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Click Fraud: What It Is, How to Fight It

  |  February 18, 2005   |  Comments

Click fraud hurts everyone, except the cheaters. Make sure the cheaters don’t win.

There’s a crisis brewing in this industry. Poor click quality has the potential to hit marketers hard and to negatively affect search engines. It manifests itself in many ways, including as network click fraud, competitive click fraud, and mislabeled traffic.

These problems drive down a clickstream’s value, forcing marketers (if they act rationally) to lower bids or remove themselves from the market completely. Impression fraud falsely places certain listings higher in engines that count CTR (define) against impressions as part of a ranking algorithm (as with Google’s AdWords).

Click fraud hurts everyone except the cheaters, who benefit unfairly. Recent SEMPO research finds 45 percent of surveyed marketers are concerned about click fraud but don’t track it. Another 19 percent thinks it’s a moderate problem and do track it, and 6 percent feel it’s a significant problem and track it. Thirty-one percent either weren’t concerned or had never heard of click fraud.

Network Click Fraud

Network click fraud occurs when a syndication partner (a smaller publisher or search engine) that receives and displays paid placement or contextual results from a search network engages in the manufacture, creation, or misrepresentation of clicks delivered to its network partner.

When a network partner manufactures clicks, either through human or robotic means, that traffic is of much lower quality than pure traffic generated through user searches. Adding this useless traffic to the network initially seems to benefit the network owner (often a search engine itself). After all, the network owner shares click revenue with the publisher.

But the network owner must also worry about network quality. Most marketers measure their traffic quality and make campaign mix and bid changes based on empirical conversion or other quality measurement data (whether automatically, manually, or both). As the network’s volume of subpar traffic increases for any specific market segment, click prices drop. The remaining publishers in the network are hurt.

To renew deals with quality publishers, a network can’t accept members that dilute network click quality. Google CFO George Reyes was probably focused on network-type click fraud when he stated, "I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model."

Clearly, Google takes network fraud seriously. A pending lawsuit against Texas-based Auctions Expert International claims it "flagrantly abused [Google’s service” by artificially and/or fraudulently generating ad clicks."

If you think a search engine’s network has quality problems, regardless of whether it’s due to fraud or a poor quality publisher, build a case and show the data to the engine’s reps. Or, if you want, send it to me. I can’t promise to examine every case, but I’m very interested in supplementing data I have from my clients with results from other marketers.

Competitive Click Fraud

Competitive click fraud is a big problem for smaller businesses, particularly when the service provided is of great value (or great lifetime value), resulting in high CPCs (define). Lawyers, doctors, accountants, IT consultants, and, of course, search engine marketing (SEM)/SEO (define) firms all bid in high CPC marketplaces. The higher the CPC, the greater the effect a competitor can have on a specific budget.

Terms such as "new york lawyer" exceed $10 CPC. If a listing gets a click a day from five people from a competitor in both Google and Overture, you’ll pay an extra $1,500 a month each to those search engines. This is a serious additional cost -- with absolutely no benefit.

In our server logs, I’ve seen entries from competitors came through paid links and returned more than once. Click fraud or natural curiosity from a competitor considering working in our agency program? I’ll never know for sure. SEO-related keyword clicks aren’t cheap. The business’s competitive nature can involve a certain level of personal animosity between players. Competitive click fraud can be tempting. Resist the temptation, and do unto others...

Can you catch competitive click fraud? Perhaps. It depends on the competitor’s level of sophistication. IP address lookups are the most common method of identifying click fraud, combined with cookie and session tracking and normalized benchmarking. Yet smaller businesses are likely to use Internet connections that don’t directly identify them.

Mislabeled Traffic

Mislabeled traffic is more a network issue. It isn’t about malicious activity so much as crossed lines between search and contextual traffic. Visit a news sites and look for text links. Some of those links are reported as search when actually, they’re contextual.

What’s the difference? Some marketers want to provide a different message to active searchers than to visitors who happen on the ad. Some ads served against some content aren’t even contextual. I see many "debt consolidation" and "bankruptcy" ads running on general news pages. Sure, the CPCs and CPM (define) are high for the publisher, but does the marketer get what he pays for?

Impression Fraud

Impression fraud is the newest threat. Google and other engines rely on an AdRank method of determining an ad’s relevance. A competitor pauses his campaign while a sudden fraudulent surge in impressions on your keywords occurs. All these impressions occur with zero clicks. AdRanks for competing ads, including yours, drop through the floor. The competitor waits a bit, then swoops in with a normal ad with a high CTR. Your campaign is entrenched with keywords that are disabled or seriously crippled. So, Google makes an ad position decision based on fake data.

In the end, search traffic, and search engine marketers’ success, search engines, and the industry as a whole rely on correctly labeled traffic coming from high-quality network partners (or inexpensive, lower-quality networks). All these players have a vested interest in SEM’s success, except cheaters. Let’s make sure the cheaters don’t win in the long term.

Meet Kevin at Search Engine Strategies in New York City, February 28-March 3.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.

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Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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