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February 22, 2008

Click Fraud Keeps Rising, Up 15 percent in 2007

Erick Schonfeld

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click-fraud-chart-1.pngClick Forensics has some data out on click fraud (clicks on Internet ads that are not real) in the fourth quarter of 2007 and for the full year. The industry-wide average click fraud rate for the entire year went up 15 percent, ending the year with 16.6 percent of all clicks on Web ads being fraudulent. The click fraud rate for search engine ad networks alone, including Google AdSense and Yahoo Publisher Network, grew even more. That was up 47 percent in the fourth quarter, ending the year with a 28.3 percent click fraud rate. According to this data, nearly one out of every three clicks on a Google or Yahoo ad is fraudulent.

While the year-over-year growth is cause for concern, the click fraud rates remained pretty steady compared to the third quarter of 2007, when the overall click fraud rate was 16.2 percent and the search-engine click fraud rate was 28.1 percent (see charts above). One quarter does not make a trend, but could the click fraud rate be leveling off? One can hope. If Google can ever get that rate to actually go down, maybe its stock will shoot up again.

Click Forensics also published the handy heat map below showing the countries where the most click fraud is originating. (Red is bad, green is benign). The biggest sources of click fraud are India (4.3 percent), Germany (3.9 percent), and South Korea (3.7 percent). Mexico is also in the red.

clickfraud-chart-2.png

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This entry was posted on Friday, February 22nd, 2008 at 8:52 am and is filed under Web 2.0 News & Ideas. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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Comments

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  1. BloggrZ

    February 22nd, 2008 at 8:55 am

    No wonder advertizers get such crappy clickthroughs and conversion rates!

  2. WTL

    February 22nd, 2008 at 8:59 am

    What a surprise… not! I don’t know anyone who clicks on ads (even rarely). The fact is Google has only shown themselves to be a one-trick pony at this point. The double edge sword of their business model is that as customers get better at SEO and their organic search results improve, reliance on paid results will diminish over time. In essence, the better Google gets at search, the less powerful and necessary AdSense becomes.

  3. Rushabh Choksi

    February 22nd, 2008 at 9:00 am

    well.. i am not surprised to be honest. i guess this rate might just go higher and higher.

  4. JosefVirek

    February 22nd, 2008 at 9:04 am

    Google’s going to crash and burn…

  5. Ghaus

    February 22nd, 2008 at 9:07 am

    Yes, the rate will go higher and higher. No one can stop it, not even Google.

  6. sourceroot

    February 22nd, 2008 at 9:26 am

    @5, your right, the problem is there has to be incentive for publishers… I personally know guys that have a company that do nothing but CF as a primary source of revenue. Stealing from advertisers is unfortunately a trillion dollar business. The more saturated this “industry” gets the harder its going to be to monetize legitimate traffic.

  7. magnusdopus

    February 22nd, 2008 at 9:26 am

    Google recently issued a revenue warning related to click fraud, or what they deem as ‘accidental’ clicks.

    @WTL - Good insight, I’m on the same page but with a different conclusion. I would say that Google intentionally skews the organic search results so that advertisers are forced to use their paid search. Sites that have been able to game the system in the past, get shut down as soon as Google updates their ranking algorithim. Over long term, this volatility is worse for an advertiser/site than the steady traffic they can expect with paid search.

  8. AK

    February 22nd, 2008 at 9:27 am

    This report itself looks fraud !!

  9. gilltots

    February 22nd, 2008 at 9:39 am

    i wonder how closely that heat map correlates to a map of where the most active Tor servers are. i know anytime i tried using Tor i ended up connecting through a server in germany..

  10. Alex Hammer

    February 22nd, 2008 at 9:42 am

    Although many studies have I believe been done, the average Internet user, and I would think the average Internet text ad buyer as well, I believe has little to no detailed understanding of what the issues and profundity in this realm may be.

    If a highly regarded reliable study was very widely distributed (and explained in ways that people notice, understand and remember), how much an effect might it have on the entire industry?

    Google’s cash cow.

  11. skeptical dude

    February 22nd, 2008 at 9:44 am

    O.K. Whose smart here? Is the whole click-based-advertising thing fundamentally flawed, or is there a solution? I guess tracking the clicking user by cookie or ip isn’t a perfect solution, any other ideas?

  12. Scott

    February 22nd, 2008 at 10:01 am

    I think the answer is for more end-to-end transparency, so advertisers and publishers can correlate pre-click and post-click activity. Obviously there are privacy issues here, but nothing that a good standard can’t overcome.

  13. Adam

    February 22nd, 2008 at 10:02 am

    Solutions:

    #1) Don’t advertise outside the U.S./Canada (or whatever your market is), unless necessary. That should solve the problem for most people. I’ve seen so many people that have ads running in China and India for no good reason.

    #2) For the content network - Use Google’s placement report to see all the sites you’re advertising on, and boot the crappy ones.

    The people getting killed by clickfraud are lazy-assed PPC managers, in my opinion.

    There’s really just not much motivation for people to commit click-fraud on the search network. Competitors may do a few clicks, but they’ll get filtered out unless they’re really advanced and put a ton of time into it.

    If you’re careful, you can still get a great ROI on the content network. I’m happy more people are terrified of it, actually. Less competition. Maybe I should shut up.

  14. Rod

    February 22nd, 2008 at 10:06 am

    How is click fraud measured?

