Click Fraud:
You’re Being Ripped Off (and You Don’t Even Know It!)
Whether e-commerce is new to you, or you’ve been active in the W3 marketplace for some time, if you use pay-per-click advertising, e.g. Google AdWords, there’s a fairly good chance that you’re being ripped off – totally!
What’s PPC?
Google AdWords is probably the best known pay-per-click program out there. You see Google AdWords under the Sponsored Links heading on search engine results page. You’ll also discover contextual AdWords on thousands of web sites. Contextual adverts are placed on sites that are, somehow, related to the topic of the site. So, for example, if you’re selling farm supplies on line, you’ll see a lot of AdWords on your site for farm equipment, feed and grain supplies and other ads of interest to farmers. In other words, the AdWords are placed within the context of the site’s main focus.
It’s a good way to advertise because visitors to the site where a contextual ad appears are buyers, looking for information and an outlet that sells the products or services they’re after. But there are lots of ways to cheat the system.
Fake Clicks
There are lots of PPC services so we’re not singling out Google AdWords as the culprit in any particular fraud scheme, though Google’s numbers certainly don’t jibe with those of independent researchers.
There are two kinds of click frauds about which you should have some concern:
PPC Fraud #1: Easy as pie. PPC charges you on a per click basis. So, each time a potential customer clicks on one of your AdWords placements, you pay anywhere from five cents to fifty bucks depending on the keywords on which you bid. The more popular the keyword, the higher the PPC cost.
Now, once you’ve placed your PPC with Google, there’s nothing from preventing an owner of a competitor site from clicking on your AdWords link, costing you money with each click. And as long as these competitors are ripping you off and sapping your promotion dollars, why don’t they ask a few of their friends to click away, as well? In no time, you’re out a few thousand bucks for bogus clicks. And for a start-up, a few thousand bucks may be an entire year’s marketing budget.
PPC Fraud #2: Site owners subscribe to a PPC plan and agree to have adverts placed on their sites to generate additional revenue. Again, AdWords places contextual ads on thousands of sites and each click through generates money for the site owner.
However, many site owners click on these links themselves, using a variety of means, generating fraudulent revenues from the placement of the contextual ad. And despite the fact that Google and other PPC programs take a dim view of PPC fraud, the practice continues unabated. In fact, regardless of the type of click fraud, many unscrupulous (criminal) site owners employ programmed scripts, or “bots,” to steal your marketing dollars and (hopefully) put you out of business. Major, beaucoup rip-off.
Is Anybody Doing Anything About the Problem?
Yes, though the effectiveness of these efforts is certainly questionable.
An organization called SEMPO, the Search Engine Marketing Professionals Organization (www.sempo.org) tracks the activities of online marketers. Recently, SEMPO conducted a survey of 86 different online organizations and businesses and, frankly, the results were unsettling. All 86 test subjects reported some degree of click fraud. That’s 100%. Admittedly, 86 is a small sampling but 100% of that sampling certainly provides a look into just how pervasive the problem is.
Fair Isaac
You might have run into Fair Isaac when applying for a home loan or credit card. FICO, Fair Isaac and Company, developed the algorithm and software to calculate an individual’s credit score, also called a FICO score, back in the ‘80s and they’ve been collecting and collating data on all sorts of topics ever since.
Joe Milana is a number cruncher at Fair Isaac who’s been studying the click fraud problem. Milana reports that this type of fraud across all PPC ad networks runs as high as 20%, or one out of five. That’s costing online business owners a lot of money.
It also costs the company placing PPCs money, even Google. Why? Because these online ad placement services use metrics analysis to tout their return on investment or ROI. The higher the ROI, the more the placement agency can charge – if the numbers are legit. They’re not, which skews ROI and rates charged per click by Google and other PPC models. If you can’t trust the validity of ROI stats, you can’t trust the validity of your anticipated ROI. And that can hurt – a lot.
What Does Google Say?
Obviously, it’s in the best interests of Google to put a sunny face on the click-fraud fiasco. So, Google pegs click fraud at about 10% rather than the 20% found by SEMPO. In fact, Google has gone to great lengths to dispute the claims of SEMPO and FICO. Why not? Google can afford to protect one of its major money makers.
Even so, Google has stated that it estimates click fraud costs advertisers some $500 million each year. That’s a whole lot of money circling the drain.
Marketing Sherpa, a top source for online marketers, has published numerous studies
on click fraud and has provided some additional, jaw-dropping statistics from its Click Forensic files. Recently, Marketing Sherpa reported that click fraud had reached a new yearly high of 14.2% and calculated the cost in lost revenue dollars at around $1.3 billion dollars annually.
Cash Settlements from Google and Yahoo
In ’06 and ’07, both Google and Yahoo (another huge player in PPC advertising) agreed to pay significant fines in excess of $90 million. Did you see any of that money as a Yahoo or Google PPC client? Probably not. And the chances of ever seeing rebates for click fraud from these two PPC giants is pretty slim.
The money has been paid, and if you feel you’ve been victimized, you can stake a claim to a portion of it – if you can prove you’ve been defrauded. Good luck. It’s a tough case to make based purely on empirical observation. So what can you do to make sure each click-through is legit?
Track Your Site’s Conversion Rate by Source
Any good metrics software will provide this information. And if the numbers game isn’t your game, hire a marketing wizard to perform the analysis. It may cost a few bucks, but the information you receive will tell you all you need to know about the usability of PPC to market your site.
Read the Fine Print
Google and other PPC companies love fine print – really fine print. And when you sign up for one of these PPC packages, you’ll be asked to accept the company’s TOS or terms of service. Buried in the boilerplate are the rules for click fraud reimbursement. Most top tier search engines (you know them well) have no provision for reimbursement for click fraud, even when you can prove it six ways from Sunday.
So, before you click on the “Accept” button, read every line of that contract. If there’s no provision for click fraud reimbursement, move on.
Click Fraud Software
The problem of click fraud is so serious, many companies now offer software and PPC auditing to help site owners get the ROI they deserve for their promotional dollars. Several of the better known click fraud software packages include: Lyris, which provides site navigation metrics, PPC counts and accurate ROI as part of its analytics package.
If money is tight, use the open source software called VeriClix. VeriClix also provides free auditing services. One caveat: online, as in life, you get what you pay for. VeriClix is free but you may not get the detailed reports provided by paid services and software.
Are you a big-time PPC advertiser? Then you’ll be interested in Keywordmax, a tracking service that costs $20 a month. ClickAuditor looks for the tell-tale signs of click fraud including:
- Tracking of competitor activity
- Spikes in PPC activity (you go from two clicks to 100 in a single day)
- Sales-based geography (if your business is focused in the
- Suspect IPs (shows IPs that have clicked on your PPC ad a few thousand times in the past week. It’s usually a competitor trying to run you out of business by running up your PPC bill).
Other click fraud software worth checking includes:
adgooroo – a little pricey, so may not be appropriate for start-ups
whosclickingwho – which detects click fraud and delivers other benefits like SEO metrics
TrafficSentry – works with a wide range of PPC programs if you use more than one
AdWatcher – saves up to 50% on fraudulent clicks and recovers your marketing dollars from the PPC firm – automatically.
There are others, each with its own list of features, each with its own price tag – from free
Be Prepared
Before you sign a PPC contract, read the fine print and install some kind of PPC fraud detector – even a freebie.
There is no way to stop click fraud completely, but you can sure put a hurting on some competitor who’s defrauding you and costing you money. A quick note and back-up data to the PPC placement service will usually take care of competitor fraud by banning that fraud site from the search engine’s rankings. You know that’s going to leave a mark.
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