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).*

Click Fraud - Why People Do It?



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 success.