On the Front Lines of Click Fraud

Click Fraud, the bane of PPC marketers everywhere, is still a hot issue for almost anyone trying to drive traffic on any scale. The big “3″, Yahoo, Google, and MSN, each state that they’re doing the best they can, as you can read further at ZD Net. One company, Click Forensics, Inc., has emerged as a leading resource for companies trying to understand their actual fraud exposure. I got the chance to share some great dialogue with Heidi Johnson of Click Forensics to learn more about the firm and their efforts to combat this threat to online marketers…

As an overview, can you please describe the history and key milestones of Click Forensics?

Click Forensics was spun-out of a web analytics firm called OptimaliQ. The folks at OptimaliQ have been researching click fraud for their clients for more than 3 years and developed the Click Forensics’ product set as a result. In March of 2006, Click Forensics announced the formation of the Click Fraud Network, where advertisers could use CF Analytics to monitor PPC campaigns free of charge for up to 100,000 clicks per month. Larger advertisers us an enterprise version and pay a fee. (That’s how the company makes money)

What’s the latest overall fraud figure? At ad:tech, I know you were stating approximately 13% on all tiers, with approximately 12% for the big ’3′ (Yahoo, Google, MSN) and higher fraud rates on Tier 2 or 3 PPC networks. Have those figures changed?

• The overall industry average click fraud rate was 14.1 percent, slightly higher than the average of 13.7 percent for Q1
• The industry average click fraud rate for high-priced search terms was 20.2 percent. High-priced terms are defined as terms that cost over $2.00. These high-priced terms often make up the majority of an advertiser’s total spend.

The industry average click fraud rate for companies running online advertising campaigns through:

• Tier 1 search providers, such as Yahoo! and Google, was 12.8 percent vs. 12.1 percent in Q1
• Tier 2 search providers was 20.3 percent vs. 21.3 percent in Q1
• Tier 3 search providers was 27.1 percent vs. 29.8 percent in Q1
• The average pay per click term cost for the top key terms across the five biggest search advertising industries – Retail, Financial Services, Health & Fitness, Technology, and Entertainment – for Q2 was $4.51. This compares to $4.75 from Q1.
• The greatest percentage of click fraud, over 88 percent, originated from within the U.S. and Canada. Outside North America, the greatest amount of click fraud originated from within India. Unwanted click activity originating from India increased 26 percent during Q2.

Overall, what is the nature of the bulk of the click fraud? Numerous techniques have come to light, including competitor clicks, or ‘Adsense fraud rings’, or just individuals clicking for their own profit. What has your research shown to be the most significant, and, alternatively, the most over-hyped?

The main source of click fraud comes from those who will gain financially – So adsense fraud and folks clicking for profit. Other fraud stems from folks trying to deplete budgets of their competitors.

How many firms are participating in the Click Fraud Network? How many clicks are you monitoring on a weekly basis?

More than 1300 firms are now part of the network – from large to small. (We have 2 of the world’s largest retailers, financial services companies, one of the largest travel sites, pharmaceutical companies, several advertising agencies, etc.)

How is the fraud detection standards movement progressing? Are there notable developments in terms of providing a clear and uniform fraud assessment criteria that will (ideally) be accepted by the search engines as valid proof of fraud?

We’re working towards the goal of giving advertisers and search engines a standard, third-party method to monitor for click fraud and reconcile findings for billings. There are really no clear standards yet, and the search providers themselves provide few, if any, details to their customers (advertisers) on how the credit billings for suspected fraud. (Hence, why we’re out there)

Does Click Forensics have a vested interest in ‘bad click-fraud news’? What is your firm doing to provide transparency to ensure that the data you are providing is clearly click-fraud?

Our goal is to give advertisers and Search Providers a 3rd party validation service to make click fraud transparent – Similar to the validation role Neilsen plays in broadcast, Arbitron in Radio, and ABC circulation validation in print (Though we use more automated technology). We don’t believe click fraud will be eliminated, especially as the perpetrators become even more savvy, though we can make the process of determining fair billings automated. (This would be a benefit to all parties)

What is in store for the future of Click Forensics, and for the click fraud issue in general? Will things be getting worse before they get better?

Though we don’t expect click fraud to go away – We are VERY optimistic that the issue of third-party validation can be easily implemented. (Obviously, we aim to be a leading provider of that type of service). The PPC industry will continue to grow at a rapid pace – This is a matter that needs to be resolved, but not one that will “bring down” PPC as a whole.

I think it’s safe to say, if you’re involved in the pay per click portion of your marketing, you might want to take a few minutes and consider joining their network. Considering the suspected rise in pay per click (per the information they’ve released), it seems to me that the pay-for-performance model is looking better and better each day.