUG

NOTES

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https://www.ft.com/content/4ead1bee-8978-11e7-bf50-e1c239b45787

https://techcrunch.com/2017/01/23/china-internet-half-population-mobile/

https://techcrunch.com/2017/01/23/china-internet-half-population-mobile/

ABOUT ACCENTUREAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions – underpinned by the world’s largest delivery network – Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With approximately 425,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives.

Accenture has been operating in Greater China for 30 years. Today, the Greater China practice has around 15,000 people serving clients across the region and has offices in Beijing, Shanghai, Dalian, Chengdu, Guangzhou, Shenzhen, Hong Kong and Taipei. As Chinese economy experiences the new normal, Accenture will bring more innovation to the business and technology ecosystems and help Chinese enterprises and the government to embrace digitization and enhance global competitiveness to succeed in the new age.

For more information about Accenture, please visit its corporate homepage www.accenture.com and its Greater China homepage www.accenture.cn.

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CHRISTIAN REQUENAAccenture Consulting,Customer & Channels Managing [email protected]

curbing ad fraud | accenture · programmatic digital advertising was ntended for brands to reach...

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