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FAQ's
What is click fraud?
Click fraud is the practice of passing illicit traffic through online ads or websites for profit, artificially raising costs to advertisers and compromising return-on-investment (ROI) effectiveness for ad campaigns.
How is click fraud perpetuated?
There are two main methods - automatically using "robot" software that is designed to continually click on a chosen ad link, thereby artificially raising the number to clicks, or by human methods, which is to hire someone in an economically depressed area to manually click on the ad link. This fraud is instigated by either unscrupulous competitors, disgruntled employees/customers or by hackers just to prove it can be easily done.
How real is the threat of click fraud?
Several highly respected industry sources claim the cost may range anywhere from 5-20% of total online sales. Clickrisk has found large variances in the volumes detected; the highest percentage of fraudulent clicks detected was in excess of 70% of click-throughs during the analyzed period. Leading advertising networks, such as Googles' CFO, George Reyes, told investors "...something has to be done about this really, really quickly...it [click fraud] threatens our business model". (CNN Money Writer, December 2004)
The Internet Advertising Bureau estimates that 20-35% of ad clicks are fraudulent (Revenue Today, Fall 2005, p. 53)
Why should advertisers be concerned about click fraud?
Click fraud compromises the integrity and accuracy in measuring the effectiveness of an online ad campaign. This may cause an advertiser to pay a search network for clicks that were not legitimate (e.g., "bot" clicks), spending more on advertising than was necessary.
What are the search networks doing to prevent click fraud?
Search networks do not generally have access to vital web log data that advertisers maintain, nor would it be practical for them to analyze given the sheer volume of data. Without this critical information, the search networks are not able to detect click fraud, one of the most damaging and costly forms of online fraud.
What are the search engines/networks doing to ensure the integrity of their cost-per-click (CPC) billings to advertisers?
Google has reiterated that “we can’t prevent it [click fraud] from happening, because the action [click fraud] comes from an external source, but we can prevent the action [click fraud] from having an effect on advertisers.” (Shuman Ghosemajumder, Product Manager, Google, Revenue Today, Fall 2005)
Clearly if an action can't be prevented or detected in real-time then it will have an effect on an advertiser, bogus clicks result in skewed reports and depleted budget. By the time sophisticated click fraud is discovered (typically weeks or months later when Clickrisk is engaged to conduct a traffic review) the damage has already been done.
The advertising networks have fraud detection systems in place, however, the quality of these systems vary amongst the engines. Some industry analysts are arguing that search engines are guilty of taking little or no action, “click fraud threatens to erode confidence in the pay-per-click model…Search engines haven’t done a lot to counteract negative publicity.” (Greg Sterling, Managing Editor, Kelsey Group, Fall 2005). In particular, second-tier search networks have far less sophisticated systems. This leaves advertisers exposed--paying networks for illegitimate clicks.
The search networks are also in a compromising position—to detect click fraud, they must audit the data themselves while maintaining independence for accurately billing advertisers. The recent class-action lawsuit filed in Arkansas but now moved to federal court, against several leading search engines (e.g., Google, Overture, AOL, MSN, Ask Jeeves, Lycos, FindWhat, LookSmart) for overbillings to advertisers, may spark renewed interest in search engines providing greater accountability for proving legitimate clicks.
How does Clickrisk prevent this click fraud?
Clickrisk provides a third-party external click audit that detects click fraud. A Clickrisk audit is an independent and unbiased analysis of the magnitude of click fraud and the extent of any overpayments to a search network. The online advertiser uses as proof for refunds or reduced cost-per-click invoicing from the advertising networks as well as filtering identified sources of bogus clicks.
Who benefits from click fraud?
There are two key beneficiaries of click fraud: search networks and their affiliates. Competitors and disgruntled employees or customers may also benefit from click fraud.
Search network content partners (i.e., affiliates) receive a commission from the search network for each click. It is standard for advertisers to pay US$5-10 per click, where the affiliates can receive as much as 51% of this amount--allowing for an environment in which click fraud can thrive. Until third party auditors like Clickrisk can patrol this environment, search network content partners will take advantage of this "loophole" in fraud detection.
Competitors may engage in tactics to sabotage their rivals' ad campaigns. This is done by clicking on ads, increasing their rivals' cost-per-click and advertising costs without the expected sales conversion rates.
Is competitive clicking the most prevalent form of click fraud?
No. This is a misunderstanding amongst marketing circles. Although competitive clicking is one form of click fraud, it is by far not the most sophisticated and difficult type of click fraud to detect. We have found that the most sophisticated and difficult type of fraud leaves a trail of evidence that is obfuscated and takes time to unravel. It takes place gradually over a sustained period of time.
Who is responsible for identifying click fraud?
The advertiser is solely responsible for identifying click fraud. The responsibility rests with the advertiser in providing credible audit evidence to the advertising networks in seeking a refund. It is in the best interests of online advertisers to engage the services of independent, third party Internet security experts to audit and review monthly cost-per-click (CPC) ad campaigns. This provides certification and attestation as to the accuracy and integrity of billings provided by search networks.
What regulations exist to prevent click fraud and/or punish perpetrators?
None. Since the Internet is an unregulated environment free from government rules and regulations, there are no enforcement mechanisms to catch or punish click fraud perpetrators. The Internet knows no boundaries, and perpetrators may surface anywhere—rules in one country may not be enforceable in other countries.
Why isn't government introducing legislation to protect advertisers from click fraud?
The global scope of the Internet makes it problematic for local governments to enforce e-commerce. For example, the US Federal Trade Commission (FTC) does not view click fraud as a consumer protection issue. This leaves the onus on the industry to self-regulate.
Click fraud is a growing problem. The online advertising market is estimated to be over US$11.3 billion for 2005 (eMarketer, November 2004), an increase of 20% over 2004. The paid search portion is estimated to represent 42% or US$4.69 billion, of all US online advertising for 2005 (eMarketer, November 2004).
Click fraud is costing advertisers anywhere from US$570 million to US$2.26 billion per year.
What is the average percentage of click-throughs that are considered fraudulent?
Some industry sources claim the cost may range anywhere from 5-20% of total online sales. Clickrisk has found large variances in the volumes detected; the highest percentage of fraudulent clicks detected was in excess of 70% of click-throughs during the analyzed period.
What solutions are available to advertisers to detect and monitor click fraud?
Advertisers must implement click fraud auditing software. Clickrisk provides consulting and software solutions in order to detect, monitor and enhance online ad campaign effectiveness and protect the integrity of clicks to advertisers' sites.
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