Spending on Internet advertising is growing faster than any other sector of the advertising industry and is expected to surge from $12.5 billion last year to $29 billion by 2010 in the U.S. alone, according to the researcher eMarketer Inc. With around 50% of this spending being spent on pay-per-click (PPC) advertising.



Here we offer you a complete guide as to what this phenomenon is, who is likely to commit such an act, how to identify & prevent click fraud and how to best report instances of suspected click fraud on your PPC campaign.

What is Click Fraud?

According to Wikipedia "Click fraud is a type of internet crime that occurs in pay per click online advertising when a person, automated script, or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating a charge per click without having actual interest in the target of the ad's link"

Click Fraud is estimated to range from 5% - 15% of pay-per-click traffic (some estimates are as high as 20% - 35%) although Google estimates click fraud at only 2% due to the rigorous detection methods they claim are in place.

In a recent study by Click Forensics, click fraud reached a new high of 14.2% in the last quarter of 2006 with the average rate of click fraud on ?content networks? as high as 19.2% for the same quarter.

So who is likely to commit Click Fraud?

The click fraud villain is most likely to fall into one of three categories:

- Online vandals with nothing better to do than cause a nuisance

- A competitor clicking on your search network PPC ads, with the sole intention of increasing your cost-per-acquisition (CPA). This could be interpreted as click fraud, although currently the search engines do not consider this kind of activity as click fraud

- Search Engine advertising affiliates who generate self-income from fraudulent clicks on ?content network? adverts displayed on their own websites. This practice, at it's extreme, involves the use of unscrupulous ?paid to read? or PTR sites, which are basically click-fraud rings, some with hundreds or thousands of participants, paid to click on your ads with no regard for your return on investment (ROI) as the advertiser

What are the Search Engines doing about it?

Both Google and Yahoo claim that they filter out most fraudulent clicks. The costs involved for these clicks are either not charged or are reimbursed to advertisers who have been wrongly billed.

To combat click fraud Google applies four layers of fraud detection:

1. Automatic detection - this filters clicks from both the search and content networks in real-time with the goal of removing them before their existence is ever shown to the advertiser

2. The "Flagging system" - an automatic process to remove invalid AdSense clicks

3. The "Manual review" - this process has more than two-dozen Google employees tasked with manually reviewing and removing any suspicious AdSense clicks

4. If the first three layers of protection fail then the fourth and final layer of click fraud detection falls to the advertiser and 3rd party click fraud detection companies. Google refers to this layer as "requested investigations"

Googles main aim is that the first three layers of filtering will identify all invalid and fraudulent clicks. These layers currently filter more than 98% of invalid clicks.

And should you be in any doubt, both Google and Yahoo have, in the past, released the following statements:

"We think click fraud is a serious but manageable issue" says John Slade, Yahoo's senior director for global product management.

"Google strives to detect every invalid click that passes through its system" says Shuman Ghosemajumder, the Google manager for trust and safety. "It's absolutely in our best interest for advertisers to have confidence in this industry."

As a positive for the future, Google is currently testing a cost-per-action (CPA) platform, which should effectively deal with click fraud. With CPA ads you don't pay by the click but instead pay when the customer reaches a certain goal: buys a product, fills an enquiry, etc.

How to identify click fraud on your pay-per-click campaign

Before you can even contemplate identifying click fraud you must have effective tracking tools implemented on your website and, if possible, access to your server logs. With tracking tools in place, the most obvious way of spotting click fraud is to simply observe any spikes in traffic where there is no particular shift in your conversions.

Once identified, these spikes can then be analysed by looking for repeated clicks from sources that look similar. This similarity could be an IP address or an IP range; it could be a combination of IP range; browser version; operating system. Basically look for data in groups that looks fraudulent.

If all this is just ?a bit too heavy? for you then there are a number of companies out there that can help.

- AdWatcher: claims to able to spot click fraud so that you can report it. Covers other aspects of PPC marketing, by helping you track your ROI, email success, etc.

- Click Auditor: offers the ability to check whether your competitors IP is the one performing any abusive clicking, and says it will stealthily gather your competitors IP addresses for this purpose

- ClickSentinel: focuses on helping you get refunds on fraudulent clicks, as requesting a refund from your PPC provider can often be very difficult for the un-initiated

- Click Tracks: reportedly has automatic click fraud reporting along with other click tracking (analytics) tools

Reporting suspected Click Fraud

When reporting suspected click fraud, you must include as much captured data as possible to increase your likelihood of obtaining a refund or credit.

The following guidelines are recommended:

- Clearly state, at the very beginning of your claim, that you are reporting suspected click fraud

- Provide a full explanation to support your claim

- Include your account details (do not include your password or payment information)

- State the exact keyword, ad and campaign where you suspect click fraud has occurred

- State the exact time, date and IP address of each instance of suspected click fraud. This data can be gleaned from your server logs or 3rd party tracking tool

- Finally, state whether you are requesting a refund, credit or investigation

If you were using any software tools, such as those highlighted earlier, to help you track and report click fraud then include any reports generated by these in your claim.

Lowering the risk of Click Fraud happening to you!

Always bear in mind that your PPC objective is to get conversions and not just clicks.

The more you have researched the demographics of your intended client base the better your chance of avoiding click fraud. Are your clients from a specific country or location? When are they likely to search for your product or service? What are the key search-terms they are using?

With demographic data in-hand you can target your ad campaigns more effectively and lower your risk of click fraud.