Click Fraud

Click Fraud and Pay-per-click Programs

It's hard to have a day go by in the Internet marketing mind-space without someone speculating on click fraud. What's annoying is that no one knows what they are talking about when they refer to click fraud.

Before the hyped and obfuscated term click fraud can be explained, you need to understand what a pay-per-click program is. Google AdWords is a program where by you can ask Google to display ads when people click keywords that are of interest to you. E.g. if you are selling pancake mix, you might want to pay Google to show an ad directing people to your site. Of course you may need to consider other keywords like "griddle cakes," "hotcakes" and "flapjacks." Once you pick your keywords, you then put a maximum bid per keyword. Let's say you put down 25 cents for each of your terms. Suddenly you have a pay-per-click program.

You then can repeat this for Yahoo (a.k.a. Overture) and MSN, which has been getting into the game. Now your pay-per-click program is visible on all major search engines.

Not only are you showing your ad for pancake mix but you are also open to click fraud - or so the mainstream media is talking about.

Let's define click fraud simply:

Type 1 Click Fraud: If a competitor (or someone who doesn't like you) finds the ad and clicks on it, that would be considered click fraud. The person had no interest in your site whatsoever. They are trying to do you harm.

Type 2 Click Fraud: Someone (insane) re-clicks on the same ad repeatedly or is just plain confused. Or their keyboard or mouse goes berserk.

Type 3 Click Fraud: Someone creates a site with GoogleAds on it and participates in the Google AdSense program and clicks on the ads to generate revenue for themselves. (AdSense is the program where on your own site you display Google pay-per-click ads and when someone clicks on them, you get a part of the revenue.)

Google doesn't like the term click fraud because "fraud" is a loaded term. They prefer the term "invalid click." Shuman Ghosemajumder, Business Product Manager for Trust & Safety states on the AdWords blog that "it's practically impossible to 'prove' that an impression or click was caused by deliberate deception."

We are in the land of Catch 22. Google states that the problem is small and that they are doing everything they can to combat it. They are well motivated because if everyone lost confidence in pay-per-click programs, Google's revenue stream would end. But Google won't tell you what their very smart employees are doing to stop it because, as Ghosemajumder says, it "would make it easier for fraudsters to try to defeat our systems."

It's best now to say that some of your clicks through a pay-per-click will be invalid if not an act of click fraud. So what? You can do audits of Google by comparing your web server logs with the reports of activity from Google and see if there's anything odd. This is a painful process because of the amount of data produced by web server logs and the fact that Google won't share more data than what they normally report and, even if they did, the comparison process would be tedious.

What everyone needs to focus on is the simple question: is my ad campaign making any money? To determine that you need a more holistic view; namely, you need to tally up all your web site costs and compare them to web site sales. If the sum of the margins on all sales is not greater than the web site costs a vast majority of the time, you have more to worry about than click fraud.

Robert Ford is the president of Quokka Systems Consulting.

For more information about Google's views on invalid clicks take a look at:

http://adwords.blogspot.com/2006/03/about-invalid-clicks.html