Is click fraud a growing danger for marketers, or is it all just a myth? Recent estimates have placed fraudulent clicks at nearly 20 percent. But does that mean it's more of a problem, or just more easily detected?
Click fraud has gotten a lot of press lately, and it seems that in the search world, click fraud is the gift that keeps on giving. Like any plague upon humanity, it seems we only pay attention to it when a flair-up appears.
For the un-indoctrinated, in search engine advertising, advertisers pay for every click they receive. The growth and continued popularity of cost-per-click (CPC) advertising in directive search and contextual search (ads appearing in search results and near content) is a boon to the industry, but has also birthed an unusual sort of conundrum.
Click fraud costs advertisers millions of dollars each year. Though no one is certain of the exact size and scope of the issue, The New York Times recently reported that search giants Google and Yahoo have vastly different perspectives on the problem -- and, therefore, different estimations of how much of a problem for marketers it actually is.
Here's what we do know: In the new economy of desperation, click auditing firms are proliferating. The claim that fraudsters are becoming more and more desperate may or not be valid, but at least one thing is certain: Click fraud is not just a search advertising problem anymore.
Past and present
Fraud is a difficult word in that it implies that a crime has occurred. The generic label of "click fraud" is associated with any type of click that's invalid, but as measurement of online traffic has matured, the concept of a click that is not accurately delivered is not the catch-all label it once was.
Today, we refer to clicks as either "valid" or "invalid." (For specific definitions of the types of click fraud, take a look at my previous iMedia article on the subject) In the not so distant past, lawsuits were initiated against pay-per-click media providers -- class actions, if you will -- targeted at the deepest pockets: Google and Yahoo specifically. As is often the case with class action litigation, lawyers get richer, advertisers get slightly wiser and the needle of progress moves just a bit.
The outcome of past litigation? Advertisers waived the right to litigate for past lost revenues, industry organizations woke up to the click fraud problem and third parties that audit click activity on behalf of advertisers began to proliferate.
Just about three years ago, the Interactive Advertising Bureau began working on an addendum to its existing ad impression measurement guidelines of 2004 in attempt to officially define a click. In mid may, 2009, the IAB released said defining document.
Problem of scope
So is click fraud a big problem, a small problem, or a hype problem? Or is it even a problem at all? Let's look at what we know:
Searchers are changing habits constantly. A recent Hitwise study indicated that paid search traffic compared to natural search traffic has actually dropped from 9.84 percent to 7.25 percent in a comparison of the four week period leading up to May 9, 2008 and 2009.
What seems to be missing from the analysis is the defined decline in ads shown in search results. Google, Yahoo and other search providers have been reducing the number of ads appearing in search results since 2007. For example, comScore qSearch data indicates that for the period April 2007 to April 2008, Microsoft, Yahoo, and Google reduced the number of paid ads appearing in search results by as much as 19 percent.
Fewer ads mean fewer opportunities for fraudulent activity in search but opens the door for more fraudulent opportunities elsewhere in the CPC world. Failing and struggling economies in Eastern Europe, for example, along with first-world economies in peril, may very well be fueling the latest round of click issues. Notably, several reports have noted clicks coming from countries where companies are not doing business, such as Bulgaria.
Problem of understanding
What constitutes an invalid click? According to the new IAB guidelines, an invalid click is one that "originate(d) from a user, program or automated agent that accesses a URL for the purposes of manipulating click measurement activity, or click-based advertising payments having no intention of legitimately browsing site content, making a purchase or performing any other type of legitimate conversion action."
Did you get all that?
Basically, if the click didn't come from a human being with the desire to follow a link, the click is invalid.
But then there are less clearly defined situations. For example, if you thought you were buying the ad in Springfield, Mo. and the ad appeared in Springfield, Mass. and someone clicked on it, is it an invalid click? Probably, but that information falls within another section of the guidelines, referred to as "filtering," with very specific protocols for measurement.
Filtering clicks is a problem for publishers and advertisers alike. Historically, Google, Yahoo, and other large publishers have publicly declared that filters were in place to remove invalid clicks. No doubt some of the IAB guidelines came from these best practices, and certification of clicks are now on the scene.
2009 will be known as the year of click validation and the guidelines for certification are actually quite complete in this arena.
One of the new IAB guidelines requires disclosure of click filtration activity. Disclosure of this factor has been a significant problem in the past. One of the firms auditing click activity is Enquisite. Richard Zwicky, Enquisite's president, notes that Yahoo aggressively discounts clicks and does not disclose actual fraudulent clicks, while Google does. "By the same token, Yahoo has been much better about answering questions about activity than Google," Zwicky says. "Yahoo responds much faster when customers have issues."
Another way to look at that equation is that Yahoo opens the kimono and Google hides behind its technology. Well, not really hiding, per se; rather, it discloses that the actual method and technology behind determining what constitutes a fraudulent click really cannot be disclosed, and that the IAB guidelines provide for protection of those technologies.
So it seems that if you let the perpetrators know how you prevent fraudulent or invalid clicks, it only makes it easier for criminals to do their dirtiest. So, what should you be doing now to combat the problem, according to the experts?
The end game
Complaining doesn't work. Media attention does. Lawsuits don't work, but third-party auditing does. Overall, the IAB's guidelines are an enormous help for advertisers and publishers. So, in the short term, look to auditing firms to facilitate the interaction between advertisers and publishers.
Invalid-click-auditing third parties can be thought of in the same way third-party ad serving firms are utilized; make sure the right clicks are being served in the right places by humans seeking an interaction. In the mid- to long-term, look for publishers actively participating in the Measurement Certification initiative led by the IAB.
But is the problem getting bigger? At this point, I can only say it's certainly getting more press. In the traditional comparative reporting from The New York Times, "Google says that advertisers contend that fraudulent clicks account for just 0.02 percent of all online activity."
Google says that advertisers contend? To be clear, Google isn't really saying anything. In the same New York Times article, Yahoo actually disclosed that their number was between 12 and 15 percent prior to hiring click auditing firm Click Forensics.
This is a prime example of how the mainstream press has distorted the issue. Comparing a search fraud percentage to all online activity is like comparing apples to Buicks.
In order to accurately measure the problem, we'd have to understand the entire universe of search and CPC advertising, not just a portion of it. Scaring people is an effective means of motivating them, but at the end of the day, what has fear really ever accomplished for humanity?