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Home

Click Controversy

Pay-per-click advertising is a big business.

According to the Interactive Advertising Bureau, pay-per-click is the fastest growing segment of all advertising. It is estimated that in 2005, keyword advertising accounted for about half of Yahoo's estimated $3.7 billion in revenue.

In the same year, Google earned $6.1 billion in revenue, 99% of which came from keyword ads, making Google a bigger recipient of ad dollars than any television network or newspaper chain. In the face of such developments, pay per click advertising, which barely existed five years ago, is poised to become the single most important form of marketing - unless click fraud ruins it.

In pay-per-click advertising, each time a valid web user clicks on an ad, the advertiser pays the advertising network, who in turn pays the publisher (operator of a website) a share of this money. This revenue sharing system is seen as an incentive for click fraud.

Click fraud occurs 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. This trend is emerging as an important concern for search engine marketers.

Not a new phenomenon, click fraud has been happening for years, since the original installation of the cost-per click (CPC) pricing model. It has been increasing in frequency and impact as more advertisers launch CPC campaigns and as the overall cost of online advertising continues to rise. Recent SEMPO research finds 45 percent of surveyed marketers are concerned about click fraud but don't track it. Another 19 percent thinks it's a moderate problem and do track it, and 6 percent feel it's a significant problem and track it. Thirty-one percent either weren't concerned or had never heard of click fraud.

Click fraud is perpetrated in both automated and human ways. It can be as simple as one person starting a small web site, becoming a publisher of ads, and clicking on those ads to generate revenue. Often the number of clicks and their value is so small that the fraud goes undetected. Frequently publishers will claim small amounts of such clicking is an accident, which is often the case. The most common method is the use of online robots, or "bots," programmed to click on advertisers' links that are displayed on Web sites or listed in search queries.

Much larger scale fraud also occurs. A growing alternative employs low-cost workers who are hired in China, India and other countries to click on text links and other ads. Fraud also takes place when employees of companies click on rivals' ads to deplete their marketing budgets and skew search results

However, in large scale fraud, huge numbers of clicks appearing to come from just one, or a small number of computers, or a single geographic area, look highly suspicious to the advertising network and advertisers. Clicks coming from a computer known to be that of a publisher also look suspicious to those watching for click fraud. A person attempting large scale fraud, alone in their home, stands a good chance of being caught.

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, MarketingExperiments.com, an online marketing research outfit, reported that "as much as 29.5 percent" of the clicks in three experimental PPC campaigns on Google were fraudulent

Proving click fraud can be very difficult, since it is hard to know who is behind a computer and what their intentions are. Often the best an advertising network can do is to identify which clicks are most likely fraudulent and not charge the account of the advertiser. Ever more sophisticated means of detection are used, but none is foolproof.

A number of companies are developing viable solutions for click fraud identification and are developing intermediary relationships with advertising networks, such as analysing the advertiser's web server data which involves an in-depth look at the source and behavior of the traffic.

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. The largest of the advertising networks, Google's AdWords/AdSense 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 it from the advertiser. Because of the spread between what Google collects and what Google pays out, click fraud directly and invisibly profits Google.

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