SEMPO, FIC Commence Click Fraud Study

A click fraud study undertaken by a search marketing trade group is now gathering data from search marketers.

The Search Engine Marketing Professional Organization (SEMPO) and Fair Isaac Corp. have begun asking SEMPO members to share their pay-per-click (PPC) advertising campaign data and site log files, which Fair Isaac will begin analyzing later this fall.

Corporate advertisers, agencies managing large search advertising accounts, and the operators of Web analytics and ad serving technologies are being asked to contribute their data to the study in exchange for analysis of their campaigns and identification of potential click fraud. Data will be collected and normalized over the next two months, and then Fair Isaac will begin its analysis.

Fair Isaac, best known for its credit-rating scoring system and credit card fraud monitoring services, has in the past applied its artificial intelligence technology to find stolen cell phones, detect health insurance fraud, and catch falsified prescriptions.

In all those areas, the underlying process is the same: to examine user behavior and recognize in it patterns that can signal fraud, according to Ted Crooks, VP for global fraud solutions at Fair Isaac.

“While the details are different, the fundamental goal is to examine behavior represented by a stream of user events and identify patterns,” Crooks told ClickZ.

Fair Isaac’s main goal in working with SEMPO is to explore the possibility of applying its technology to the problem of fraud in online advertising, while at the same time lending its fraud-busting expertise to an industry problem that has become a major concern for search marketers and others who engage in PPC advertising.

If Fair Isaac determines that it can apply its software to the problem, and if it can do so at a level that would meet performance needs of even the largest advertisers, then it would begin to develop a click-fraud-specific application for the online marketing industry, Crooks said.

According to a SEMPO member survey, click fraud is the undisputed leader among marketers’ concerns, according to Dana Todd, SEMPO president. The problem of fraud is not limited to search marketing, but extends across the entire spectrum of online marketing, and this study could be the beginning of a solution that would address fraud in many of those areas, she told ClickZ.

“Click fraud is part of a larger industry problem, in that our industry is poorly regulated and poorly standardized,” Todd said. “We’re thinking of this as a starting point to clean up the entire Internet advertising space.”

Other industry groups have also begun stepping up to look at the issue lately. Earlier this month, the Interactive Advertising Bureau (IAB) and Media Rating Council (MRC) formed a working group with the goal of defining legitimate clicks. That effort has representatives from the largest search marketing publishers, including Google, Yahoo and Microsoft.

Todd said the IAB’s efforts will provide a good counterpoint to SEMPO’s study, since the issue is one that needs to be approached from multiple angles. The IAB has tasked its working group with defining the “click” for purposes of performance-based marketing by search engines, ad networks, third-party ad servers, and others. The group will also outline a recommendation for a third-party auditing and certification plan that marketers would be able to employ to measure their own campaigns.

What’s especially valuable about the IAB’s effort is the participation of the MRC, a disinterested third party with no vested interest in either inflating or downplaying the size of the click fraud problem. Some surveys undertaken by companies that also provide click fraud detection services have been criticized for their lack of objectivity.

In addition, recent efforts by Google to be more open with advertisers are welcome, but not enough, Todd said.

“Hopefully this is the first step towards more transparency from Google. At the very least, it will allow advertisers to have some sense of accountability, and helps provide some reconciliation information for invoicing,” Todd said. “That being said, this still does not take the place of a third-party audit, which we think is still very necessary. If we’re going to really fix click fraud, we need industry-wide participation, a system for independent auditing that meets Media Rating Council standards, and we need some ‘teeth’ in terms of enforcement and retribution.”