Click Fraud

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Just when we thought we had heard all about “frauds on the internet,” we get “fishing” emails enticing users into giving up their bank account (or PayPal) information. The SCAM-THRU-SPAM market is huge and it is not just limited to financial losses.

Frauds/scams are making people think more than just twice when it comes to using the internet and making transactions through different e-commerce channels. The trust deficit is a shame given how efficient and cost effective this medium is, especially in terms of targeted advertisement.

A perfect example of that would be PPC or pay per click. PPC is a huge upgrade on the good old flashing banner ads that we see quite a lot. The pay per click ads are text based, with no slow loading flashy graphics distracting the visitor from the site. Most importantly, they are context dependent. They get displayed only when a person searches for a certain “matching keyword.” PPC is extremely popular with advertisers because it is simple to demonstrate and  brings traffic to their site more conveniently. PPC ads are a shortcut for people looking for something on the internet without sifting through the clutter that search engines often display organically.

Unfortunately, there is a downside to it as well. If you advertise your site via pay per click programs like Google Adwords & Overture, then you might end up being a click fraud victim. Click fraud takes place when a person or a program visits a website with no intention of browsing the site, purchasing a product or performing any other type of conversion action. The intent simply is to make the advertiser incur losses or generate extra income for themselves illegally.

This new type of cyber fraud is on the rise. It is estimated that the losses incurred by the advertisers through click fraud vary between 10-40% depending on the keyword and the industry. A simple calculation shows us that the advertisers are shelling out 500 million to 2 billion dollars per year to click fraudsters. Google and Yahoo, two leading providers of advertising links, usually target the audience based on the contents of a page. The issue, to some extent, boils down to the difference between a genuine user (sometimes referred to as a “good faith” visitor) and a click fraud artist.

Now the question is: Who perpetrates a click fraud? A significant percentage comes from competitors who aim to drive up the advertising costs of their rivals in order drain or put excessive strain on their competitors marketing budget. This is a form of digital industrial sabotage.

There might also be a terminated employee trying to get his revenge by clicking on a PPC advertisement. The one that’s probably the hardest to nail down is the equivalent of a drive by clicker; someone who enjoys random acts of click violence and other such mayhem.

To gauge the seriousness of the problem, who better to listen to than former Chief Financial Officer of Google, George Reyes, who once said: Click fraud is “the biggest threat to the internet economy.” “Something has to be done about this really, really quickly, because potentially it threatens our business model.”

His statement is not without merit. An advertiser pays a large premium on getting focused, directed traffic to his website through paid listings. Take banks as an example. If they lose their credibility, then people will stop going to them and will resort to hiding their dollars under the mattresses. In the same way, if the search engines lose their credibility due to click fraud, their customers will vote with their dollars and move back to more traditional forms of advertisement. The bottom line is, if the PPC customers see their advertising ROI drop due to such fraudulent activities they may start walking away from it.

The search engines cannot possibly know the overall trends and analytics of the advertiser’s site. A good analytics package should provide statistics which show the optimal path to conversion, places where abandonment may happen and the average time taken reading the “top” pages etc. This “signature” may very well include time spent on the path, conversion, on site search etc. of a genuine client. Basically, the serious visitor has a certain pattern which a malicious user or a bot would not be able to simulate.

The fraudsters, however, have their own “signature”(i.e. statistical pattern) for a certain website as well. In order to differentiate between a certain visitor and a likely fraudster, one of the techniques used is to match the “genuine” signature against that of a “fraudster.” A dedicated click fraud detection effort based on rigorous analytics, website statistics and a software that matches patterns should have no problem nailing these guys.

Lastly, some efforts need to be made with regards to customized reporting when the pattern of abuse is more complicated. The search engines don’t have the resources (or interest) to drill deep into the analytics data and audit individual advertisers’ website stats. However, they will consider refunds if presented with detailed and convincing data.

If you are a regular PPC customer, you have to defend what’s rightfully yours from the click fraud artists. This can be done by auditing and reporting click-fraud by using a proper mechanism developed in-house or by some other analytics based click fraud Detection Company.

The search engines are unable to fully detect fraud, due to the reasons described above. So, who is there to look after the interests of an advertiser trying to make money or promote his business when there is a big chance he will get cheated by the fraudsters? Given the PPC fraud rate, the advertiser has to really question his conversion numbers. Is that conversion ratio of 1% really natural? Could it be higher if the fraudsters are excluded from the traffic and the money wasted on them is refunded?

This is basically where we step in. At Sofizar, we offer click fraud detection on a contingency basis. We track data and set click fraud alarms. When these alarms are triggered we manually verify that our “click fraud case” is strong enough to warrant a reasonable refund. Our monitoring system ensures an early detection of all click fraud activities. Over the years, we have been able to track down fraudsters and ensure a smooth flow of our PPC campaign without any problems whatsoever. We know what to do and we are good at it.

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