With great power comes great responsibility. Unfortunately, though, a significant number of marketing experts today care only about the power aspect and engage in a variety of questionable advertising tactics in an attempt to increase their sales.
Take a look at the following false advertising statistics and see just how they impact both the global market and you as an individual.
Keep in mind, though, that the extent to which ads are misleading tends to vary—some simply nudge you in the direction they want, others use outright lies to get you to buy a product you don’t need.
Astonishing Ad Fraud Stats (Editor’s Choice)
- 21% of ad spending goes to advertising frauds.
- The cost of ad fraud will reach $80 billion by the end of 2022.
- Red Bull had to pay $13 million for claiming its drink “gives you wings.”
- The financial toll of online ad fraud goes up to $51 per day.
- In India, 31% of internet users fall victim to false ads.
- The US loses $15 billion a year because of fraudulent ads.
- The effectiveness of online ads is overestimated by over 4,000%.
False Advertising Statistics for 2022
First things first: How would you define false advertising?
A more conservative definition would consider only those commercials that incorporate untruthful claims as “false.”
On the other hand, a less strict definition would include misleading ads under that term as well—that is, those ads that use truthful statements in a way that purposefully leads you to a “wrong” or untrue conclusion.
Either way, as you’ll see throughout this article, the consequences of deceptive ads can be dramatic.
Let’s get started.
1. In 2021, people spent $521 billion on digital ads.
(Source: Statista)
Only a decade ago, digital ads went more or less unseen. In fact, one of the major incentives for using YouTube back then—besides the special content it broadcasted—was that, unlike its rival, the TV, YouTube had virtually no ads.
Nowadays, digital ads really are a thriving industry. Unfortunately for the 41% of netizens who find them annoying, projections suggest that ad spending will reach $876 billion by 2026.
Fun fact: In 2020, Google generated close to $150 billion from advertisements—$20 billion of that came just from YouTube ads.
2. The global cost of deceptive advertising will reach $80 billion by the end of 2022.
(Source: Statista)
Everything seems to point to false advertising being on the rise. In 2018, the total cost amounted to $35 billion, meaning that that number will have more than doubled in less than five years.
Talking specifically about the US, the total cost of online ad fraud was nearly $8 billion in 2016, and projections suggest that it’s seen accelerated growth. Currently, it should be around $15 billion.
3. Media and sports (2.1%) have the highest rate of false advertising.
(Source: Statista)
Do all advertisements contain false information?
No. But some industries are statistically more inclined to stretch the truth when doing marketing—media and sports being chief among them.
Technology (1.8%), financial services (1.6%), and travel (1.6%) follow behind. Education, entertainment, retail, and restaurants have the same false advertisement rate (1.4%).
Interestingly enough, “health and pharma” is the industry that’s less likely to indulge in false advertisements (1.1%), which is somewhat reassuring.
Keep in mind, though, that these ad fraud stats only contain data on outright fraudulent content in different advertising sectors. So, this is not the total rate of misinformation in commercials—it’s more like the lower boundary of the rate of most serious breaches in the world of advertisement.
Fun fact: Nearly 11% of the global ad traffic is invalid (aka bot-based).
4. 31% of Indian internet users suffered financial loss due to misleading advertising.
(Source: Statista)
In fact, 21% have incurred both financial and health losses. This might seem inconsistent with what we mentioned in a couple of stats above, but the incidence varies across countries. And there was also COVID.
When the pandemic hit, many people turned towards herbal and food products that were supposed to “boost the immune system”—which was a misleading advertisement. In India, 42% knew at least someone who bought such items.
5. Indonesia has the highest ad fraud rate in the APAC region (15.1%).
(Source: Statista)
According to false advertising statistics, you’re the most likely to encounter ad frauds in Indonesia. The closest follow-ups are Singapore (14.4%), India (7.9%), Vietnam (6.2%), and China (5.6%).
This is, of course, only in the Asia-Pacific region. Worldwide, the country that has the highest rate of fraudulent online advertisements is the United States.
