Are western marketers making unfounded assumptions about the state of brand safety and ad fraud in China? In the first instalment of 'The China Expert Series', in association with iClick Interactive, their head of agency sales, Southeast Asia and Europe, Darren Jacobs (pictured below) explains that, while strong awareness of the complexity of the Chinese market is imperative, it offers a wealth of opportunities for marketers.

Ad fraud, ad viewability, as well as brand safety, have been hot topics in the industry in recent years. Upon the news report a while ago on Methbot – a Russian hacking operation that had allegedly been defrauding US-based online advertisers of more than USD$3m (£2.05m) on a daily basis – concerns over the issues peaked, putting scrutiny on any performance metrics. The burden of responsibility falls on platforms and exchanges to work together and ensure quality, for the sake of the reputation of the marketing brands.

Universality of ad fraud: The East vs The West

There has been a conception among western marketers that the ad fraud issue is outrageously rampant in China. What I would like to stress is – yes, China may be operating on a different scale in terms of the volume of fake traffic, yet the issue is not unique to the market. By partnering with the right martech partners, and being armed with the right information and approach, marketers can indeed make effective use of their marketing dollars and reach their desired Chinese audiences via a data-driven approach.

What western marketers would need to be aware of is that China is a unique market with a highly complex digital and programmatic landscape, in which global industry giants, such as Google, Facebook, and YouTube, are not operating. The usual ad tech companies that they used to work with also rarely have local operations or capabilities in the market.

Meanwhile, the market dynamic is dominated by homegrown giants and large publishers, of which many have been holding their marketing metrics proprietarily – including the renowned Baidu, Alibaba, and Tencent (BAT), which are overwhelmingly dominant across display, search, social, and video. As there is a lack of regulation enforcement yet to make third-party tracking or data auditing compulsory for digital marketing activities; marketers have been bearing with a less-than-desired level of transparency in ad performance and ad viewability.   

The two sides to the Chinese coin

China has been an exceptionally bright spot for digital ad spending, estimated to reach US$50.31bn (£34.42bn) and a 27% year-on-year growth in 2017, according to eMarketer. And programmatic display ad spend is just as rosy, looking to climb to USD$16.74bn (£11.45bn) this coming year.

The lure of China for digital marketers is high, given the huge consumer base, the consistently strong spending power, and a high rate of mobile penetration. The flip side to this is a unique media landscape dominated by local technology giants and in areas of regulatory restrictions that make it imperative for brands to find the right partners. On top of this, brands face the task of ensuring the accuracy of their marketing message reaching its target, which has its problems from fraud and viewability, just as every market has shown to have.

Darren Jacobs, Head of Agency Sales, iClick Interactive

Industry driving progress

Despite a larger scale of ad fraud, to label the problem in China as systemically worse than anywhere else is incorrect. To date, initiatives have already been taken by the industry that show the fellows’ dedication to fighting for a higher level of brand safety for marketers in the future. MMA China announced in January 2017 the establishment of their Brand Safety & Viewability Standard Group under their Mobile Ad Standard & Measurement Committee, appointing Adbug as Group Leader. The group is aimed at increasing the protection of brands by reinforcing the measures for safety and fighting against fraudulent traffic. The approaches taken may be different because of the market’s intricacies, but it shows the industry’s commitment to tackle the issues.

Local giants start opening up with data

Data is the lifeblood of digital marketing and overseas firms have been starved of this in China through the dominance of local giants Baidu, Alibaba, and Tencent (BAT). As they start to open up with data-sharing deals, such as the one Tencent signed with GroupM, Omnicom, and Dentsu Aegis in 2016, more transparency can be looked forward to. Global brands may then expect to start getting a more credible picture and be able to improve the quality of interactions with Chinese audiences.

Practical solutions – we’ve been working on the issue too

At iClick Interactive, we have been playing our part as well, front-running the wider market developments. Our partnership with Adbug, which started in 2014, was an early move to tackle brand safety. It has led to the creation of big data analytic algorithms that measure brand-sensitive messages and, through machine learning, enhance context recognition capabilities. This has been key to managing the brand credibility of clients.

Our recently launched, cross-channel targeted, marketing platform for overseas agencies and marketers, iACCESS, also provides clients with a clear and concise view of their campaigns run in China by using third-party tracking from Miaozhen and AdMaster. Via these initiatives, we aim to ensure the appropriateness of ad placement while maintaining a quality level of targeting, reporting, and feedback.

Right partners and platforms will bring success

Marketers should focus on the opportunities that can be found with the right partnerships and not be put off by the risks. Users in China are very receptive to marketing, more so than their western counterparts. One of the best examples of this is in the booming digital video market. There are, at times, a number of ads before online content is played, and this is permitted as long as the quality of the online content is not compromised, according to the laws and regulations. Social media is a must for all ages in China and presents another ripe territory for marketers.