More Marketers Concerned About Click Fraud

  |  February 27, 2006   |  Comments

A SEMPO study found three times as many online advertisers and SEM firms believed click fraud was a serious issue in 2005 compared to the year before.

Click fraud is a growing concern for advertisers and agencies alike, according to research by the Search Engine Marketing Professionals Organization (SEMPO).

Three times as many online advertisers and search engine marketing (SEM) firms said click fraud was a serious issue in 2005 compared to the year before. Of the 553 respondents to SEMPO's December 2005 "The State of Search Engine Marketing" survey, 16 percent of advertisers and agencies say they are tracking click fraud, and agree it's a significant problem. That's up from 6 percent who said so in SEMPO's December 2004 study.

Another 23 percent of advertisers and 33 percent of agencies surveyed have tracked fraud; and agree that it is a moderate problem. A third of advertisers and agencies are not tracking click fraud, but are still worried about it. A quarter of advertisers and 18 percent of agencies said it is not a significant concern, while only 2 percent of advertisers, all of them in larger organizations, had not heard of click fraud.

In 2004, 25 percent of respondents were tracking click fraud and found it to be a significant or moderate problem, 45 percent were concerned but not tracking it, and 31 percent either weren't concerned or had never heard of click fraud.

"It's not so much that it's getting worse, but there is a heightened awareness about it," Kevin Lee, chairman of SEMPO and co-chair of the association's research committee, told ClickZ News. He said that at SEM firm Did-it, where Lee is the executive chairman, data indicate that the prevalence of click fraud is not progressing, but the concerns among clients certainly are.

Lee believes that click fraud has grown somewhat, especially as pay-per-click providers turn to smaller sites to grow their ad networks, but also says providers have been taking the issue seriously and are catching more of the fraud themselves.

"In the short term, while it may seem like the providers would benefit from the additional clicks, that's far outweighed by the long-term harm to their networks," Lee said. "They don't like it because it annoys the marketers, who will then lower their bids or stop spending money on contextual advertising."

Most of the respondents who said they'd been victims of click fraud put the blame on publishers, networks or affiliates attempting to increase their revenue through non-authentic clicks. This so-called "network click fraud" affected 78 percent of advertisers and 59 percent of agencies in the study. Just over half of all advertisers and 41 percent of agencies said they had experienced "competitive click fraud," where competitors drive up an advertiser's costs by clicking on an ad multiple times.

In January, SEMPO released some preliminary findings from the same survey, which showed that spending on search engine marketing is on the rise, but more advertisers are opting to handle their search efforts in-house. The study also found advertisers were using search marketing for branding as well as lead-generation and direct response. The data was collected via an online survey conducted via Radar Research.

Click fraud has gotten lots of attention in mainstream and trade press. Whether it is an issue that marketers need to address will depend on the level of their search and contextual ad spending, and the source of their sites' traffic, Lee said.

"If the majority of an advertiser's traffic comes from the search engine itself, it may cost more to police than what the fraudulent traffic represents," Lee said. "A fair number of advertisers will count it as a cost of doing business, because their spending is not at the level where it would make sense for them to devote more resources to it."

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Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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