Understanding Click Fraud & How to Avoid it

Click fraud has become what some refer to as "a billion dollar mess." It is difficult to detect, monitor, and control. Plus, it is part of a multi-billion dollar industry. The Internet has always been known as a haven for the unscrupulous due to its anonymity. If remained unchecked, this form of fraud will wreck havoc on the Internet world we know today. What exactly is click fraud? And, how can you avoid it?

By definition, click fraud is the intentional clicking on paid advertising spots throughout the web. This intentional clicking can be the result of a person, computer program, or an automated script that simulates a human clicking. You have seen these paid advertisements, they are hard to miss. The term for this online form of paid advertising is known as Pay Per Click (or PPC for short.) This industry is growing at astounding rates and some analysts claim that it accounts for 90% of all Internet sales. In fact, Google reportedly receives an estimated 99% of their ad revenue from PPC. With 2005 revenue of $6.1 billion, that is a huge chunk.

PPC, ideally, is supposed to split the revenues (from the clicks) between the publisher (search engine) and advertiser. More simply, every time someone (or something) clicks on a paid advertisement, both the advertiser and publisher are to receive revenue. This revenue sharing is how and why click fraud started.

Click fraud, therefore, is the result of this fastest growing segment of the advertising industry (PPC.) Instead of an interested party clicking on an ad for further information, ads are being clicked on for a variety of reasons such as:
1) Harming the competition (by increasing ad expenditures) and/or
2) Purposely increasing one's ad revenues.

Who are the perpetrators of click fraud?

1) On the smallest scale, it can be as simple as one person sitting in front of their home computer. They set up a website, and then place an advertisement on it. They, in turn, become a publisher. That same person then fraudulently clicks on the ad, thereby getting paid. This is the hardest form of click fraud to find since it is on such a small scale.

2) Another way to commit fraud-the human way- occurs in what has been termed a "click factory." Advertisers hire low cost workers, for pennies an hour, to repeatedly access targeted ads. Workers continually click on ads and reap profits for the advertisers. This makes advertising campaigns appear very successful. "Click factories" are a common practice in countries such as India, China, and Mexico.

3) The largest scale of click fraud occurs via bots (online robots), software containing automated clicking tools, and/or software that uses different IP addresses in order to simulate random users. Software, of course, clicks much faster than humans. This is the most difficult to detect due to its enormity.

Now that we have an idea what constitutes click fraud, how do you avoid it? Protecting yourself is the first step in avoiding click fraud. There are a number of steps you can take to protect yourself and your firm. Here are a few ways to help avoid click fraud:

1) Keep good records. This is obviously the best way to avoid click fraud.

2) Keep abreast of changes in the industry.You can learn better ways to avoid click fraud by knowing what is happening in the industry.

3) Form your own click fraud protection & police group. Develop some guidelines to avoid click fraud. Write some policies and procedures to follow.

4) Analyze your web surfing behavior or traffic logs. Is there an unusual amount of clicks coming from a specific geographic area?

5) Know your raw data. This way you will notice any uniformity and unusual spikes.This is why keeping good records is so important. Knowing your baseline trends and data can help you avoid click fraud.

6) Look for any repetition of IP addresses. Look for unusual activity here.

7) Are you getting more traffic in a traditionally low ranking keyword area?

8) Have your click throughs increased twofold but you haven't changed your bids or ranking?

9) Has your sales revenue decreased while your ad expenses increased? Illicit clicks are known to jump up ad expenses.

10) Are you receiving clicks from anonymous proxies? They are popular with click perpetrators.

Whenever you find that you need extra help in the click fraud area, look online. There are a multitude of auditing firms and software programs available.

Click fraud is an immensely complex area that is only touched on in this article. The legal ramifications are very complicated. Perpetrators are also benefactors. Even as we speak, click scammers are figuring out ways to cover up the origins of clicks. Good luck!