Click fraud can exhaust your PPC budget, but so can an underperforming campaign. ClickTracks Analytics, Inc.'s director of marketing teaches you the difference.

If you've been running pay-per-click campaigns for any length of time, you understand how quickly your PPC budget can be exhausted if problematic situations are left unchecked. For PPC advertisers, the two main areas of concern are click fraud and poorly performing ads, and how to differentiate between the two.

In this article, we'll explore the concept of problem campaigns. We will discuss click fraud and explore what marketers can do to prevent it in the future. We will also provide steps to identify poorly performing ads or campaigns, along with a host of questions that will help marketers determine if their clicks are malicious or simply ill-informed. 

Step 1: Take an inventory of your campaigns
Using your web analytics software, create an overview report that lists all of your campaigns and shows conversion, revenue, ROI, costs, clicks, time on site, and percentage of short visits. Sort your campaigns by average time on site or percentage of short visits; these are the campaigns you'll want to focus on, as they're the ones that are wasting your money.

Step 2: Determine if it's fraud or a bad ad
Once you've identified poorly performing campaigns, then it's time to get down to work. For each of the campaigns, compare your metrics to the click fraud checklist below. If you can answer "yes" to one or more questions, you may be the victim of click fraud.

• Does the campaign generate a large number of visits where the client IP addresses are similar AND/OR
• Does the campaign have a large number of sessions where there is no referring domain, AND/OR
• Does the campaign originate from a particular domain that generates a high number of single page visits OR
• Does the campaign come from a particular domain that generates a high number of sessions with near zero time on site?

Pay a quick visit to referring sites that appear frequently but still generate low page counts or low time on site. If the site is merely a link list, and has no relevant content, then you should be highly suspicious of click fraud.

Once you've identified suspicious campaigns, you need a second reality check. Is it possible that there's another explanation for the campaign's poor performance? Let's take a look at one example where what initially appeared to be click fraud ended up being a much more innocent mistake on the part of the marketer.

Click fraud or poorly performing ad? An example:
Acme Distributors sells widgets mainly to the U.S. market, so all of its PPC ads are written in English. Jackie, Acme's marketing director, creates a new AdWords campaign and is pleased as everything goes smoothly for several months. One day, Jackie becomes alarmed: the PPC budget starts to skyrocket. Why? Because of hundreds of clicks into one particular ad, with all of the IP addresses originating from India. Many of the automatic systems described above would sound the click fraud alarms, prompting Jackie to begin composing a scathing letter to Google. But is this really click fraud? Consider this alternative:

1. When Jackie set up the campaign she forgot to limit the countries where the questionable ad is served. Normally, Jackie would select English speaking countries only, but on this ad she forgot.
2. The ad is running in Google's content match (syndication) area as well as search.
3. Several months after the ad was published, a website using AdSense published an article whose content matched Jackie's ad. Suddenly her ad was getting a lot more impressions.
4. The article happened to be of interest to people in India, where English language articles are popular.
5. Jackie's widget product is of no interest to people in India, or is too expensive, but they only learn this after clicking through the ad and into the Acme Distributors' website.

Clearly, the scenario described above is one of many that may appear to be click fraud when it really isn't. If the ad in question was only served in the United States, then one might argue it truly is click fraud. Only Jackie can know enough about her customers and the way they behave to effectively distinguish click fraud from ads that aren't delivering what the visitor expects. Not even the most powerful click fraud software can do this reliably.

Step 3: Change your ads or request a refund
If the campaigns you've identified are simply bad ads, you have a couple of choices. You can either tweak the ad content or landing page content and try again, or you can delete the ads altogether. But if you've identified a pretty clear case of click fraud, you'll want to alert your advertising service and request a refund.

When requesting a refund, you'll need to give your ad provider proof of the offending clicks; unfortunately, they don't just take your word for it. Use your web analytics program to create an Excel spreadsheet that displays each visitor session that resulted from a single suspicious PPC ad. In the spreadsheet, use each row to represent a visit or a session that came from one ad and make sure that you list all pertinent information for each ad, including:

• Specific campaign ID
• Landing page with all parameters
• Date and time of visit
• Visitor client IP address
• Country
• Referring domain
• Full referrer information
• Number of pages visited
• Total time on site
• Revenue
• List of each page visited with time

Highlight the sessions (rows) on the spreadsheet that you believe are fraudulent, then:

1. Calculate your amount of refund by multiplying the number of highlighted rows by your average CPC (use average cost per click or your syndicated rate).
2. Email the Forensics Report spreadsheet and a polite request for refund to your PPC provider.
3. Follow up with a call to your PPC provider if a representative doesn't respond within five or six business days.

Step 4: Develop good long-term habits
Once you've adjusted your campaigns to only bring in real visitors that are interested in your website, be sure to check on a regular basis for any new click fraud.

Problem campaigns are sometimes click fraud, and sometimes they're simply poorly performing ads. Either way, marketers need to be able to quickly and easily discern (among potentially thousands of campaigns) which are problems. At the point that problematic campaigns have been brought to your attention, you can then decide if click fraud is really occurring. With a systematic approach, and finely tuned ads, you'll find that your ad spending will drop dramatically while visitor quality and conversion increase. 

Dan S. Robbins serves as director of marketing for ClickTracks Analytics, Inc., the web analytics solution from J.L. Halsey. Read full bio.