EXPOSING CLICK FRAUD

Click fraud has recently emerged as a topic of discussion and debate
regarding the potential of undermining the pay-per-click revenue
model that has made Google and Yahoo the financial success that they
are today.
At its essence, click fraud is the willful act of clicking on a search
engine sponsored listing or banner ad with the intention of falsely
increasing clicks while consuming the advertiser’s pay-per-click
budgets.
While there is little consensus that click fraud will undermine the payper-
click market, most search engine marketers agree that click fraud
does occur and diminishes the success rate of many online marketing
programs. Below are the results of a recent survey conducted by the
Search Engine Marketers Professional Organization (SEMPO).*
There are numerous reasons why someone will intentionally commit
click fraud. In some cases, click fraud may be an isolated occurrence.
In other cases, click fraud may be a malicious and well thought out
systematic method of generating excessive and erroneous click
activity.
The Covert Competitor
In some cases it may be a rival competitor who jealously has clicked on
a top sponsored ad to visit your web site. In this case the click fraud
may easily go undetected if the number of clicks is not exceedingly
high. Even if identified, the time involved for seeking
remuneration from the pay-per-click network may not justify the time
involved in the research and pursuit of the credit.
However, some more sophisticated unethical marketers have
developed a variety of programs and techniques in an attempt to out
wit other advertisers by depleting their budgets, daily allocations or
reducing return on investment in an attempt to take top position for
sponsored links. In some cases, these marketers utilize cloaking
technologies to generate clicks while going undetected. In addition
they may develop “spider” technologies that automatically and
systematically click on sponsored links.
In the cloaking example, a click fraud perpetrator may be accessing the
Internet using a single IP address or block of IP addresses, while
fraudulently clicking on your ads. They may cloak or disguise their IP
address (similar in manner to a spammer using an erroneous reply to
an address) so they appear to be accessing your pay-per-click ads from
a variety of IP addresses in an attempt to avoid detection
Alternatively, the click fraud perpetrator may develop a computer
program that automatically “crawls” a search engine or their affiliates
in a spider like fashion looking for competitor pay-per-click ads and
generating erroneous clicks on sponsored links.
The Advertising Affiliate
Some search engines with pay-per-click / sponsored listings have
developed a network of affiliate sites that distribute listings based on
search term results in what is known as contextual advertising. The
ads or sponsored links are served up in the context of related Web site
copy. For example, a search request for news on the Apple iPod™
may direct the user to a news Web site that displays a sponsored link
along with an article about the new iPod Shuffle.
The advertising affiliate is compensated with a percentage of the
revenue associated with “click” resulting from the display of the
sponsored link. Some affiliates have actually generated erroneous
clicks in an attempt to boost their own revenue. In addition to using
spider technologies that generate click fraud, some of these affiliates
have resorted to a form of “outsourced” click fraud. In this case, they
enlist the help of foreign labor who click on advertiser listings with no
intention of looking at your site. These clicks increase the amount the
advertising affiliate gets from the pay-per-click network.
Recently, Wired News** reported that Auction Experts International, a
Google AdSense partner located in Houston, allegedly reaped $50,000
in commissions by hammering away on ad links until Google sued in
November 2004. Its principals never showed up in court, and Google
won by default.
In summary, there are a variety of factors that induce click fraud.
Some of these perpetrators have developed sophisticated technologies
and business processes in order to fraudulently generate clicks without
getting detected. Others are less sophisticated, but still poise a threat
and burden for accurately measuring a campaigner’s online succes

Click Fraud - What To Look For?

