Click fraud occurs when a competitor or malicious user intentionally and repeatedly clicks on a pay-per-click (PPC) ad in order to drive up the costs for the advertiser. Sometimes a malicious user will randomly pick an ad and repeatedly click on it just for the heck of it. Most click fraud is believed to be intentional and caused by a direct competitor. Certain industries are more susceptible to this phenomenon than others. It appears to be driven by the ethical nature of the industry and the level of competition.
What can be done to prevent click fraud?
There is almost nothing that can be done to totally prevent click fraud because it occurs on another web site where you have no control. But there are ways to limit your exposure and prevent it from getting out of control.
Click fraud is theft. Unfortunately, there are currently no laws covering this type of activity, so even if you catch the perpetrator, your options for prosecuting the person may be limited. Moreover, due to the almost anonymous nature of the Internet, it can be very difficult or sometimes impossible to identify or stop the perpetrator.
Click fraud is usually identified through the server logs. Every time a web page is requested, the server logs record the IP address of the requester. Repeated requests for the same page from the same IP address in a short period of time are a sure indicator of click fraud activity. But monitoring server logs can be very time-consuming, especially if a site gets a lot of traffic. This method is also not foolproof. AOL and a few other ISPs use proxy systems that can change the user’s IP address with each request, which therefore defeats all attempts at identifying click fraud. Also, almost all dial-up ISP connections assign a different IP address to a user each time they log onto the Internet.
For larger web sites, there are companies that offer click fraud monitoring and recovery programs. These programs actively monitor a site’s server logs and use proprietary software to identify click fraud, and then submit the proof to the PPC program. Legitimate advertising programs, such as Google AdWords, will issue credits for fraudulent clicks. This type of monitoring service can be expensive (typically $2,000+ per month) and is generally only justified with large advertising campaigns where tens of thousands of dollars are being spent each month.
Google does use software to detect click fraud with their AdWords PPC advertising program and sometimes a credit will appear on an invoice. Their current system does not appear to be very sophisticated and credits, if any, are usually very small.
Managing Click Fraud
Although there is no current way to prevent click fraud from occuring, there are methods that can be used to limit the potential cost and to improve the overall cost effectiveness of advertising. These methods are employed in all Google AdWords advertising campaigns managed by Top Rank Solutions.
First, the geographic scope of the ads should always be limited to the areas serviced by a company’s offerings. If a company’s products are only sold in the USA, PPC ads should be limited to the USA. If ads are appearing in South Korea and Romania, it is very likely that a number of people are clicking on the ads out of curiosity, and then abandoning the site. Another benefit from limiting the geographic scope of the ads is that the exposure to malicious users is limited. If an ad only appears in Arizona, a malicious juvenile in New York has no opportunity to click on the ad.
Second, a reasonable daily spending limit should be set. If the average daily cost for click charges is about $16, it does not make sense to set a Campaign Daily Budget in Google AdWords at $100. $20 or perhaps $25 is more reasonable. Should someone decide to click on an ad 100 times and for some reason Google does not detect it and discount the clicks, the cost will be limited to the daily budget.
Third, the keywords used to trigger the ads should be carefully chosen. Very generic keywords are likely to be expensive, which increases the chances that costs will be driven up if click fraud occurs. If a user in Phoenix is looking for “mortgage lending” services, they are likely to be discouraged by search results and advertising for mortgage lending companies around the world. Given the massive amount of clutter in search results, users are learning to target their search terms to a geographic area when searching for local products and services. A search for Phoenix mortgage lending or “Arizona mortgage lending will produce better results. In situations like this, using localized keyword phrases in AdWords campaigns is a much more effective approach for driving targeted traffic to a web site.
Forth, whenever it is feasible to do so, negative keywords should be used with Google AdWords. Negative keywords are words used in searches that prevent an ad from showing. This can also lower your click fees because the ads should not display if someone is searching for a phrase that is unrelated to the product or service you offer. For example, if your web site sells electrical generators, and the words and “generators” are part of the Ad Group keyword list, you may want to add the negative keywords ozone, code, steam, number, music, function as well as other words commonly used in combination with the word "generator" that are completely unrelated to your product.
Google Agrees to Settle Click Fraud Law Suit for $90 million
In early March of 2006, Google settled a class action lawsuit and agreed to pay up to $90 million based upon a click fraud suit filed by Lane’s Gifts. The suit covers alleged click fraud that occurred in 2002 and covers AdWords advertisers that did use AdWords in 2002 and join the class action. It appears that the settlement with the advertisers is for credits and not cash payments, but at least Google’s attention should now be better focused on this problem.