Click fraud is a form of fraud that can affect pay-per-click (PPC) advertising. It refers to the practice of repeatedly clicking on an ad that is hosted on a website for the purpose of gaining more revenue for the host site, or for stealing revenue from a competitor. It is an illegal practice that has serious repercussions. In this article, we provide an in-depth analysis of click fraud and its implications.
Thanks to the Internet, marketing efforts have been revolutionized over the last two decades. Online marketing has completely changed the way that businesses reach their customers. In fact, online advertising is so powerful that it has become the preferred form of marketing, and more traditional methods of advertising are starting to disappear.
It’s easy to understand why online advertising is so popular. It makes it possible for businesses to reach more customers, it’s much less expensive than traditional advertising, and it also allows companies to really target key demographics. Add to all of this the fact that online marketing can be closely monitored, and it’s no wonder why it has become so popular. There are many different types of online marketing, but the most effective form is, hands down, pay-per-click advertising.
What is Pay-Per-Click Advertising?
Pay-per click (PPC) advertising is a form of Internet marketing in which advertisers make an arrangement with website owners. Basically, the advertisers post their ads on a website, and they the owner a certain amount every time a visitor to that site clicks on the advertisement. Once someone clicks on the advertisement, they are brought a specific destination, such as the advertiser’s website. Essentially, pay per click marketing is a way for businesses to buy visits to their site instead of earning visits organically.
Pay per click marketing is used by tons of search engines, businesses and website owners. In theory, it seems like the perfect arrangement, because all parties involved benefit, and when it is done properly, it really does benefit everyone involved.
What is Click Fraud?
Unfortunately, people are taking advantage of pay per click advertising and have developed ways to take advantage of it for their own monetary gains. In the simplest of terms, click fraud is a way of generating false clicks on pay per click advertisements. This fraud can either be done manually by click farms, or it can be done by online bots and automated software.
Click fraud impacts pay per click advertising because it creates a false price hike on search terms. It also affects display ad impressions because advertisers believe that they are receiving a higher amount of click-through rates than they really are.
Why Does Click Fraud Exist?
Imagine that you paid for billboard advertising for your business. Now, imagine if someone were to tear down all of those billboards… If your billboards are torn down, people aren’t going to be able to find out about your business, so you invest in more billboards, which of course, cost you more money. This analogy is essentially how click fraud for pay per click advertising works.
But why would someone tear down your billboards, or commit click fraud? Some of the most common reasons include:
- Eliminating competition
- Personal gains
- Malicious intentions
When someone wants to eliminate or harm their competition, they might target a competitor’s ads and click on them to generate false clicks. These clicks end up inflating the competition’s cost of advertising, as they end up having to pay for fraudulent clicks. If their marketing budget is depleted, they have less to invest in other ads. Thus, the competition is eliminated, and the party that committed the click fraud can get more business.
What Types of Click Fraud Exist
There are several ways that click fraud can be committed. Some of the most common methods include the following:
- Click farms. Click farms employ workers at a low wage to sit behind a computer and constantly click on a specific advertisement. Essentially, click farms are like the sweatshops of online marketing. Click farms are hard to track because it is almost impossible to differentiate the fraudulent clicks from legitimate clicks.
- Online bots. Software applications driven by codes that click on ads for the purpose of increasing the number of impressions purchased without the ad every actually being seen by real people. Bots are highly sophisticated and have the potential to run continuously and achieve a high rate of clicks. They are also difficult to indentify, as they have become quite good at mimicking actual clicks that a human would make.
- Impression fraud. This type of click fraud is also referred to as ad stuffing or ad stacking. It occurs when a fraudulent publisher piles ads on top of one another by placing them in invisible frames. This tricks advertisers into thinking that their ads are being seen, though in actuality, only the ad on top is actually visible to site visitors.
- Fraudulent sites and domains. This occurs when websites are built for the sole intent of advertising. The website offers no other content other than ads. It is also integrated within a large network so that it doesn’t seem suspicious. Bots are also used to continuously load and reload pages in order to create false traffic. Advertisers end up thinking that these websites are legitimate and generate a lot of traffic, so they might spend a lot of money to place their ads on the sites, but in reality, they are paying for impressions that are completely useless.
How is Click Fraud Detected?
There’s really no way to determine exact estimates of click fraud, as a lot of this fraud is completely undetected. However, in 2017 alone, it is believed that 1 in 5 clicks on pay per click advertising were fraudulent, and experts believe that the number rises every month.
In order to identify click fraud, several technologies have been developed to detect it. There is a pretty much guaranteed way to tell if click fraud is occurring without the use of technology: if a site’s click through rate is near 100 percent, but has few impressions, odds are that click fraud is occurring.
Protecting Against Click Fraud
There are several ways advertisers and publishers can protect themselves from click fraud. Some effective protective measures include:
- Being aware of competitors. Keeping tabs on competitors is important because it will help you keep an eye on anyone that might set out to perform click fraud in order. Once you know your competitors, you can install tools to monitor if and when competitors fraudulently click on your ads.
- Reduce exposure. Only running ads in certain locations can help to prevent click fraud. Unfortunately, impoverished countries where labor rates are low are common locations for click fraud.
- Keep watch on campaigns. You can’t know if something is wrong if you don’t have past experiences to compare with. Keep a close eye on your campaigns so that you know exactly what they are doing.
- Install fraud prevention software. Invest in click fraud software for your site to ensure that activity is constantly monitored and fraudulent activities can be identified.
