Online marketers have embraced pay-per-click advertising, enriching search engine-based ad networks such as those run
by Google and Yahoo. Unfortunately, fraudsters also participate in the clickfest. Click fraud incidence is unclear, say experts,
but it has become a gnawing concern: 70 percent of online advertisers were concerned about the phenomenon or considered it
a problem, according to a recent survey from the Search Engine Marketing Professional Organization.
How does click
fraud work?
Understanding click fraud requires grasping the pay-per-click (PPC) advertising model. PPC ads are short,
text based and link to an advertiser’s website. When an ad is clicked on by a visitor, the advertiser pays a fee to
the ad network provider. If the ad runs in a website created or published by Google, the payment goes to Google. Companies
such as Google and Yahoo also beam the ads out to websites affiliated with their ad networks. If the ad runs in an affiliated
site, then Google splits the payment with the site.
Click fraud occurs when someone clicks on a PPC ad maliciously, without
intent to do business with the advertiser. There are two main types of click fraud. In one, a company will repeatedly click
on competitors’ ads to run up their advertising costs. In the other, an affiliate of an online ad network clicks on
ads at its own site to increase its commission. Both people and software are used to click on ads in these schemes.
Why
should CMOs care about click fraud?
Fraudulent clicks dilute PPC campaigns’ efficacy because the advertiser
pays for clicks that weren’t made by potential customers, says Su Li Walker, a Yankee Group analyst. They also skew
campaign results, cost money and drain marketing budgets. PPC ads are usually delivered based on keywords entered into search
engines. Multiple advertisers often want their ads triggered by the same keyword, so keywords are sold by bid. The bid is
the amount the advertiser will pay when its ad is clicked on. The higher the bid, the higher an ad will rank versus others
triggered by the same keyword. The most popular keywords tend to be the most expensive--and the most likely to attract click
fraud.
However, some CMOs ought to worry more than others, says Kevin Lee , executive chairman of Did-it, a search engine
marketing company. "The incidence of click fraud varies greatly among industries," he says.
What can marketers do about
click fraud?
Owners of ad networks, search engine marketing firms, consultancies and advertising agencies are all
developing systems and services to detect click fraud, experts say. A CMO should make sure his PPC partners are aware of click
fraud, proactive about detecting it and capable of documenting it. That way, if a fraud is detected, the CMO can request a
refund from the ad network provider.
How serious is the problem?
Legal battles are erupting over this issue.
Google, for example, has been on both ends of the fight. It successfully sued one of its affiliates for engaging in click
fraud, and it is being sued by an advertiser that charges Google isn’t doing enough to curb the problem.
How
can you tell if click fraud is taking place?
Marketers should keep a wary eye on the following indicators: visitors
who don’t stay long on the advertiser’s site or don’t click around it much; clicks on ads aimed at a U.S.
audience from faraway countries such as Pakistan or Romania; repeat visitors from the same IP address and hits from anonymous
proxy servers; and click-to-sales conversion rates that fall below expectations.
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