This post discusses fraud in online advertising - specifically click fraud. Before I get into the heart of the issue, I must first define pay-per-click as well as click fraud...
Pay-Per-Click Defined
In online advertising, a marketer may utilize pay-per-click ads to promote their products. An interested party will read the ad, click on it, and be delivered to the desired web page to learn more about the offer presented within the ad. The marketer is charged each time that someone clicks on their ad. Pay- per-click ads will appear in one of two places:
1) Next to the search engine results when a user enters a search phrase into a search engine (like Google AdWords)
or
2) On a user-owned website. Some users join networks - like the Google content network - and run ads on their sites. They are compensated when a visitor to their website clicks on the ad to their site.
Click Fraud Defined
Fraud can enter the picture in one of two ways: An unscruplous website owner or an unscrupulous competitor.
Unethical Website Owners
If you choose to run ads on a content network - like the Google content network - it is possible that a website owner that is showing your ad may click on the ad to generate income for themselves. They can do this by themselves, have others do it, or automate the process with a bot. Clicks are occurring with no intention of learning more about your offer. To make matters worse, every time your ad is being clicked on, you're being charged. You're accumulating charges for bad clicks.
Unethical Competitors
It is also possible that you may have unethical competition. They could be clicking on your ad repeatedly to rack up your charges. The result is that your ad may stop showing for the day because you max out your budget. You could also take a hit to your quality score if they don't stay on your page after clicking on your ad. There are a multitude of outcomes that can happen when a competitor clicks on your ad - all of them bad.
Click Fraud on the Rise
In a recent post at Search Engine Land, they referenced a study by Anchor Intelligence which showed that attempted click fraud has reached an all time high rate of 29.2% during the first quarter of 2010. This is up from a click fraud attempt rate of 25.7% during the previous quarter.
Click Fraud Prevention
Many ad platforms have tools in place to prevent click fraud. Google will refund advertisers for clicks that are believed to be fradulent. Google will actually seamlessly rule out some clicks in AdWords as they happen.
How Does This Help Me Market My Denver Small Business?
As a Denver small business owner, if you wish to engage in online marketing - and you should - you need to monitor the activity very closely for suspicious activity. Click fraud is rampant in online advertising. Given the high percentage of click fraud, it will likely happen to you if it hasn't already. While the online ad platforms do provide some level of protection to advertisers, those advertisers must still be vigilant when it comes to monitoring their ad campaigns.
My Experience with Click Fraud
I have actually run into an episode of what I believe to be click fraud for one of my clients. I was able to identify the click fraud within hours. My Denver client had an ad campaign that was targeted to specific cities within North America. There was very suspicious click behavior coming from one of the cities - which almost certainly was orchestrated by a competitor. Deciding that it wouldn't be cost effective to fight a prolonged battle involving the competitor and working with Google, we discontinued ads in the area. Had I not had systems in place to identify unusual click activity, my client would have wasted a lot of advertising dollars. It is very important for Denver small businesses to stay on top of their advertising budgets daily so that they can identify click fraud when it happens.