The Hidden World of Click Fraud

You’ve heard plenty of reports about click fraud. But who is doing it? And what are the pressures motivating them? This author interviews several anonymous webmasters engaging in click fraud in Lagos, and discovers a small piece of a much bigger problem.

After six months away from Lagos, working in sun-drenched Eket, I returned to Lagos intent on getting up to speed on what my companions in the tech center of West Africa were up to. Three days into my return, I was at a meeting for a non-governmental organization for which I do pro bono work. After the meeting I was talking to another web master who was offering me web space. As our conversation progressed he began griping about how much competition there was in web design.

I asked him what other things he was doing apart from web design and hosting, and with a sly look on his face he shared his practices with me. Ten minutes later, stupefied, I was interviewing another colleague, a graphics designer who wanted to work with me on several projects. The result of these interviews and three others led me to write this report on click fraud on the streets of Lagos.

The Foundation

If you have ever studied ways of making money off the Internet, you will definitely have come across the literally thousands of get rich quick scams that run on Adsense. Self-styled gurus offer to sell you secrets on how you can “instantly” increase traffic and get people to click on your Adsense accounts, thereby making millions for yourself (and Google). Thousands of legitimate sites and blogs have Adsense accounts which provide them with some amount of money every month; for example, www.soulcast.com‘s entire remunerations package is based on paying the bloggers a percentage of the revenue generated by Adsense placed on the site. The site http://www.plentyoffish.com/ averages ten thousand dollars a day on Adsense revenue.

Compare this number to the average amount (sometimes meager) a small personal or business site will make and you have a situation in which website owners will be tempted to click on their own ads. Even worse are the “made for Adsense” sites, which are only online so that they can generate revenue off Adsense, having no real concern for content or user experience. They build hundreds of sites with content replicating software and CMS, monetize all their links and place Adsense on all their sites. They hail themselves as heroes and are eulogized on blogs while making six figures yearly off Adsense revenue.

Lagos is the technology and financial center of Nigeria. On a darker side, it was where the Nigerian scam letter began. It fortunately it missed being home to the biggest click fraudster in Nigeria; that dubious distinction rests with a resident of another province. There is literally a glut of highly qualified professionals; thousands of them are unemployed. They then turn to Internet fraud, or go into business as software developers and website designers.

It is the latter category (specifically web designers) who perpetrate click fraud on Adsense. This is not a blanket accusation, but the percentage of webmasters that are involved in it is close to eight percent. Fortunately, they only do it on their own sites, not their clients’ sites.

The first webmaster I interviewed (let’s call him John) is a web designer who has being in the industry for close to four years. He has built hundreds of web sites for clients, and just one for himself. He runs Adsense campaigns on his site, after he ran across an article on the net that motivated him to do so. He has little or no knowledge of search engine optimization, however, and zero incentive to learn. He also has a six year old daughter and no other source of income apart from web design and hosting.

According to him, “Adsense is for clicking, they say I should click and get paid, so I do so.” I asked him whether he considered it stealing to click fraudulently, and he sneered at me. He told me he does not participate in Internet fraud, and only does enough clicking to cover the monthly fees for his Internet connection and give his daughter an allowance when she goes to school. But the real beauty of the scam is the amount of organization he put into it.

The Scams (Made in Nigeria)

All over the world there are thousands of individuals who are computer savvy, who cannot afford to own their own computer. Combine this in Lagos with an undisclosed unemployment rate. He paid each individual on a weekly basis the equivalent of ten dollars (he claims he can only afford between 8-10 people a week because of overhead).

Computer centers charge between one to two dollars an hour to rent a computer connected to the Internet. The individuals he pays buy bulk time packages at discounted rates and browse happily, while paying him back by going to his site and clicking on his ads. He also clicks on his own ads whenever he has the chance, and encourages friends and family to do so when they visit his site. 

The graphics designer claimed that the only thing stopping him from starting his own ring was a large project on which he was currently working. I remembered that a few months back he had asked for my cost estimate for six web sites and bulk hosting for all six. He had emphasized that I would set up Adsense accounts for all six.

This is not happening only in Lagos; think Mumbai, Bangladesh, Calcutta, Shanghai, Pakistan, and Peru. I think the only reason you are getting this information is because I am currently in Lagos. What I am saying is, this is a global phenomenon, not a Nigerian one.

