Eliminating Click Fraud

By: Susan Esparza, Bruce Clay, Inc., March 2006

The click fraud tempest has been brewing for years, and settlement of the Google click fraud class-action suit in early March 2006 brings the issue to the forefront. Google agreed to pay up to $90 million in ad credits to marketers who were charged for invalid clicks since 2002, including court costs. The settlement marks a first step toward correcting a serious search marketing problem.

Pervasiveness of Click Fraud

While most search engines downplay the incidence of click fraud, some will admit to a 20 percent rate. However, estimates run as high as 40 percent, depending on the industry. Scott Boyenger of Click Defense, a company that sells click fraud prevention software, estimates click fraud rates at 38 percent.

You better believe this costs money. It is widely reported that click fraud costs marketers up to $1 billion per year, and advertisers have taken notice.

Reaching the Boiling Point

Frustration over click fraud has been simmering for years and all parties are reaching the boiling point. A spirited exchange between search marketing vendors and search engine reps took place at this year's Search Engine Strategies-New York, with the vendors accusing the engines of soft-pedaling the issue and the engines defensively guarding their turf. Points of contention are:

• Search engines are lax in warning advertisers about the risks.
• Search engines don’t do enough to protect advertisers from click fraud.
• Search engines are slow to remedy the abuse.

The engines dispute these charges but concede that the industry needs a single, clear definition of click fraud.

With paid search now accounting for 83 percent of search marketing revenues ($4.7 billion in 2005), the problem can no longer be ignored. Currently, 69 percent of advertisers use paid search for branding. U.S. paid search advertising is projected go over $10 billion by 2009. As more and more advertising budgets shift to the web, there is a pressing need to reduce click fraud.

Common Varieties of Click Fraud

Publisher click fraud and competitor click fraud are the two types of click fraud most advertisers have to deal with.

Publisher Click Fraud: This occurs in sponsored search and contextual search ads. Sponsored search ads (Google AdWords or Yahoo! Search Marketing) can appear as the first listings at the top and down the right-hand column of most search engine results pages (SERPs). Contextual search ads (Google AdSense and Yahoo! Publisher Network) appear on publisher partner websites.

The network of publisher sites and smaller search engines comprise a contextual search engine network. So we have the publishers and the search engine partner.

Publisher click fraud occurs when a publisher site engages in fraudulent activity by misrepresenting clicks delivered to its search engine partner. This is done to inflate publisher revenue at the cost of the advertiser.

At first glance, it might seem as though this is good for both publishers and search engines because they share the revenue. However, there are some drawbacks because in so doing, the publisher lowers the quality of traffic in the network. The search engines must keep click quality high because marketers monitor traffic quality and make future buys based on quality and conversions. So when network quality is low, click prices drop, and everybody loses.

Competitor Click Fraud: This occurs when competitors fraudulently click on your ad without intention to buy. This can be done manually or by automation. It is more of a problem for small businesses, especially when the keywords demand a high cost per click.

For instance, search marketing keywords are expensive, as well as those for professionals like accountants and lawyers. The higher the keyword cost, the more overwhelming the effect on your budget if a competitor targets you for click fraud. When you have a $10 keyword, it only takes five clicks a day in both Google and Yahoo! to add an extra $3,000 a month to your advertising costs. Most small businesses can’t afford this.

Consequences of Rampant Click Fraud

Some experts believe click fraud threatens the future of pay per click (PPC) advertising. There are a number of click fraud schemes, but the most pernicious are scraper pages and zombie networks. These schemes do more than damage individual advertisers; they can threaten the entire PPC system.

Scraper pages: Phony websites generate content automatically by scraping content with popular keywords from other Web sites to form multiple new sites, which they enroll as Google or Yahoo! affiliates. Software links these sites repeatedly to well-known real sites, tricking search engines into giving them high rankings on the SERPs. This generates traffic, which in turn results in click throughs from unsuspecting searchers, who end up frustrated because content is sparse. The number of scraper pages is enormous, and they are extremely profitable. It is estimated scraper pages earn spammers tens of thousands of dollars a month in PPC income.

Zombie Networks: Botnets (zombie networks) contain a multitude of linked computers controlled by software bots. The bots are planted in tens of thousands of computers around the world by means of computer viruses or by a hacker typing a line of code. These bots send can spam continuously without the computer owner’s knowledge, transmitting worms and viruses and causing denial-of-service attacks. Zombie networks can be huge, involving over a million computers worldwide. Botnets are up for hire by hackers. When it comes to click fraud, zombie networks are difficult to identify because the robot machines create clicks from all over the world at random intervals.

What Can Be Done About Click Fraud?

Google and Yahoo! both have policies in place to credit click fraud victims when detected by their filtering systems. If undetected, advertisers suspecting click fraud are allowed to document and report it, requesting a refund.

Google states in its AdWords blog, "In addition to our automatic filters (which will catch and discard the vast majority of invalid clicks), our team proactively identifies invalid activity that may not have been automatically filtered and credits advertisers accordingly." It also states, "…if you see suspicious activity on your AdWords account and would like to request a review of clicks within the past 60 days that you believe may be invalid, you can submit them for review."

However, when requests are made, it is difficult to agree on the disputed clicks. The engines can’t access the advertiser conversion data, and the advertisers can’t access the engine click data. It’s a catch 22, and both parties are justified in refusing to share data -- advertisers can’t share sensitive cost data, and engines won’t divulge proprietary click data.

The obvious remedy is to implement third-party analytics. To quote the plaintiff attorney in the recent Google settlement, "one of the things you’ll see in the next 12 months is third-party analytics -- the analysis of that click-through done by a third party."

Another suggestion from Bill Gross, who originated PPC advertising with GoTo, is to pay by action rather than by click. That would obviously eliminate click fraud but it is unlikely to happen wholesale very quickly. Gross launched Snap.com in 2004, which operates on a pay-per-action model. Advertisers don’t pay when prospects click on an ad, only if they perform the desired action. But business is slow. Wired reports that the firm has 2,300 CPA advertisers, only 2 percent of the Google and Yahoo! advertiser base.

Another tack is to sponsor research that helps identify and eliminate click fraud. In what has been said to be "the most vigorous study ever of click fraud," Fair Issac will ask marketers to submit traffic data to examine sources of click fraud.

Catching the Bad Guys

Can you catch click fraud? It depends on how sophisticated the fraudsters are. Some will create complex robots to generate thousands of clicks around the clock, while spoofing IP addresses to avoid detection.

For protection, there are software solutions and vendors who provide anti-click fraud services. There are tracking tools that can detect and deter click fraud. Some even have pop-ups warning errant clickers that they’ll be caught.

You can download your server logs daily and study them for multiple clicks from the same IP address, check out visitor origin from cookies, track visitor sessions and compare these stats to benchmarks. It is time consuming and cumbersome to document, so many marketers prefer to outsource the task.

Before closing, let me remind you that everyone should be concerned about click fraud. It drives up keyword prices, costs advertisers billions in fraudulent clicks and threatens the health of the entire PPC system.