Click fraud rates lower than some estimates

News.com reports " Click fraud rate lower than expected " based on a study by Click Forensics.

The Click Fraud Index shows that the overall, industry-wide average click fraud rate is 13.7 percent. The click fraud rate at top-tier search engines such as Google and Yahoo is even less, at 12.1 percent, the data show. The rate rises to 21.3 percent at so-called Tier 2 search providers and 29.8 percent at Tier 3 search companies, according to the Index.

Pundits including Henry Blodgett and Mark Cuban have long suggested that click fraud is rampant...approaching 30% to 50% of all clicks. Click fraud is when a web site owner clicks on ads on its own site to generate revenue for themselves, or when a company clicks on a competitors ads to drive up their costs. The claim is that they use automated software robots or pay people in third world countries to manually click on the ads.

The major search engines have sophisticated algorithms for detecting click fraud and remove it before it gets to their customers accounts. Based on my experience at AltaVista it is fairly easy to detect and disregard click fraud. You look for things like frequency of clicks per minute, number of clicks coming from the same IP address, seconds spent on the site, etc. This also explains why the Tier 1 sites have lower click fraud than the Tier 2 and 3 sites, The Tier 1 sites are more sophisticated and spend more money on click fraud detection and prevention.

Google recently settled a click fraud class action suit for $90M in advertising rebates. This settlement of $90M versus the billions of ad revenue indicates that click fraud is a much smaller problem than the alarmists have suggested. Good news for advertisers and search engines.

UPDATE 4/21/06 - Mark Cuban has entered the debate on click fraud. See his comment to this post below, and Mark's post on BlogMaverick. Mark makes good points and inspired me to add this update below. I also spoke by telephone to Mikhail from ClickFacts. They are still early in the process but do have some preliminary data that suggests click fraud varies greatly from site to site.

Spam stinks for sure...but it isn't click fraud. Spam and Splogs are designed to attract viewers with their "content" ...dubious as it may be. The sole purpose is get visitors to click on ads. I don't consider this to be click fraud since a real human is choosing to click on the ad.

Advertisers who pay for 'impressions' or page views, formerly known as CPM are definitely affected by spam and splogs. Spam pages designed to attract users by deception so that they can build of page view counts and then charge advertisers CPM rates are indeed a fraud. But that is not click fraud.

Comments

[mark cuban]

CLICK fraud goes far beyond click farms, robots and competitors.

Its the new monthly allowance for I dont know how many college and high school kids

Take a look at this splog (spam blog)
http://blogger3.com/users/nba-ticket/article/113845/

MILLIONS of these are created EVERY day. Showing up in search results trolling for clicks through adsense. Not click fraud by your definition, but all pages created purely to draw clicks. Not what the advertisers had in mind Im sure. being on a spam page.

or this is popular, telling people to help out by clicking on the ads
http://blog.myspace.com/explorers_of_the_unknown

or
http://www.icerocket.com/search?tab=myspace&q=ads+by+google

for more info.

[Mikhail L]

I'd have to agree with Mark that click fraud is much bigger problem, and I'd like to address a few points in regards to your post.

ClickForensic's ClickIndex: It's almost impossible to give one estimate for click fraud all categories. Clickfraud varies depending on keyword, bid price, and how competative the vertical market is. To give one overall estimate is an impossible task. Furthermore, they do not reveal their sample size, which keywords are tracked, or accross how many verticals that data is collected.

Also, if they suspect that Tier 3 is only at 29.8% fraud, I'd be a bit suspect of just what and how they are tracking.

How prevalent is click fraud? Well, here is a link from last week, to a http://www.scriptlance.com/projects/1144957890.shtml
asking for bids to design a click fraud tool

"The major search engines have sophisticated algorithms for detecting click fraud and remove it before it gets to their customers accounts." -- Perhaps, but another well known insider claims that -- "There is a lot of corporate double talk and speculation but no PROOF that the engines even have software to detect click fraud. Want to know what they really have? It's a mash up of proxy checking and geo-ip tagging, plus a group of people looking through traffic logs for "patterns of click activity". No real science or software is implemented here. It's simply a group of guys and gals sitting in cubicles looking through the server's traffic logs. Trying to spot (by eye mind you) suspicious patterns. It's ineffective and highly subjective. "

Perhaps it was soo easy to catch fraud at Altavista because it didn't catch much of it.

Furthermore, Microsoft is rolling out its own advertising network, wouldn't its imployees have an incentive to downplay click fraud ?

As someone who deals with click fraud on a daily basis, If you want I'd love to have a constructive debate about the issue anytime.

