Click Fraud - The Good Click and Bad Click Feud
null    
Can't donate to charity?
Volunteer computer time
or Support SETI!
R&D Sponsorship Center
Fonts.com
 
February 2007

Home Page
Feature Archive
A&I Column Archive
Production Tools
State Marketing Data
US Marketing Data
World Marketing
Classifieds
Service Directory
Quality Assurance
3D Printing


Subscribe to Advertising & Marketing Review!
Contact Ken Custer at 303-277-9840.


Click Fraud - The Good Click and Bad Click Feud
Creating a Place Extraordinary Employees Choose to Stay


By Andrew Beckman, President SearchAdNetwork

In the rapidly growing world of Pay Per Click search engine marketing, there are good clicks and there are bad clicks.

When it all works as planned a real prospect clicks on an ad and the potential of a new lead or sale is generated. That's a good click. But when suspicious clicks don't add up to more revenue and eat up advertising budget instead, that's a bad click, also known as click fraud.

Click fraud occurs in PPC advertising when a person, automated script, or computer program imitates a legitimate user of a web browser by clicking on an ad for the purpose of generating a debiting click without having actual interest in the landing page's offer. This debiting click eliminates the possibility for a conversion to occur and forces advertisers to pay for fraudulent clicks while passing on the PPC fee to the violators.

The reality is that click fraud is more common than one would think. Click fraud, at one time or another, has affected every company; all it takes is one false click. It is estimated that more than 15 percent of an online advertising budget goes to click fraud and in some highly competitive markets that figure soars to nearly 50 percent. Use of a computer to commit this type of Internet fraud is a felony in many jurisdictions. There have been arrests relating to click fraud with regard to malicious clicking in order to deplete a competitor's advertising budget.

Click Fraud and the Search Engines
There are many reasons why people and/or companies engage in click fraud: financial gain, spite, competitive market positioning and malicious intent. Although it's difficult to determine the rationale behind the action, the end result is always the same wasted budget and a weaker return on investment.

Click fraud is the subject of some controversy and increasing litigation due to the advertising networks's status as key beneficiary of the fraud whether, they like it or not. The largest of the advertising networks Google's AdWords and Yahoo! Search Marketing act in a dual role, since they are also publishers themselves (on their search engines).

According to critics, this complex relationship may create a conflict of interest. For instance, Google loses money to undetected click fraud when it pays out to the publisher, but it makes money when it collects from the advertiser. For example, company A launches a new site and agrees to run Google AdSense ads on its site. In theory, this company could hire people located in completely different locations to click on these ads in order to generate enough Cost Per Click (CPC) profits to share with Google. Because of the spread between what Google collects and what Google pays out, click fraud directly and invisibly profits Google.

Disputes over the issue have resulted in a number of lawsuits. In one case, Google (acting as both an advertiser and advertising network) won a lawsuit against a Texas company called Auction Experts (acting as a publisher), which Google accused of paying people to click on ads that appeared on Auction Experts' site, costing advertisers $50,000. Despite the networks' efforts to stop it, publishers are suspicious of the motives of advertising networks because the network receive money for each click, even if it is fraudulent.
In July of 2005, Yahoo! settled a class action lawsuit alleging it did not do enough to prevent click fraud. Yahoo paid $4.5 million in legal bills for the plaintiffs and agreed to settle advertiser claims dating back to 2004. In July of 2006, Google settled a similar suit for $90 million.

The challenge is deciphering between the good clicks and the bad clicks, and then working with the search engines to ensure reimbursement for the false clicks. When working with search engines, the key is to present them with the IP addresses, search queries and time stamps so they can investigate and determine if the traffic is truly click fraud. The search engines can take anywhere from a couple of days to a couple of weeks to make a decision and issue a refund for the click activity; therefore, it is important to report suspicious activity in a timely manner.

The Low Down on Bad Clicks
Fraudulent traffic can originate from many sources including foreign users, bots, spiders, paid clickers and even malicious competitors. With the inherent limitations to geographic targeting on search engines, clicks from foreign users can pose a serious problem. For example, foreign scammers can grossly impact an advertiser seeking only U.S. traffic because their clicks have no potential of converting into a viable lead or sale. This is a growing trend in countries such as Russia and Pakistan. These countries are known for their organized click centers that operate around the clock searching and/or browsing sites looking to find listings that are bidding for ad space.