establishing baseline visitor behavior, unusual patterns usually become
apparent. Almost everyone can be a victim and no one is immune.
There are a variety of indicators that you can watch for to identify
possible click fraud including:
Conversion Rates
If you are spending ANY money on pay-per-click marketing programs
you should establish base line conversion rates for your campaigns.
For example, how many clicks does it take to generate a desired site
behavior (e.g., shopping cart transaction, e-mail opt-in, contact us
form completion). By comparing your campaign results to your
expected baseline, you can identify underperforming campaigns as
suspicious click activity.
Clicks By Country
Some search engine marketers and advertising affiliates have
outsourced the task of erroneously clicking on your sponsored links. If
you have an increase in activity from domains like Romania (.ro) or
India (.in) you may be a victim of click fraud.
Repeat Visitors From The Same IP Address
Repeated clicks from the same IP address may be a possible sign of
click fraud. This technique is a first line of defense in the identification
of click fraud. There may be legitimate reasons why campaign clicks
may originate from the same IP address (e.g., aol users). However, by
combining this information with a number of other variables,
suspicious clicks can easily be differentiated from genuine customer
visits.
Page Depth
When analyzing click behavior, it is important to note the average
page depth of the suspicious visitor. If a repeated site visitor
generates only one page view per visit this may be suspicious.
Compare these results to a typical visitor session on your site. Be wary
as some sophisticated bots which can generate multiple page views
from an automated fraudulent session.
Time On Site
In addition to identifying repeat visitors and page depth, also consider
the time spent on the site. An automated bot may generate many visits
and lots of page views, but do so in a period of time too short for a
human. By knowing how long a typical visitor spends on your site
you will be able to identify suspicious click activity.
Acceptance Of Cookies
Many bots use browser-less spider technology to visit your site. In
many cases these spiders do not accept cookies. Evaluate what
percentage of your site visitors accept cookies (typically more than
95%). Repeat visits though a sponsored link from the same visitor
who does not accept cookies may be a bot that is attempting to
deplete your ad budgets.
Clicks At Unusual Hours
The World-Wide-Web never sleeps, however, be wary of an unusual
increase of visitor activity at odd hours of the day or night. This may be
suspicious visitors from different time zones not typical of your usual
site visitor or automated spiders that are clicking your ads at all hours
of the day or night.
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search engine marketer, the advertiser, the consumer, and ultimately
the search engine or pay-per-click network.
The Search Engine Marketer
Search engine marketers who are victims of click fraud see their rate of
return on marketing programs diminished by these activities. It
needlessly consumes budgets and decreases results. As a result,
search engine marketing organizations may be delivering results at a
sub-optimal level jeopardizing their client relationships. Click fraud
can become a difficult topic of discussion if it has been ongoing for a
prolonged period of time and left undetected.
The Advertiser
What business can afford to pay more for advertising dollars
needlessly? Whether an organization is large or small, return on ad
dollars is under paramount scrutiny. One of the benefits of online and
eCommerce business models is the ability to “close the loop” on
advertising dollars. By marketing through search engines and selling
online, there is an unprecedented opportunity to track and report
return on investment from search engine marketing dollars – down to
the keyword! The growing prevalence of click fraud contributes to
diminishing performance industry wide for online marketing
campaigns directly impacting all advertiser's.
In addition, if click fraud continues unchecked, there may be the
possibility of an industry shakeout where less credible companies will
be forced out of the market resulting in fewer search engine/pay-perclick
network operators allowing those remaining to be under less
scrutiny for raising minimums and increasing online ad fees.
The Customer
Because organic search engine listings can be complicated and
competitive, many companies rely on sponsored listings to ensure that
they are highly ranked in search engines. Customers have come to rely
on sponsored listings to find what they are looking for on the web.
Should click fraud undermine the pay-per-click business model,
advertisers will find its cost prohibitive to place sponsored listings. In
turn, customers will find it more difficult to find what they are looking
for on the web.
Furthermore, there is the possibility of higher cost of goods and
services. If marketing budgets are increased due to click fraud and
associated customer acquisition costs, marketers may elect to pass on
the increased costs to the consumer in higher prices for goods and
services
The Search Engine/Pay-Per-Click Network
Ultimately, if click fraud reduces results to a point where it is no longer
economically feasible to sponsor listings, advertisers will stop spending
and the search engines will suffer accordingly. While it seems that
they benefit in the short run by erroneous clicks (they get paid anyway
don’t they), these engines compete to deliver top results. Letting
click fraud run rampant on their networks is not in their best interests
and they know it.
It should be noted that many of the more respected networks have
acknowledged the click fraid problem and are actively reviewing
suspicious activity on their networks. When it has been uncovered, the
networks are beginning to automatically credit back advertisers for the
suspicious click activity. However there are many unscrupulous or just
plain lazy networks out there with no intention of taking on the
burden of policing their own networks. In cases like these, their
business practices of today will come back to haunt them as their
future livelihood and longevity depends in part with their industry
participation in detecting click fraud.