"Google Fraud": Exposing Click Fraud

Pay per click (PPC) marketing has mushroomed ever since Google launched it in 1999. PPC is the most popular way for advertisers to reach potential customers online. Many search engines offer PPC price plans to advertisers. Advertisers get charged by the number of times a visitor clicks an ad or text links on publishing site. PPC marketing works effectively and proves affordable for advertisers, but remains vulnerable to click-fraud.

What is Click Fraud?

Click fraud also known as Google fraud poses the biggest problem to the PPC market and is the hottest scam in the search engine industry when it comes to internet fraud. Click fraud can occur in both human and automated ways. For example, companies can commit click fraud by hiring low-cost employees in places like China and India to click on ad or text links to increase the revenue for publishing sites. Also, employees of companies can click ads or text links to deplete the marketing budget of their competitors and distort search results. After all, their competitors have to pay every time someone clicks their ads.

Click fraud can be automated by online robots or "bots" programmed to click on ads or text links on designated sites to increase traffic figures or boost profits for web sites. According to Click Forensics, the operator of the Click Fraud Index, the rate of click fraud representing the number of illegitimate clicks continues to rise with the years. The Click Fraud Index showed that the overall click fraud rate for the second quarter of 2007 was 15.8 percent compared to 14.1 percent in 2006. Similarly the click-fraud rate for PPC ads on search engines like Google AdSense and Yahoo Publisher Network has jumped from 21.9 percent in 2006 to 25.6 percent this year.

This jump in fraud rates is largely attributed to the increased use of botnets, or networks of software robots used to sabotage people's computers to send out spam, commit identity theft, go phising, distribute spyware, and in this case, to continuously click on ads on certain web sites. These clicks are considered fraudulent because real customers do not click on them. The FBI speculates that more than 1 million PCs in the United States are compromised for these types of frauds and scams. Often the owners of the computers are not aware of it. Tom Cuthbert, president and CEO of Click Forensics reports that click fraud is becoming the new spam—a problem that worsens each year with traffic from botnets and made-for-ad sites.

How Can I Avoid Click Fraud?

Being aware of a fraud is usually the key when it comes to preventing frauds. However, for click-frauds this may not be the case since a lot of advertisers are aware of click fraud, but do little about it. They fear that it could ruin their free listings if they complain too much to search engines or they think this issue is beyond their control. The latter is entirely not true.

Companies who recognize click fraud and voice against it often have received refunds from search engines for fraudulent clicks. Also, companies who suspect click fraud in PPC campaigns can do a number of things to confirm suspicion. At the most basic level, they can audit and create a list of sites that produce high click rates but not sales.

Google Combats Click-Rate Fraud

Google answered click-rate fraudsters earlier this year with a new pricing plan – pay per action. Google made its pay per action pricing plan accessible worldwide this July. This new pricing plan charges advertisers only when the visitor completes a pre-defined act after clicking on an ad or text link. A pre-defined act may include a visitor signing up for a newsletter or purchasing an item. Advertisers will be charged on the number of pre-defined acts taken by the visitor. This gives both advertisers and publishers more control over their marketing budgets.