Interesting fact: Although Indonesia has a significantly higher ad fraud rate than China, the latter reports more economic losses than the former. People in Indonesia lost $13 million due to false ads in 2020, whereas the Chinese lost $5.2 billion that same year. In fact, the only country that seems to surpass China in this regard is the US, which reported losing $11.4 billion in 2020.
Misuse of Statistics in Advertising
Now that we’ve covered the basics, let’s focus on how scientific statistics and results are misused and misrepresented around the world.
6. 73.6% of statistics are fake.
(Source: Business Insider)
A liar tells you: “I’m lying.” Is he telling the truth, or is he lying to you?
It’s the same sort of paradox when you encounter statistics like these.
Business Insider used this statistic as a header to demonstrate the fact that companies and media tend to use fake (or misleading) statistics as headers just to draw people’s attention.
Point made.
There are sure a lot of made-up statistics going around—online, certainly, but also in the news, TV ads, etc.—so we should really ponder the veracity of each stat we come across. A bit of fact-checking couldn’t hurt.
7. Uber paid $20 million for giving false statistics on earnings.
(Source: Business Insider)
Specifically, Uber lied about drivers’ hourly wages in 2017 in an effort to attract more people to work for them. The company claimed that drivers in Chicago made up to $21 per hour, but the reality was that fewer than 20% of drivers actually earned that much—talk about exaggerated advertising.
It was even worse in Philadelphia. According to Uber, drivers made $25 per hour when working in Philly, but not even 10% of them actually achieved this.
Fun fact: As you know, Uber is not only one of the most popular ridesharing app, it also offers top food delivery services. Counting both business segments, the company boasts 109 million monthly active riders across 80+ countries.
8. Mars Petcare claimed its dog food can increase dogs’ lifetime by up to 30%.
(Source: USA Today)
The more you look into the misuse of statistics in ads, the more preposterous and outright absurd they become.
Mars Petcare made this mistake and advertised its dog food by saying that it will make dogs live longer. This was entirely unfounded and, as you can expect, Mars had to remove this content once this came to light.
Similarly, Kellogg’s arbitrarily decided that Frosted Mini Wheats improved children’s attention by 20%. The company had to pay $4 million for false claims and change its advertising.
Fun fact: Pet owners’ highest expenditure is food. People in the US spent $50 billion in nourishment for their furry friends in 2021.
9. Colgate claims that “80% of dentists” recommend their toothpaste.
(Source: Marketing Law)
One of the best examples of misusing statistics in advertising comes from Colgate. The company boasts that 80% of dentists recommend its toothpaste, but this is a purposeful misinterpretation of the results from a survey.
It’s true that 80% of dentists mentioned Colgate when they were asked for their recommendation. What the company chose not to mention is that those same dentists named multiple brands and Colgate just happened to be on the list.
Companies That Were Sued for False Advertising
We’ve already mentioned a few of the many companies that were brought to court due to their fraudulent ads, but let’s go over the biggest cases now.
10. Volkswagen sold 600,000 cars by falsifying emission statistics.
(Source: Todd F. Law)
Why does a company engage in false advertising?
Uber did it to attract drivers, Colgate did it to attract buyers, and Volkswagen did it to appease environmentalists.
It was 2016, and there were environmental initiatives putting a lot of pressure on VW to improve its diesel engines so that they’d pollute less. And while modern diesel engines are most certainly greener than 10 years ago, VW couldn’t meet the standard at the time.
The problem was that cars were already made and had to be sold. So, the company cheated a bit—i.e., they rigged tests—and ended up entangled in a multi-billion dollar scandal. As far as fines and false advertisement statistics go, the $9.5 billion Volkswagen tops the charts.
11. Airborne paid $23 million for false advertising.
(Source: Todd. F. Law)
While, financially speaking, Airborne’s mistake is significantly less costly than VW’s, it’s equally detrimental.
Airborne—a company that makes dietary supplements—claimed that one of its products “warded off germs” and “boosted the immune system.” Conveniently enough, no studies were undertaken to prove this.
