Click fraud has received a lot of news coverage recently; even Google's chief financial officer admitted that it was a serious threat to the company's business model. It could also become a serious threat to your business model, causing your pay-per-click advertising costs to skyrocket with no return on your investment. What is click fraud? And more importantly, what can you do about it? Read on to find out.
You expend massive amounts of funds, perhaps tens of thousands of dollars every month on sponsored pay per click advertisement on the major search engines. Your idea is clear-cut: you settle upon a bid for the chosen keywords, you engineer and launch a simple creative ad and then sit back to wait for visitors to beat a path to your website. The price paid for those keywords depends on the amount of competition there is for those keywords, as well as how often your ad is clicked.
Now think for a moment. What would happen if someone – perhaps a competitor – spent all day clicking your ads? This type of behavior would definitely hurt the budget; before too long, the bid will rise on the price of your keywords and could cause your ads to exceed your maximum daily spending limits. Ultimately, your products and services may end up not seen by legitimate buyers, as intended. Worse, what about the professional online con artist who uses your banner ads in order to drive the prices way up for the market? This has the same hazardous effect on your advertising budget!
It is no secret that our world is vulnerable to fraud, whether it occurs over the Internet or in the mainstream business realm. Fraudulent activity played out in the media spotlight recently when the mounting risks of Internet click fraud were finally exposed. The problem has been around for a while – indeed, in July of last year some marketing executives reportedly estimated that as much as 20 percent of the fees in some advertising categories were fraudulent. It wasn’t until November of 2004, however, that Google filed a lawsuit against a company it accused of engaging in systematic click fraud. Finally, in December, Google CFO George Reyes admitted the magnitude of the problem. “I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model,” he said.
It not only threatens the search engines’ business model, but potentially yours as well. In the Google case, Auctions Expert International allegedly agreed to display Google’s targeted text advertising on its website, and then, using either humans or a software program, fraudulently clicked on the ads. Since it displayed the ads on its website, Auctions Expert International received paychecks for the clicks. Can you guess where the money came from? It came from advertisers…just like you.
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