17% of all Pay Per Clicks are Fraud (New York Times)
I was reading the New York Times this morning on my Amazon Kindle and took interest in an article entitled “Per-Per-Click Web Advertisers Fight Costly Fraud.”
The article notes that the ONLY form of advertising that grew in 2008 was pay-per-click advertising (despite the recession).
This makes sense since pay-per-click is one of the most measurable and effective forms of advertising ever – as an advertiser, you are supposed to only pay for clicks from keywords that you select (these keywords should reflect your specific products or services and therefore tend to have high conversion rates) and advertisements you draft (these ads reflect your value propositions and allow you to differentiate your products or services from competitors).
This highly relevant form of advertising has revolutionized internet advertising. Save behaviorial advertising (which I believe is an even more effective and cost efficient form of online advertising than search pay per click) and affiliate marketing (which is the most accountable form of ALL advertising…since you only pay for performance….performance defined by actual conversion [not clicks, which Google requires]), Pay Per Click represents an incredible way for businesses of all sizes to generate new business leads and sales.
However, as reported by Tom Cuthbert, President of Click Forensics (a Pepperjam partner)….there is a very serious and growing concern with Pay Per Click advertising. In fact, Click Forensics reports that 17% of all clicks in 2008 were FRAUD.
17% of all clicks were fraud!!!
That is a very serious claim and one that raises serious concern about how Google Adwords and Yahoo Search Marketing advertisers are being charged.
In other words, with this finding….does Google or Yahoo credit their respective advertisers 17% of all clicks?
The answer is no.
Back in 2006 I wrote a post about how Yahoo credited Pepperjam (the agency side of our business) $10,000 as a courtesy after we claimed that much in click fraud for one of our clients. This post was quite popular at the time and was covered by hundreds of other blogs across the internet.
Let’s be fair, Google and Yahoo have click fraud filters in place. Based on our internal agency data on any given month Google will credit up to 1% of clicks as a miscellaneous “credit” to each of our client accounts. In addition, both Google and Yahoo claim to take click fraud seriously and they admit click fraud poses a serious risk to the viability of their business. At the same time, if an advertiser claims click fraud beyond Google and Yahoo’s detection systems there are processes in place for the advertiser to get compensated.
However, according to a 2007 report on Danny Sullivan’s Search Engine Land Google appeared to suggest that click fraud is no where near the 17% recently reported by Click Forensics – in fact, Google claimed Click Fraud Is 0.02% Of Clicks.
Someone is wrong….Click Forensics or Google.
Regardless, today’s New York Times article raises a very serious issue that has certainly been swept under the rug by the major search engines.
Click Fraud is a real issue, especially during a recession where every penny matters.
Are you having trouble with click fraud?
Do you believe the problem is overblown or underestimated?
For more information on Click Forensics visit http://www.clickforensics.com/
To read today’s NYT’s article CLICK HERE.
To read my 2006 article about Yahoo CLICK HERE.
May 13th, 2009 at 9:48 am
Is click fraud a problem? Depends.
On SERP — minor issue. In fact, one can show mathematically that it is minor. See — http://ist.psu.edu/faculty_pages/jjansen/academic/jansen_click_fraud.pdf
“Assuming that unidentifiable void
clicks are nearly zero, slightly more
than 1 percent of all search-engine visits
result in an unidentifiable fraudulent
click.”
On content pages – could be a major problem (it seems). Though no one really knows. I’ve been an advocate of independent research to examine the issue. However, to conduct such a study, one need the search engines on board as partners.
May 13th, 2009 at 10:38 am
Jim,
Thanks for your response!
I only had a short period of time this morning before Kris Jr. woke up so I couldn’t fully explore this issue.
However, it’s my opinion that 85% of click fraud occurs within Google’s content (aka, AdSense) and distribution partner network (i.e through their partnerships with AOL, Ask, etc.).
If I’m not mistaken when you visted Pepperjam we briefly spoke about this issue. We strongly encourage you to put together a team to explore the role of click fraud in Google’s content network.
Kris
May 13th, 2009 at 10:30 pm
One could put this click fraud thing to bed with a straightforward experiment, but would need the collaboration of Google.
