China is the second largest digital advertising market after the US, a trend that has remained strong throughout the country’s overall slowdown. Digital ad spend is expected to reach $40.42 billion in 2016, a 30% increase from the year before. And by 2017, APAC is expected to take over the US as an advertising market and China will account for most of that increase in ad spend. In the U.S. and Western Europe the transition from traditional advertising channels to digital has been a slow (and perhaps painful) process, but the switch is happening almost overnight in China. Already, mobile advertising dollars alone have outpaced television spending in China.
Despite this growth, China is far behind the US and Western Europe in adhering to transparent advertising standards. Fraud is rampant and accountability on the accuracy of view counts and placement is almost non-existent. Adbug, a leading ad verification company and one of L2’s data partners, is working to set new standards for advertising transparency and fair ad buying in China. Adbug crawls desktop and mobile sites and platforms, analyzing the ad environment to give brands an accurate sense of where the views from their ads are being derived. In an interview with L2, CEO and Founder Martin Zhang and Vice President Summer Han said brands should be concerned with two things when advertising in China: 1) Brand safety 2) Fraud.
What is brand safety? Brand safety in digital advertising is incredibly important to brands just entering the Chinese market, because a digital ad is often the first time a Chinese consumer is encountering the brand. To inflate view counts, ads are often placed next to pornographic content, which damages brand perception. Zhang says this is especially important for CPG brands that have difficulty competing with local players in China. Food brands should also beware as food safety is a top concern for Chinese customers. Placing an ad for a food brand next to an article about food safety can easily damage brand perception; for example, a powdered milk brand should make sure its ads are not placed next to content about toxins in milk.
How is brand safety different from fraud? While placing ads next to off-brand content is harmful to brands, it is technically not fraud – because the views were actual human views. However, brands looking to place digital ads in China should also watch out for outright fraud like opening ads backstage, using robots to refresh ads, and auto-reloading the ad to inflate views.
How should brands approach advertising in China? Despite these challenges, Zhang encourages brands to embrace programmatic buying. It’s almost impossible to effectively target an audience through traditional channels and brands should diversify their efforts. Zhang and Han believe that Western brands – especially luxury brands – are taking a conservative approach to ad buying and should be more aggressive in digital buys.
A partner like Adbug can help brands expand their ad buys without damaging their reputation or overpaying for false clicks. When brand approaches Adbug, they offer pre-bid and post-bid services, in which they tell advertisers whether they should invest in certain ad packages and verify whether the ads are being placed and tracked as promised. To make things more streamlined, Adbug has an existing database of blacklisted URLs it advises brands to avoid. Perhaps this increased transparency can encourage brands to drop their conservative approach and experiment with China’s digital ad marketplace.