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Click fraud persists

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The good news: Despite the recession, studies show that marketers continue to turn to the performance-oriented benefits of search marketing.

The bad news: Paid keyword campaigns can fall prey to abuse by competitors, disgruntled employees or cyber criminals.

Click fraud occurs when someone clicks on a pay-per-click (PPC) ad, either by mistake or with a malicious intent. A competitor, for example, might click on an advertiser’s PPC ads to drive up that rival’s ad spending. And because companies typically cap their PPC expenditures, a competitor could click on a company’s ad multiple times, burning up its daily search budget and causing its sponsored links to drop out of search results.

How bad is the situation?

The overall industry average click-fraud rate in the third quarter was 16%, according to Click Forensic’s Click Fraud Index. This compares with 16.2% reported for the same quarter in 2007.

Traffic from botnets—a collection of compromised computers running PPC software that sends spam or perpetrates click fraud—was responsible for 27.6% of all click fraud traffic in the third quarter this year, up from 25.2% in the second quarter.

“Gains are being made by advertisers taking more action to proactively filter out fraud before it affects online campaigns,” said Tom Cuthbert, president of Click Forensics, a company whose products measure and score traffic quality, as well as identify click fraud for advertisers and ad networks. “However, the growth in click-fraud traffic from botnets continues to rise, and it is one of the top areas advertisers and the industry should monitor closely.”

The greatest percentage of click fraud originated from countries outside North America, including Russia (4.9%), France (4.8%) and the U.K. (3.5%), according to Click Forensics.

In October, Google announced it would accept the electronically generated click-quality reports from Click Forensics’ FACTr (Fully Automated Click Tracking Reconciliation) service, automating and simplifying the reporting of click-fraud instances.

Google relies for virtually all its sales on pay-per-click ads that appear alongside relevant search results or, alternately, in Web pages with relevant content.

Purposely misleading
One aggravating problem for advertisers is a practice known as “typosquatting,” wherein perpetrators register common misspellings to redirect users to their sites. Here, visitors clicking on display ads to the real, intended Web site will “earn” the perpetrator a commission.

While working on behalf of Vegas.com, a Las Vegas travel site, Click Forensics uncovered another site called Vegass.com. The legitimate Vegas.com had placed ads in an ad network, which distributed them to sites with relevant travel content, but some of these ads appeared as sponsored links on Vegass.com.

Click Forensics this fall introduced a new feature in its Click Forensics for Advertisers solution allowing brands to identify and track those using trademarked names for search marketing campaigns. The feature produces updated reports on potential trademark abusers that use well-known brand names to generate pay-per-click traffic, allowing “victim” companies to take action to protect intellectual property and their own search marketing investments.

Of Click Forensics trademark validation tools, Mike Brown, VP-Internet Marketing for Vegas.com, said, “It allows advertisers to more quickly identify and stop trademark infringement online, which helps boost the performance of pay per click advertising initiatives.”

Aiding SEO
While traditional click-fraud tools are intended to head off malicious behavior, they also have the effect of refining a company’s search engine optimization.

America’s Vacation Center, part of American Express Corp.’s representative network of travel agencies with a considerable b-to-b customer base of corporate travel managers and meeting planners, is a case in point. It uses the vetting process that Click Forensics applies to referring Web sites to help it refine its lead-generation processes.

“It helps us identify our traffic, evaluate it and determine if the traffic is right for our lead-gen goals,” said Jeff Anderson, the company’s VP-marketing. While referring sites that clearly have nothing to do with travel can be blocked, he said, a more nuanced approach is required with other sites.

“If the click-through comes from YouTube, for example, that’s still an eyeball that might be interested in travel,” Anderson said. “It’s our challenge to figure out how to convert the lead.”

Despite Click Forensics’ dire findings in its Click Fraud Index, Anderson feels the major search engines are doing an adequate job of filtering out problems.

“A lot of protection can come from not buying keywords that are heavily conducive to poor quality traffic,” he said. “Everybody spending money should have something in place to protect themselves from just poor media buys.”

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