What is Click Fraud?
According to Wikipedia, "Click fraud occurs in pay-per-click online advertising when a person, automated script, or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating an improper charge per click. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud whether they like it or not. Use of a computer to commit this type of fraud is a crime in many jurisdictions, for example as covered by Penal code 502 in California and the Computer Misuse Act 1990 in the United Kingdom. There have been arrests relating to click fraud with regard to malicious clicking in order to deplete a competitor’s advertising budget."
What attracts these criminals?
Pay per click (PPC) search engine advertising is the fastest growing segment of internet advertising, according to the Interactive Advertising Bureau. PPC advertising is lucrative for both Yahoo and Google, with estimates of more than 250 million listings for Yahoo, and $6.1 billion in revenue for Google in 2005.
In an article for Wired.com, Charles C. Mann explains, "About 99 percent of that revenue comes from keyword ads (over 56 percent from AdWords, according to the company’s most recent quarterly financial statement, and 43 percent from AdSense), making Google a bigger recipient of ad dollars than any television network or newspaper chain." Yahoo and Google both face concerns that click fraud will ruin the lucrative PPC advertising business. "If that occurs," continues Mann, "the consequences will be felt throughout the Net. By splitting revenue with the sites that host the ads, search engines have become, in effect, the Internet’s venture capitalists, funding the content that attracts people to the computer screen. Unlike the VCs who backed the boom-era Internet, search engines now provide revenue to thousands of wildly diverse sites at little up-front cost to them – PPC advertising is one of the few income sources available to bloggers, for instance. If rampant click fraud overwhelms the system, it will muffle the Internet’s fabulous cacophony of voices."
The amount of click fraud is difficult to quantify; estimates of the proportion of fake clicks run from as low as 1 in 10 to as high as 1 in 2. In a widely cited recent study by MarketingExperiments.com, an online marketing research outfit, we find that as many as 29.5 percent of clicks in three experimental PPC campaigns on Google were fraudulent. Even as search engines shore up their defenses, click scammers are becoming more sophisticated, increasingly deploying complex software to disguise the origins of clicks.
Type "click fraud" into a search box and you get links to more than 30 million Web sites and ads for the dozens of companies that have sprung up to help victims track the practice. Sponsored ads march down the right-hand side of the search result page: Click Defense, Clicklab, Clickrisk, ClickAssurance, VeriClix, Authenticlick, WhosClickingWho. In fact, a recent search in Google for "click fraud" turned up more than 30 companies. Interestingly, one company, Click Defense, even sued Google in June, claiming it was a victim of click-fraud in search results containing "click fraud" keywords.
Click fraud techniques
There are two primary methods of generating invalid, fraudulent clicks: manual (human-generated) clicking and automated (software-driven) clicking. Potential financial gain, competitive advantage, "revenge", and blackmail are all considered motivators – the degree to which someone will go to commit click-fraud obviously, as with most human endeavors, depends upon the perceived or actual reward.
Where do we go from here?
Let’s look at the top two search engines. Yahoo is generally quite willing to disclose traffic data to advertisers during the refund negotiation process. Google, on the other hand, routinely resists providing specific traffic data for refund clicks – this makes it difficult for advertisers who are issued arbitrary refunds without details or suggestions for protecting the advertising dollars.
As click fraud matures into new, more complex forms, PPC companies may need to explain the methods they use to prevent it for individual ad campaigns in order to retain customer confidence. One thing is for sure – PPC advertising is such a powerful revenue generator that businesses will keep using it. As competition for these advertising dollars increases, search engines will most likely take greater measures to afford advertisers a sense of security.
Kara Toedtli – Blizzard Internet Marketing, Inc.