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What You Should Know
“Pay-per-click” (PPC) or “sponsored link” ads appear on search engine “results” pages, as well as independent sites which are affiliated with the search engine networks.
Each time a sponsored link is clicked, the advertiser pays a fee to the search engine network. If the ad appears on an affiliate’s site, the search engine network will pay the affiliate a commission for each time the ad is clicked. This commission can be as high as 60% of the fees paid by the advertiser to the network.
Pay-per-click advertising is an excellent way to track activity, and the “pay-as-you-go” model makes it a relatively attractive, low-cost medium for advertisers—at least on the surface.
For example, unscrupulous companies will perpetrate sophisticated schemes of click fraud against their competitors, making them pay more for their advertising than they should.
However, a much bigger threat is the number of dishonest affiliates, who are exponentially increasing their commissions through bogus clicks. There are two primary means for them to do this:
Automated Clicking through bot clicks, Adware, and so on; and
Manual Clicking which primarily takes place in low-wage countries where even small financial incentives are sufficient to attract perpetrators.
The real problem is that there are no real safeguards in place to stop them. Google echoed this by saying that, "We can't prevent it [click fraud] from happening, because the action [click fraud] comes from an external source..." (Shuman Ghosemajumder, Product Manager, Google, Revenue Today, Fall 2005)
In fact, it’s relatively easy for affiliates to sign up with search engine networks as distribution partners. The acceptance criteria is not particularly sophisticated or complex. These low registration standards further perpetuate click fraud, as the search engine networks do not have sufficient barriers to entry into their distribution partner program.
Click Fraud is Growing, 2002-2008
At present, click fraud is going largely unnoticed. But that doesn’t mean it’s insignificant. As much as 70% of a paid search online advertising budget can be spent because of this fraudulent activity. And it has been estimated that as much as $500 million will misspent on paid search online advertising in 2004 alone.
Of course, the more online advertising presence you have, the greater your risk becomes.
At Clickrisk, our online security experts and software developers have created a set of tools and services that help marketers track fraudulent activity, recoup advertising dollars, and mitigate the risk of future exposure.
Let us show you how we can help you save your advertising dollars, too.
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