The Center for Science in the Public Interest noticed the deceit and sued Airborne, making this one of the most notorious examples of misleading commercials.
12. Apple’s “waterproof phone” claim led to a $12 million lawsuit.
(Source: Best Practice)
Starting from iPhone 8, Apple’s advertising campaigns focused on the waterproof quality of its mobile devices. Namely, the company claimed that its phones would “survive” being plunged in up to four meters of water for 30 minutes.
What Apple didn’t say was that this was only achievable under very specific laboratory conditions. In practice, numerous consumers understood this message as “the phone is waterproof as long as you don’t spend too much time in water and not go too deep,” which prompted them to test this and ruin their new iPhones.
Apple has provided us with other examples of deceptive advertising over the last decade. For instance, the company was sued in 2015 for saying that one of its new phones had “16 GB of free space.” As it turns out, only 12 of those are actually free.
13. Red Bull paid $13 million for the “gives you wings” claim.
(Source: CBC)
Rest assured, it’s not that the plaintiff actually expected wings to sprout off his back. The reason for the claim was much more mundane. The plaintiff read the label and figured out that the amount of caffeine in a can of Red Bull is less than what you’d get from a cup of coffee.
Therefore, he concluded, Red Bull can’t give you metaphorical wings either—and that’s false advertising, right there.
Although the company didn’t quite agree, it acquiesced to paying a $13 million settlement.
Online Advertising Frauds
It’s not that social media isn’t good for businesses who wish to attract customers.
For instance, 200 million Instagram users visit at least one business profile every day, and 73% of marketing specialists consider their social media campaigns to be successful.
So, online ads do work, just not as much as people think they do—and certainly not as much as the sites and platforms who sell ad space want you to believe.
Let’s go over a couple more ad fraud stats.
14. The effectiveness of online ads is overestimated by over 4,000%.
(Source: Harvard Business Review)
The internet opened new possibilities for stealing money from people.
You’ve probably heard of phishing, vishing, smishing, and other forms of social engineering that, combined, are behind 98% of all cyber attacks. Well, now you can add one more term to your list: “click fraud”.
That’s when click-through rates are artificially inflated, making the people who pay for them believe that the ads are doing well when, in reality, no one pays attention to them. In other words, many companies have wasted millions on ad campaigns that have little to no real conversion rate.
Click fraud can take many forms. It can be your competitors clicking repeatedly and purposefully, it can be netizens clicking accidentally, but it’s actually bots more often than not.
According to the statistics, the most affected industries are finance (22% of bot traffic), family (18%), and food (16%).
15. Methbot and 3eve are the most profitable digital ad fraud operations to date.
(Source: News Bloomberg Law)
Methbot was a bot farm that was discovered in 2016. It was a complex hacking operation that, at one point, cost people $5 million a day.
How did they do it?
Basically, Methbot spoofed 250,000 well-known websites and sold ad space. Then, they had bots simulate human traffic, faking up to 400 million views of video ads per day.
The FBI shut down another botnet, 3ve, which not only made false advertisement statistics hit a new high—3ve managed to drive up to 12 billion ad impressions daily—but also employed malware to infect thousands of PCs.
Fun fact: Taking down 3ve required a team effort. The FBI enlisted the help of multiple organizations, including Google, Amazon, the Department of Homeland Security, Adobe, McAfee, and other companies that are invested in cyber security.
Wrap Up
Phew, that’s a lot of fraudulent activity for one (not so) brief article.
It’s true that false advertising statistics are getting more and more worrisome—especially in the digital universe, where fraud in general reaches acquires new guises.
The best thing we at Web Tribunal can recommend is that you be really careful with any kind of ad content.
Think twice before you make that impulse purchase, and perhaps do a bit of digging—it really couldn’t hurt to double-check that the company’s legit and read a review or two about the product you’re interested in.
With digital advertisement, the possibilities for scams are endless. That’s why your critical ability also has to have no end!
Sources
Unaware that life beyond the internet exists, Nick is poking servers and control panels, playing with WordPress add-ons, and helping people get the hosting that suits them.
