Experts: Policing Affiliates Big Challenge for PPC Search Players

Pay-per-click search companies difficulties’ adequately policing their affiliate distribution partners is one of the bigger challenges facing the search marketing industry, experts said.

It is on these affiliate sites that 70 percent of click fraud activity takes place, according to Scott Boyenger, president and CEO of ClickDefense, one of a score of companies that has launched in the last 18 months to identify and stop click fraud. Affiliate publishers distribute pay-per-click ads and search players pay them a cut of what advertisers bid.

“About 15 to 20 percent of all click activity is erroneous. Seventy percent of that is not by real people,” Boyenger said, referring to bots designed by fraudsters to click on PPC ads. “The advertiser is the loser and the companies offering PPC are winning, and so are the affiliates.”

Other companies, like Fathom Online, also identify search players’ affiliates as the most widespread source of fraudulent click activity.

“Without a doubt, the majority of click fraud is coming from affiliate sites,” said Matt McMahon, EVP at Fathom Online. “But advertisers will vote with their pocketbooks with regard to the offending search engines, and go for the service that offers them the best ROI.”

The percentage of click activity that falls under the umbrella of affiliate fraud was a subject of hot debate at a panel discussion on click fraud held at the Search Engine Strategies (SES) conference in New York this week. However, panelists generally agreed the percentage is higher on so-called tier two services like Kanoodle, Enhance Interactive, and than on Google and Overture.

While all of the paid search players acknowledge that affiliate fraud is a problem, they maintain they have both human and technological defenses that are effective in keeping the problem in check.

“Anyone who says it’s not a problem is kidding you, but we think it is a manageable one,” said John Slade, senior director of global project management at Overture.

Overture says it employs three lines of defense against click fraud. First, every click must pass through a system of thousands of filters designed to screen out “unqualified” clicks of all kinds. Second, Overture employs a team of expert analysts whose job it is to screen out invalid clicks from genuine click traffic. Finally, Overture actively solicits input from its advertisers, forming what it refers to as a “neighborhood watch” helping to report suspicious activity, Slade said.

“If we see we have a node in our network generating unqualified traffic, we remove it immediately from our network,” Slade said.

Though experts at SES said they thought affiliate fraud was a more serious problem at the smaller paid search companies, Enhance Interactive said it couldn’t comment on the alleged disparity.

“We only have access to our own information,” said Walter Korman, SVP of technology at Marchex, the parent company of Enhance Interactive. “Like the leaders in the space, we have a vigilant system in place to identify and prevent this type of click fraud from taking place. If there are variances between us, there are variances.”

However, Korman acknowledged that the bots targeting Enhance’s affiliate sites are growing in sophistication, and that filtering affiliate fraud traffic out of its network is a demanding process of identification and removal.

Kanoodle had a similar response to inquiries about the issue. “Kanoodle takes this very seriously and has processes and people dedicated to staying one step ahead of those who would try to game the system,” said Lance Podell, Kanoodle’s CEO. “It is the responsibility of the sponsored links providers to deliver quality leads to advertisers, which requires a constant and dedicated effort.”

Neither nor Google were available for comment.

Perhaps the thorniest side of the whole click fraud issue for advertisers is that search engines, while maintaining their commitment to protecting advertisers, nonetheless profit from those fraudulent clicks that are not identified.

“All companies offering CPC advertising are susceptible to some level of affiliate fraud,” said Rich Kahn, COO of BlowSearch, which has its own pay-per-click offering. “Are we benefiting from it? Yes. Are we also looking to eliminate it? I also have to say yes. It we find it, we squash it immediately. Catching it all is the trick.”

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