Layman’s explanation of Click Fraud – The impact of Click Frauds on Advertisers, Search Providers & Publishers

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What is Click Fraud? This is a layman’s explanation of the problem, how it impacts advertisers & publishers & why we need to prevent it.

If you are an Online Publisher and you display advertisements on your website. Advertisers pay to have their ads displayed (CPM payment method) or they pay when someone clicks on their ads (CPC payment) or like in case of affiliates, they pay when the visitor does some actions, like signing up, downloading trial products (CPA payment).

Now a legitimate visitor could take an interest in an advertisement and click on them to find out more. There are ways in which some computer programs could be made to simulate click actions on these ads. These are false clicks since no real person, with any interest in the advertiser’s product or service, are clicking. This is called an act of Click Fraud. The advertiser still has to pay since their ads have been clicked.

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Click Fraud is a major challenge to both advertisers as well as the ad agencies. Google, for example, have a strong technical system plus a large team of humans to constantly verify suspicious ad clicks. And Google for one suspends accounts without any further negotiations. I have personally suffered from this very early in my publishing career when my site was subjected to malicious click bots. It took me almost 2 months and a lot of persuasion along with hard core technical data to prove that it wasn’t me who was clicking my ads.

Clickforensics now have systems that you can employ to monitor and protect your ads. The Click Fraud is a much bigger menace as this graph for 2007 shows.

Graph & content courtesy of ClickForensics.

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Traffic quality management is now a requirement for both advertisers and publishers alike. Traffic quality management means monitoring and filtering traffic for fraudulent and low quality visitors to optimize ad serving on your web site.

Advertisers do not want to pay for clicks that do not add value to their business. They treat a click as Fraud when:

• Bots generate clicks – Bots are computer programs which click on links and increase PPC costs. Advertisers want to target humans, not machines.
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• Repeat clicks – Traffic that clicks on the same paid ad repeatedly has a lower ROI than single ad-click visits.
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• Hidden referrers – Advertisers want to know who is sending them traffic in order to conduct research and optimize their site experience. Traffic from hidden referrers is an immediate red flag to advertisers.
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• Bounces – Advertisers do not want to pay for bounced traffic (e.g. traffic that does not wait long enough to load and review at least one page).
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• A-typical Traffic – Advertisers do not want to pay for ‘fake’ traffic i.e. traffic that navigates in atypical patterns without converting.

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Advertisers who are displaying ads on your sites, as well as the ad agency that is delivering ads from the advertising networks to your site (like Yahoo! Publisher Network). One certain conditions they will treat the clicks on your site or blog as fraudulent. Here are a few general situations that you, as a publisher displaying ads need to be cautious about, as to how advertisers determine the severity of the fraud is:

• Publishers knowingly or unknowingly purchase fraudulent traffic.
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• Bots or crawlers are working on publisher’s sites and committing click fraud.
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• Publishers are engaging in spamming other publisher sites.
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• Publishers are delivering traffic during times that are not desirable to advertisers. This is a less severe offense and extremely hard to control or prove that these traffic are illegitimate. In most cases, the advertisers either do not display ads in certain geographies or do not pay for any clicks from some geographies.
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• Publishers are delivering traffic from geo locations that are not desirable to advertisers. Again, in most cases, the advertisers either do not display ads in certain geographies or do not pay for any clicks from some geographies.

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The search providers are extremely strict with fraudulent activities. They respond in various ways helping both the advertisers to maximize their ad spending, as well as publishers to maximize their ad spaces.

• Search Providers Rank Publishers – Web site or portfolios of sites receive a quality score rank. The rank is usually an index, indexing one publisher against competitive publishers. Quality rank impacts commission levels. The ranks are done periodically and publishers and advertisers could be upgraded or downgraded.
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• Search Providers Discount Clicks – Clicks are ranked based on traffic quality. For some networks, the quality of the click determines how much the advertiser pays for the click. Low click quality can cause CPC’s to be adjusted downward resulting in lower EPC.
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• Search Providers Confiscate Earnings – Search Providers give money back to advertisers for fraudulent clicks. Google claims that it gives back or does not charge for 10% of all clicks through its network; Yahoo claims 15%. A portion of these amounts represents money back to the advertiser which in return equals charge backs to publishers.
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• Search Providers Give Exclusion Control to the Advertiser – Many search providers, including Google and Yahoo, allow advertisers to ‘opt-out’ of advertising with content network web sites. Soon, Google and Yahoo will start allowing advertisers to opt-out of search network web sites as well.
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• Search Providers Give Day Part & Geo Control to Advertisers – On the larger networks, advertisers can control the time, day or week, and locations their campaigns target.

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All these are aimed to protect to Advertisers interest. If any advertiser in turn engages in any activity that could jeopardize the publishers (competitor publishers for example) that could be reported to the Search Providers for action too.

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