Others Speak Up

When I asked him from where he got the idea, he casually mentioned a name I knew very well (all hearsay, so I cannot provide the URL). The site is probably the biggest on all things Nigerian; apart from that, I had been privy to reviewing the early versions of the site. The graphic designer I interviewed was even more cavalier. According to him “the advertisers have huge budgets, a few hundred dollars will not really hurt them,” and anyway “Google keeps most of the money.”

Head still spinning, I spent the evening with my colleagues reviewing our strategies for bringing traffic to our current blogs and sites, and sharing ideas on content management systems and programming. And coincidentally Adsense came up, A particular site makes thousands of dollars monthly from Adsense (it is targeted to Nigerians). The owner of the website almost dropped out of university since he was making so much money off Adsense revenue alone. Whether the clicks from his site are honest or not is, again, a matter of hearsay.

It was not only in Lagos. In Ibadan and Abeokuta too, webmasters who spend all their time reading about ways to generate money off their sites create Adsense accounts on their site (one intended to start one on a client’s site he was administering). They are virtually untraceable; they host either on virtual servers or pay online web hosts with Master Card or Visa. The Google payments are made to associates (since Nigeria is not on their list of pay out countries) and there are no reported incidences of a scam website being pulled off the Adsense network by Google.

Profit Sharing

For more developed scam rings that specialize in sending fraudulent emails, the click fraud scam is a sideline means of generating income when business is slow. The ring (often made up of teenage males and their girlfriends) gets a friend to build and upload a site for a low fee (perhaps 200 dollars) and then goes clicking on slow days, with an agreement to share the profits when the check comes in.

So what are the search engines doing to protect advertisers from fraudulent clicks? Google CEO Eric Schmidt did not help matters when he advocated a market-driven correction, claiming that over time the advertisers will pay less for click throughs as they factor in bad clicks. Advertisers do not seem to be reacting yet.

Other solutions that Google has tried in its efforts to contain click fraud include putting click fraud metrics on advertisers’ Adsense accounts. Details about this can be seen on http://adwords.blogspot.com/2006/07/estimating-invalid-clicks.html. It basically tells advertisers what amount of click throughs are believed to be fraudulent, so that advertisers are not charged for said clicks. Google posted percentages of around ten percent, so Outsell Inc’s report of 14-21 percent is looking more and more real.

Google claim that the numbers being thrown around by third party consultants are too high, and says that maybe such consultants have a vested interest in making the problem seem bigger than it is. Also its current crackdown on “made for Adsense” sites is encouraging (though it seems as if it punishes the innocent with the guilty).

The other search engines apart from Google help by giving advertisers other options. This will encourage Google to reduce click fraud on Adsense campaigns since the search engine would not want advertisers to move to its competitors for their pay per click campaigns.

Lasting Solutions: Advertisers as Police

The one sure thing about click fraud is that it is only invisible as long as it remains small, but since it is no longer invisible (after all I saw it), I am one of those that are afraid that it is no longer small. Leaving Google to clean up its invalid click detection systems is not feasible for advertisers; they have to police their accounts and go through their logs themselves.

When that becomes unfeasible due to software inability to decipher what came through Adsense, and what came through SERPs or other factors, advertisers may have to hire third parties to investigate the sites which are responsible for large amounts of their Adsense traffic. If they can also ensure that their ads are not hosted by made for Adsense sites, would probably reduce the percentages of invalid clicks. Greedy webmasters who want to fraudulently increase their Adsense income to stratospheric proportions will probably be found out simply due to the scale of the fraud they will perpetrate.

CPA, Renting Text Links and Other Alternatives

In a previous article I had written that advertisers will consider paying for performance through pay per action, the action either being lead generation or sales. All models have their flaws, but Adsense’s flaw is too easily exploited.

Hundreds of large sites already advertise simply by buying up space for multimedia adverts or text links on sites which have large numbers of visitors. This trend will increase as advertisers simply shop around for spaces on sites where they will buy space. Also referral networks which pay for performance (like Amazon’s associate program) will grow. Online advertising will continue to be a big business, however all bets are off as who will have the biggest share in ten years’ time. After all, ten years ago, there was no Adsense.

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