Rampant click fraud on China’s internet hurts digital advertisers

China’s US$50 billion online advertising market hurt by a flood of fake clicks that are facilitated by broadband internet and cheaper smartphones

PUBLISHED : Saturday, 20 January, 2018, 7:02am
UPDATED : Saturday, 20 January, 2018, 7:02am

Retail giants like P&G and Unilever invest billions of dollars a year in advertising on China’s digital media platforms in the hopes of reaching the country’s 1.4 billion consumers, but one in three “hits” are generated by banks of mobile phones programmed to visit their websites to give the false impression of higher traffic volume.

This fake web traffic, which accounts for one third of advertiser views in China, is generated by so-called click farms which use powerful computers to control thousands of mobile phones, or hack into other smartphones through malicious apps to do the same, according to a report by data service provider AdMaster.

A separate study by consulting firm iiMedia Research found that more than 80 per cent of the operators of public accounts on Tencent Holdings’ platform WeChat, akin to verified pages on Facebook, were victims of fabricated clicks at one time or another.

“Advertisers absolutely abhor click fraud,” said Hong Bei, founder and chief technology officer at AdMaster.

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The rampant click fraud underscores the challenges faced by advertisers and brands in China, the world’s second largest advertising market, where the online advertising market has been growing exponentially along with the internet economy in recent years. China’s online advertising expenditure surged from US$24 billion in 2014 to US$50 billion in 2017 and is forecast to reach US$84 billion by 2020, according to eMarketer.

At the same time, the cost of fabricating clicks has come down significantly because of broadband, 4G mobile service and cheaper smartphones, according to Hong.

“In the past, we have detected more than 100,000 phones that kept accessing a website from the same geographical location in Shanghai for a whole day,” he said.

Click farms charge less than 50 yuan (US$7.50) to buy 1,000 clicks for articles published on public accounts on WeChat, China’s most popular social media app.

There are more than 35 million of these public accounts, operated by professional media organisations and amateur bloggers, and they have become a major source of news and information for Chinese internet users.

An iiMedia report estimated that the market for fake clicks on WeChat public account articles was worth 51 billion yuan (US$7.7 billion) at the end of 2017.

“We have a zero-tolerance policy for click or data fraud on the Weixin platform,” a Tencent spokeswoman said in an emailed statement, referring to the name of the domestic version of the WeChat app.

Tencent tightened its monitoring of clicks in September 2016, leading to a collapse in the click volumes on many WeChat public accounts. However, since then click farms have made a comeback with improved tactics to avoid detection, said Zhang Yi, chief executive of iiMedia.

The situation on video streaming sites is no less serious than on social media, Zhang said.

“Views for online TV shows are easily several hundred million now, which is impossible unless everyone in the country watches it. It’s like the Great Leap Forward in the 1950s,” said Zhang, referring to the period in Chinese history where farms and factories inflated their output to meet goals set by the Communist Party leadership under Mao Zedong.

Views for online TV shows are easily several hundred million now, which is impossible unless everyone in the country watches it
Zhang Yi, chief executive of iiMedia

Elsewhere in the world, efforts in battling click fraud are paying off. In a survey of 49 advertisers, the estimated cost of fake web traffic dropped 10 per cent year on year to US$6.5 billion globally in 2017, according to the Association of National Advertisers in the US.

In the US, Google and Facebook, which dominate the digital advertising market, have both had to issue refunds to advertisers in the past after detecting invalid clicks.

But in China, the fight against fake clicks has just started. US-based consumer product giant Procter & Gamble (P&G), the world’s largest advertiser, has spoken out against click fraud in China.

In January last year the company said it would adopt practices that included better use of metrics, third-party monitoring, and more transparent contracts – and called on other advertisers to do the same.

“We will roughly achieve the targets by the end of this year,” a P&G China spokeswoman said in an emailed statement. “These efforts will change the digital media ecosystem completely.”

In November the Chinese government officially launched a campaign to stamp out fraud on e-commerce sites such as the country’s top site Taobao, operated by Alibaba Group, and e-commerce platforms operated by rival, which have all seen fake reviews and transactions posted by vendors as a way to boost their sales.

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Amendments made in November to China’s existing Anti-Unfair Competition Law mean that such fraud is now punishable by fines of up to 2 million yuan.

“Alibaba firmly supports and absolutely uphold the changes to the law,” Alibaba’s platform governance department said in an emailed response. “Invalid reviews and transactions will destroy the future of China’s economy.”

Chinese consumers are also becoming more discerning in their evaluation of social media content although they still pay a lot of attention to the number of followers a public account will have, said Laurence Lim Dally, a managing director at Cherry Blossoms Marketing Research and Consulting.

“Brands can use sophisticated tools to track fake data but fake key opinion leaders are likely to be detected by more demanding and savvy consumers themselves through the poor quality of their online content,” she said.

Alibaba owns the South China Morning Post.