The Battle Against Click Fraud

Published In The June 2005 Issue Of Target Marketing Magazine
Written By NETexponent CEO, Peter Figueredo

Many experts agree that the biggest threat to search engine marketing (SEM) is click fraud (invalid clicks generated by paid SEM campaigns). Google has even mentioned it in their financial statements. When you consider the explosive growth of SEM and the vast dollars invested in it by so many companies, it is easy to see why this is a hot topic. In this article I would like to explore some frequently asked questions on this subject. Hopefully this will help you to more easily understand, identify, and prevent click fraud from damaging your SEM efforts.

THE EASY QUESTIONS

How prevalent is click fraud?

According to Scott Boyenger, president and CEO of Click Defense, a newly formed company designed to identify and stop click fraud, it accounts for 15% - 20% of all SEM. So if you spend $100,000 each month you could be wasting $20,000. While no search engine is immune to this plague, Google seems to be affected the most because of their dominant share of search volume and their aggressive use of distribution networks.

What are the causes?

There are currently two major origins of click fraud.

Competitors: This could be considered the equivalent of corporate sabotage. Many companies are finding that their competitors are driving invalid clicks on their links with one simple goal – deplete the companies SEM advertising budget.
Distribution Networks: Mr. Boyenger attributes 70% of all fraudulent clicks to the search engine distribution networks (sometimes known as affiliates). Since traffic (and therefore search inventory) is so limited on major search engines then expand inventory by distributing their advertising links to other web sites. Any revenue the search engine generates from clicks on those links is shared with the web site. To boost their revenue some sites artificially generate invalid clicks.

What are search engines doing about this problem?

They all claim to be doing something. Pointing to things such as:

Proprietary technology developed to detect fraud patterns
Teams of PhDs working complex algorithms and analytical models
Continuous research and development
Teams dedicated to investigating suspected click fraud cases

However, they are intentionally vague in describing exactly what steps are being taken. They do not want to alert the fraudsters to their methodology for fighting fraud for fear they will find work arounds. Unfortunately, it seems that they continue to evade detection and the problem persists.

NOTE: Google has taken a big step in filing a lawsuit against a Texas based web site and its owners. They are accused of generating fraudulent clicks on ads in its AdSense program (Google’s distribution network). This resulted in Google paying the company a significant sum of money for worthless clicks. Filed in California Superior Court, this lawsuit alleges that, from August 2003, Auction Experts International and its founders clicked on AdSense links on the Auction Experts web site and even paid up to 50 unidentified people to do the same. Hopefully, this will prove a powerful deterrent to would be fraudsters.

THE DIFFICULT QUESTIONS

How can I know if I am a victim of click fraud?

Chances are that if you have a moderate to aggressive SEM campaign running and/or you bid on highly competitive keywords then you may be a victim of click fraud.

As Google and the others will tell you there is no 100% effective way to detect click fraud. Recently some companies have emerged to help advertisers and agencies monitor for signs of click fraud such as Click Defense and Who’s Clicking Who. But the jury is still out on how effective these systems truly are. Their systems are software solutions that analyze search engine traffic to an advertiser’s site and look for some tell tale signs such as unique IP address click frequency to identify human generated fraud. However, fraudsters have many tools to evade this detection.

Can click fraud be prevented?

The short answer is “not right now”. It may just be a cost of doing business in the SEM arena.

The long answer is “somewhat”. Advertisers and agencies looking to eliminate fraud can opt-out of search distribution networks since many engines allow this option. This could eliminate 70% of your fraudulent clicks. Of course this will also reduce your overall traffic from SEM. One way Direct Marketers can counter this would be to explore the option of starting an affiliate program if you don’t already have one. If you already have on then perhaps you can devote more budget to it since it offers a fixed ROI on advertising spend.

To this last point I think that Google, Yahoo, and all other engines should evolve their distribution networks from a pay-per-click (PPC) model to a pay-per-sale/lead model. The affiliate marketing world learned a long time ago that PPC compensation to a network of web sites leaves you open to fraud. The last major PPC affiliate program migrated to a pay-per-sale/lead model years ago. Google has actually moved in the opposite direction and announced that advertisers using their distribution network will now be able to bid on a CPM or Cost Per 1,000 Impression model. This should help to eliminate click fraud. However, this may not open them up to the dangers of “Impression Fraud” where websites find ways to artificially inflate their impression counts.

If I suspect I am a victim of click fraud what should I do?

Step 1: Immediately contact the search engine you suspect of generating the fraud traffic and alert them.

Step 2: Place a cap on your search spend if the fraud is significant, to limit your exposure, or halt your campaign with that engine completely.

Step 3: Gather your evidence and make your case to the engine.

Step 4: Work with your engine to verify your data, quantify the amount of fraud, and eliminate the source.

Step 5: Demand the engine refund your money or provide an acceptable make good.

Unfortunately the burden of proof is shared with the engines. This process could take some time and resources. This is where it is helpful to have a SEM agency so your internal resources are saved. I hope you are never a victim of click fraud but if you are I hope this article proves useful.

PETER FIGUEREDO is co-founder and CEO of NYC-based NETexponent (www.NETexponent.com), an online direct marketing agency for companies looking to maximize their online customer acquisitions.