In the interest of transparency, I'm the co-founder of ClickFacts, http://www.clickfacts.com

[DonDodge]

Thanks for the comments. Spam stinks for sure...but it isn't click fraud. Spam and Splogs are designed to attract viewers with their "content" ...dubious as it may be. The sole purpose is get visitors to click on ads. I don't consider this to be click fraud since a real human is choosing to click on the ad.

When bots, click farms, and low wage people are used to generate clicks on ads...this is click fraud. Does it happen? Yes, but I doubt it is as high a percentage as some suggest.

Click fraud is fairly easy to detect. In fact it is easier to detect than spam. The major search engines do have automated systems and algorithms to detect and intercept click fraud.

I agree that click fraud varies by site, by keyword, and by market conditions. Most sites do not have the expertise or money to deal with click fraud and spam. Trust me, the big sites and search engines have it under control. You can't stop 100% of it, but you can marginalize it to an insignificant percentage.

Spam and Splogs are MUCH more difficult to detect and prevent. They are a huge problem, but don't constitute fraud in my opinion.

Both click fraud detection and spam detection are good businesses. Like anti virus, it is a problem that will not go away.

[DonDodge]

Advertisers who pay for 'impressions' or page views, formerly known as CPM are definitely affected by spam and splogs. Spam pages designed to attract users by deception so that they can build of page view counts and then charge advertisers CPM rates are indeed a fraud. But that is not click fraud.

Google and most search engines sell PPC (Pay Per Click) ads, not CPM impression ads. Any advertiser who still pays CPM rates should have their head examined...unless they are paying crazy low prices that factor in the spam views.

[Yair Leviel]

What you have failed to account for is all the spyware companies who, with the backing of major players like Yahoo, continue to generate click fraud by pushing "organic" results (the sites the user has requested) as ad clicks.

Ben Edelman points this out and shows clear examples of such fraud. Please review his article "The Spyware - Click-Fraud Connection -- and Yahoo's Role Revisited" found at http://www.benedelman.org/news/040406-1.html

[Nathan McKelvey]

Click Forensics does an excellent job of finding the patterns associated with click fraud. However, I haven't seen any statistics on how click fraud varies based on how high a particular keyword has been bid. My company was paying, at times, up to $20 per click which would make it a much more attractive target to fraudsters than a keyword paying $.20 per click.

Google has done little to stop the proliferation of click fraud. After a front page story on the Wall Street Journal about my experience catching a competitor red-handed committing click fraud against me and others in the industry, that competitor is not only allowed to continue advertising, but is now powering Web sites which offer up Google Adwords advertisements.

As click bots and fraudsters get more sophisticated with their techniques, this problem will get far worse before it gets better. And, may never get fixed until Google impliments a no-tollerance policy.

[CPCcurmudgeon]

I agree that Google and some of the other engines/ad networks are doing a better job of detecting click fraud, but I still see problems in the present situation.

One is that there are lots of means that click fraud that can be perpetrated that can't be detected, because they are made to look as if they are ordinary traffic generated by ordinary people. This can be accomplished manually via organized click rings, or automated with malware. So it is impossible to determine just how much overall traffic is fraudulent.

Another is that we have no way of knowing how well (or poorly) Google and the other engines/ad networks detected click fraud when their PPC programs were launched. We have their "assurances" that they took click fraud seriously, and that's about it. Thus we have no way of knowing how much money advertisers should have been reimbursed, or if there were advertisers that should have been reimbursed more than they got.

Also consider Google's current settlement in light of existing reports of click fraud. If we take the ClickForensics 13.7% figure as reasonable, it is far in excess of what Google appears to consider fraudulent, based on what it's willing to refund to advertisers at present. This is why I think that advertisers should opt out of the current settlement, and pursue the legal means necessary to have all of Google's records audited over the time period in question.

BTW, Google offers CPM as well as CPC advertising. My guess is you've heard that they are testing CPA now.

[Mike Baker]

Click Fraud is an interesting topic - one which both clicktracks and adwatcher will stop, one which will cost you an estimated 20% of your ad budget.
This is an interesting article with valuable information. I have used both clicktracks and adwatcher to prevent clickfraud. What we and many other webmasters are starting to do is invest our marketing dollars into clicktracks, adwatcher or other ad tracker software.
If you are looking for more information on adwatcher or clicktracks i recommend you take a look at: http://www.trackingsoftwarereviews.com they have full reviews on both clicktracks and adwatcher!

Mike Baker

[frank johnson]

Try this service if you are having problems with click fraud - www.ClickProtector.com - it detects fraud and it is pretty cheap too. It has a way to try and get money back from the Tier 1 and many of the Tier 2 search engines, including Google and Yahoo etc. They have a pretty cool feature wher eyou can make an unblockable popup come up on the screen of the offending clicker.