Click Fraud: Are online “customers” stealing 20% of your online advertising dollars?
You wouldn’t tolerate a customer walking out of your store with stolen merchandise. Then why would you tolerate pirates who are stealing an estimated 20% of your online advertising dollars?
If you think all your “Pay-Per-Click” online advertising dollars are well spent, think again. The $5.6 billion Pay-Per-Click industry itself estimates that between 5% and 20% ($260 million to $1 billion) of this figure is spent on fraudulent clicks — money stolen right out of your pocket.
What is Click Fraud?
There’s considerable debate within the industry on what constitutes an act of click fraud. Google and Yahoo! are struggling to redefine “good-faith click” because of all the bad faith clicks on their search engines, according to a Newsweek article. Nevertheless, click fraud is “the biggest threat to the Internet economy,” according to George Reyes, Google’s CFO.
What is click fraud? If a competitor’s sales rep clicks on your ad, is that click fraud? It’s definitely not a lead. How about if you competitor asks all of its 100 employees to click your $2 per click add once every day? According to the search engines, this is not detected as fraud.
The industry is telling you to factor in a part of your return on investment (ROI) to wasted traffic. While Yahoo! and Google have implemented anti-click fraud technology and are doing their best to assure you that the problem is under control, the thieves are getting through and stealing your advertising dollars. You should have to factor in 20% of your ROI as wasted dollars.
Click fraud is clicks arising for reasons other than the good-faith intention of an Internet user to visit a web site to purchase goods or services or to obtain information. It also occurs when invalid clicks are used to artificially or maliciously generate clicks or page impressions that result in improper charges per click. Examples are:
- manual clicks on an ad to purposefully increase the ad spend.
- deliberate clicks on an ad to generate an improper charge per click or increase profits by site owners hosting the ads.
- deliberate clicks through automated clicking tools (aka robots, spiders, or “bots”) or other deceptive software.
Meanwhile, you’re most likely being victimized by an undetermined number of bad-faith clicks, and you don’t even know it.
How Does Click Fraud Work?
Here’s how click fraud works: You’ve bid for the top advertising placement in sponsored search results on Google and you will pay only when people click on your ad. Your ad is also distributed to the web sites of Google’s partners. You’re also bidding on placement of paid links, which appear when certain keyword searches are conducted on the networks’ sites or those of third parties that partner with them. Keyword ads can also be distributed according to the content of partners’ sites and displayed on non-search pages.
A rogue site is set up specifically for displaying Google ads and people are hired to click on the ad links on the rogue site. Alternatively, the person who created the rogue site also creates a “bot” to deliver multiple clicks. You, the advertiser, are paying Google for all the clicks, and Google shares your revenue with the rogue site that generated the fraudulent clicks.
Click fraud is coming primarily from the major search engines’ syndication partners. Any web publisher can become a partner of these large networks by displaying its paid links on a web page within its own search results, and then share in the profits with every click. The more the large search engines extend their reach for partners, the less control you and the large search engines have over quality traffic. This is why the second and third tier search engines have a lower conversation rate of ads into sales. Most of them won’t monitor click fraud, because they don’t want to upset their top business publisher partners — the hand that’s feeding them.
Some of the fraudulent firms clicking on your ads have people all over the world doing their dirty work. Low cost workers in China, India, Pakistan and other countries are spending all day clicking ads and waiting the required 30 seconds to generate a per cent of each click. With such a high volume of fraudulent clicks, a lot of marketing dollars can be depleted in a fraction of a second.
We spoke with one firm that was defrauded by a click fraud company in Pakistan that was doing this on all its variations of $5-plus cost per clicks, costing the firm a lot of money. This company estimated that 15-20% of its traffic was coming from click fraud — and it depends upon search engine marketing for a big percentage of its business. The firm is demanding its money back.
Click fraud could be happening closer to home. Your competitor might be clicking on your text ads on Google and Yahoo! because, you’ll have to pay as much as $15 each time he does it, and he wants to drain your budget.
You Can Fight Back
You can fight back against click fraud. It’s not a lost cause. But most advertisers have not delved into fighting click fraud because of the technical complexities involved. Others are concerned that they could jeopardize their relationships and free listings with the powerful search networks if they complain too loudly.
The task comes down to tracking and looking for trends in your log files. It should be an important part of your overall search marketing to check for click fraud and study your traffic trends (e.g. whether a page is refreshed exactly every 1.8 seconds, which would indicate click fraud) in order to boost your site’s conversion rate of paying customers. Various 3rd party software vendors specialize in identifying these trends and can also be installed on your website.
One option is to have a solid web site analytics program in place. We have implemented such programs for clients since 1997 by monitoring and reviewing log files and server statistics. Besides identifying our clients’ top online referral sources, we capture the visitor data from your server logs and interpret it so that you’ll know your true traffic trends — such things as your total unique visitors, your web site’s “conversion funnel”, which pages customers click on from Pay-Per-Click ads, top keyword referrals and top engines, and how many fraudulent clicks have occurred.
If you’ve researched and identified click fraud on your web site, ask the search engine for a financial settlement for the last six months. Then, on an ongoing monthly basis, track your files and present a case to receive a credit. We have assisted many companies in click fraud settlements so that they receive what is owed to them. We focus on extensive log file web analytic research to present your best case to the search engines.
Think how much money you could save your company if you received 5 to 20% of your search engine marketing budget back.
Eric V. Melin is President of SpiderSplat Consulting, Inc., in Boston, a full-service Search Engine Marketing firm established in 1997, specializing in a combination of organic/algorithmic Search Engine Optimization Consultant, Web Analytics, and Pay-Per-Click Management. He can be reached at (617) 482-5934, emelin@spidersplat.com.
http://www.spidersplat.com