Basically, one would set up ‘fake’ businesses with AdSense and/or AdWords accounts, but the Google click fraud teams would *not* know.
Then, execute various click fraud against the business accounts. Do this for a few billing cycles.
Then, get all *three* logs — the businesses, the Google AdWords/AdSense logs, and the log from the click fraud teams.
One needs all three data points to get an accurate assessment. So, if Google doesn’t play, no valid experiment.
May 14th, 2009 at 3:49 am
An interesting article. PPC can be hugely useful, but i still believe that if you have the time, and organic SEO process is better and more cost effective. Also, it seems, more impervious to fraud.
May 14th, 2009 at 9:28 am
Jim,
Excellent points!
Mat,
SEO is 1/2 the game. If all an advertiser does is focus on SEO the other 50% of market share is going to competitors.
Kris
May 14th, 2009 at 11:08 am
I have to say I am very much a newbie here. I started a general blog after I lost my medical billing job after 6 years and being in the field of medicine for over 14. I started with adsense and did mediocre (100.00 in 2 months). However, after they shut my adsense account stating my site was a threat. I have since changed my blog over to wordpress and been reading the book Search Engine optimization By Kris Jones. GREAT BOOK! I was truly offended by google adsense as my hits and clicks done on my blogs were genuine. I am going to read the article, but I also feel thatwe as adsense users aren’t given the benefit of the doubt. Just accused and assumed. no prior notice given. That stings!
May 14th, 2009 at 9:57 pm
I will counter with this to ponder…
If click fraud is xx%, then due to the dead-on trackability of PPC, is the corresponding click prices actually decreased by that same actual xx% or at least a fraction of that xx% making the end impact nil?
Case in point…are $1.00 PPC VALUE clicks actually “selling for” $0.83?
I do not know the answer to this, but I do know we know the “full-loop” EPC (net) on our PPC spend and if everyone has the same expertise (bad assumption) and is conscious of waste (bad assumption #2) then the costs adjust for fraud inflation (pay less per click).
All of above assuming general, not targeted click fraud.
What I believe is the biggest waste in PPC is not fraud, but rather users who think the Search bar is the same as their Browser bar and type URLs into the query, click the paid link, and spend ad money to get to the site they knew they wanted…can we get some user navigation grant money?
The final variable I would impose is the end definition of “click fraud”. Is it merely malicious clicking, does it include inadvertent clicks, do some user navigation issues get tossed in…does anyone have an accurate definition? Seriously interested in different views of fraud.
May 16th, 2009 at 2:31 pm
I think that 17% is accurate *if* they are including ALL ppc sources (not just Google, Yahoo and MSN, but all the other 2nd and 3rd tier networks.)
I would easily believe 17% of everything lumped together is fraudulent. As far as adsense traffic, I have found a surprising *increase* in the traffic quality I have been getting from them over time, so I think google is doing a decent job at it (there is room for improvement) but they are still the leader in this area.
Most of the dips in quality (superpages, looksmart and business.com I am looking at you) happen when the ppc engines use various traffic channels and move you from one to another or add another traffic channel to your account since you have been paying consistently, and you might not notice a drop in quality for a month or so. Averaged overtime it isn’t that big of a deal (at least that is how I imagine they justify “testing” these new traffic sources), and you can always get refunds (if you dont mind dealing with the hassle)
Short version click fraud will *always* be here. (Just like those “rebill” affiliate offers… they aren’t going away) Google is the leader in fraud detection/prevention and everyone else is just playing catchup… still.
John
May 17th, 2009 at 6:20 am
Ohhhh i have a doubt if 17% clicks are fraud clicks then advertiser surely will be in loss of 17% but will Google or yahoo etc…… give them extra 17% clicks to the advertisers?? And the main cheating is showing fraud clicks Google or yahoo etc which ever it may be they will not pay it to their publishers(not only that their accounts will be canceled even the revenue they earned from genuine clicks will be lost .Who is asking them to pay for genuine clicks??) I think both the publisher and advertiser are losing and the companies are gaining for these fraud clicks.
May 17th, 2009 at 7:20 pm
Excellent comments!
Thanks.
August 17th, 2009 at 6:29 pm
Even if the 17% of clicks are fraudulent PPC is worth it when you get the right conversion. Great article, Thanks!