The first point worth noting is that not everyone agrees with those numbers. Peter Hershberg, managing partner at Reprise Media, a search engine marketing firm, told Media Post that it doesn’t reflect what his company is seeing. If anything, clients are increasing rather than decreasing their spending. “It’s totally at odds with pretty much every client experience we’ve had,” he said when informed of the report’s findings.
If the click fraud situation really is between 14 and 15 percent, though, and is discouraging advertisers from spending money on PPC advertising, it’s worth asking why it is so bad. One problem is that there is no official definition of click fraud. In its settlement, Yahoo defined it as “clicks generated by persons that did not have a bona fide interest in viewing the content of a Yahoo ad.” That can cover a lot of ground.
It’s true that some of these clicks are done in bad faith, by online publishers trying to make some money from the ads posted on their web sites, or by competitors trying to drive a rival out of business. But some are honest mistakes. How would you classify a click from a consumer whose mouse slipped, so he clicked on an ad unintentionally? What about the situation of a publisher who just revamped his site, became interested in the new ads Google started serving on it, and clicked on a few out of curiosity – forgetting, for the moment, that it could be considered click fraud? Let’s not forget, too, that most advertisers assume a spike in clicks will be followed by a spike in conversions; that’s not always the case, and when it’s not, it could be click fraud, or something completely different going on.
Differences in opinion as to what constitutes click fraud might explain, at least in part, why we still see fluctuating numbers as to the size of the problem. Outsell places it at 14.6 percent. Click Forensics, a company that sells pay-per-click validation services and hosts the Click Fraud Index (which reports on data collected by a free ad tracking service), comes up with similar numbers – but provides some fine tuning. Industry wide, it reports the average click fraud rate to be 13.7 percent. But then it separates search engines into tier one, tier two, and tier three companies. In tier one, which includes Google and Yahoo, the click fraud rate is only 12.1 percent. But in tier two it rises to 21.3 percent, and advertisers with tier three search companies suffer under a click fraud rate of 29.8 percent.
And then there’s the matter of those low percentages on the refunds. You have to wonder why advertisers are making a bad situation worse by not putting in for the refunds they believe they deserve. Well, many of them have learned that complaining doesn’t help. Of the ones who requested refunds, 63 percent of those who tried to get refunds from Google were satisfied by the experience – but only 17 percent who sought refunds from Yahoo were satisfied. If it is going to be a hassle to claim a refund, advertisers put a dollar value on their time, too, and decide whether it’s worth it.
Chuck Richard thinks that there’s more to the problem that this, however. If he’s right, it might point the way to a solution.
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