Technological bots and spiders are an advanced form of click fraud and also pose a significant threat to online advertisers. These automated machines are continuously crawling the Internet, clicking on links and racking up debiting clicks for marketers. Because it is completely automated, bots and spiders can be programmed to work non-stop. If utilized by those with negative intentions, this technology can be implemented to click on specific or grouped ad listings repeatedly without limitation. These bots use numerous IP addresses that change constantly to try and fool the search engines.

Paid Clickers are another source of click fraud in which a network of users are paid minimal amounts per click to surf certain sites and search engines then click on advertisements. This is often utilized to give the impression to advertisers on networked sites that a significant amount of users are frequently visiting their site in order to increase their advertising revenue. Some foreign countries are known culprits of large fraudulent click activity, which have forced the search engines to carve out and flag certain IP addresses that originate from countries such as India.

The source of fraudulent traffic that is hardest to contain originates from a competitor; unfortunately it also the most common source. Companies within a competitive vertical will repeatedly click on their competitor's ads in order to deplete their advertising budget and dissuade them from openly competing on particularly important keywords. One popular technique companies use to combat competitive fraud is to avoid advertising within a certain radius of a competitor's home base. Fraudulent clicks from all these sources, if kept unchecked, can amount to thousands of clicks daily and potentially completely derail an otherwise profitable campaign.

Taking a Stand on Click Fraud
With the openness of anyone clicking on an ad, it is extremely difficult to differentiate between good clicks and bad clicks. However, there are monitoring solutions and techniques that can help companies curtail the impact of click fraud.

There are third-party vendors who can be contracted to monitor the type of traffic coming from the search engines, and can report on suspicious activity. However, there are steps companies can take on their own to help combat click fraud. For example, IP addresses coming through at higher levels of traffic without buying product are an immediate red flag. Companies can also pull a sampling of IP addresses and crosscheck where the address originates. If it is coming from foreign countries that are known for their click fraud networks, companies can go to http://ws.arin.net/whois to research the IP address and confirm its legitimacy.

Another key step is monitoring conversion rates. Companies need to vigilantly monitor their daily conversion percentages and research odd trends that may cause conversion percentages to drop. Companies will know that fraudulent activity is occurring because this click activity will increase the total amount of traffic coming through this site, but no post-click activity of a sales or lead form will be recorded.

In addition to these monitoring techniques, there are also some search engine marketing firms that offer Pay for Performance client models that protect clients against click fraud. For example, HYPERLINK SearchAdNetwork, a Denver-based search engine marketing firm, works with a number of companies on a Cost Per Lead basis. Companies that are signed on under this model pay SearchAdNetwork only if a lead or sale (forms, applications, and registrations, etc.) is generated, otherwise, they are not charged. With this model, clients are protected against click fraud because SearchAdNetwork assumes the responsibility of paying for all clicks and/or requesting reimbursement for click fraud activity.

Click Fraud Happens
As long as the search engines continue to use the CPC model, click fraud is inevitable. For comparison's sake, direct marketers need to view click fraud as retail stores view shoplifting, it is a part of doing business. Although click fraud cannot be prevented 100 percent it can be curtailed significantly. Companies need to proactively and diligently monitor their campaign data on a daily basis in order to minimize the financial impact click fraud can have on their business.

Andrew Beckman is president of Denver-based SearchAdNetwork, a recognized authority for search engine marketing. For more information on the company visit www.searchadnetwork.com or contact Andrew directly at abeckman@searchadnetwork.com or (303) 291-6982.



For more advertising and marketing help, news, resources and information visit our Home Page.


Back to top



Economic Indicators
Census 2010
Census Bureau
BEA   NTIA
Health   Labor
Commerce Dept.
More...



It's Time to Let
A Robot
Make Your Sales Pitch!
Support
Roy the Robot
Funded by Kickstarter