  15. Chris

    February 22nd, 2008 at 10:06 am

    @ #10 - dude, did you skip every single English class when you were growing up?

    It seems to me that CF is already priced into advertising costs and that the pricing/return is figured into the ad buy. How is CF measured anyway? There has to be some amount of error in those figures. Maybe its already in the numbers? How do the search engines fight CF?

  16. Lee Gibbons

    February 22nd, 2008 at 10:12 am

    Nice scale on those graphs to make the jump look much bigger than it really was.

  17. SearcH◆ EngineS WEB

    February 22nd, 2008 at 10:22 am

    Reported this finding on Blogoscoped - got some interesting feeback from SEOs

    http://blogoscoped.com/forum/122269.html

  18. Bob

    February 22nd, 2008 at 10:31 am

    What was the article about, I was busy clicking on all the ads in the page. Mike’s got to eat.

  19. pete0rz

    February 22nd, 2008 at 10:47 am

    Erick - you’re probably already familiar with the Click Forensics/Shuman debate earlier this month, but you should 1) check out Shuman’s site: http://shumans.com/ and 2) his post on why 3rd party estimates just don’t measure up: http://shumans.com/articles/000048.php

    Food for thought & let us know what you think…

  20. JS

    February 22nd, 2008 at 10:50 am

    @ #8 and #14

    I’m with both of you. I looked around the Click Forensics site (aka ClickFraudNetwork, aka ClickFraudIndex) and can’t find any explanation of how they get their numbers. If it’s so easy for them to measure the fraud rate, then why can’t advertising networks (especially the likes of Google and Yahoo) do the same. I know for a fact Google attempts to weed out “accidental” clicks.

    So what would be more interesting for me to see would be the percentage of fraudulent clicks that don’t get weeded out. It seems rather ridiculous to think Click Forensics would be able to detect them better than the large advertising networks? They could, potentially, be able to help out smaller advertisers by filtering out specific IP addresses.

    My guess is Click Forensics is just trying to take a piece of the online advertising pie. Note: they also advertise the ability to increase a network’s “earnings per click”.

  21. Kevin Fodor

    February 22nd, 2008 at 10:52 am

    I tried Google Ad Words for a while to promote my mobile DJ business. I was a victim of click fraud when a radio competitor (who did not even operate a DJ business) decided to try and mess with my side business. I know he did it, because he bragged about it to a co-worker of mine. When I alerted Google, all I got was doubletalk…and absolutely no help. No, I was not going to keep pumping my monthly fee up to counteract the click fraud. Thanks to this gentleman, my ads would disappear within 5 minutes no matter how high I “bid”.

    Maybe Google should base their charges on “impressions” not actual “clicks”. I understand some businesses have thousands of dollars to spend on their businesses each day. We small operators have to make every dollar stretch. The way it is right now with Google Ad Words, you are simply not “cost effective” because of your refusal to deal with click fraud.

    I do use Google for ads placed on their network. That way, my competitors, (or simply unscrupulous people wanting to mess with me), can’t predict where or when the ad will fall on the network and, thus, cannot affect my advertising.

  22. Beck

    February 22nd, 2008 at 10:56 am

    @#15 - Good point. How do they measure it? Because if they are able to measure that a click is fraudulent then they should also be able to filter out that fraudulent click, with the result being no CF problem at all.

  23. Lary

    February 22nd, 2008 at 11:03 am

    How does a company such as Forensics calculate a fraudulent click? I find it hard to believe that they could easily gather that kind of data to put out a report.

    Is it based on advertisers reporting fraudulent clicks? That sounds unreliable.

    How about Google? Now I know Google would NEVER publish that kind of data.

    So is this just a puff piece based on speculation and a “gut feeling” that it is happening at a higher rate?

    -Lary
    http://www.holsumstudios.com

  24. techguy

    February 22nd, 2008 at 11:11 am

    You’ve got to be kidding. How could you produce a report like this? Even Google can’t track how many clicks are click fraud so how can a third party measure it? I call BS.

    I think we all know that click fraud is a potential major problem, but there is still 90% of internet users(my guess) out there that don’t know the difference between a google ad and a regular link. They aren’t fraudulently clicking it and still provide a valuable base of users.

    As was said, click fraud has to be part of the ROI calculation if you’re doing this type of advertising.

  25. Kord

    February 22nd, 2008 at 11:11 am

    BTW:
    India also tops the spammy mail chart: http://www.pluggd.in/2008/02/s.....uses-india

  26. Michelle Greer

    February 22nd, 2008 at 11:12 am

    It would nice to see some impartial data on this 1.) not generated by Google or other search engines and 2.) not generated by a click fraud prevention company. Google is going to report click fraud at under one percent, and click fraud companies are going to report it at 16.6 percent. Why would you expect anything else?

  27. Markus

    February 22nd, 2008 at 11:19 am

    If you have large repeat traffic, where users see similar ads day after day then users will start treating those ads as bookmarks.

    Clickfraud for the most part is pure BS, just fear tatics from companies to sell products.

  28. markus941

    February 22nd, 2008 at 11:46 am

    I agree with the other Markus ;)

    Just because the charts are pretty doesn’t mean the data is solid.

    How can you believe a company’s report whose profits directly depend on it. That’s like trusting the oil companies with “environmental safety” reports.

  29. Don MacAskill

    February 22nd, 2008 at 12:35 pm

    So what?

    Anyone reasonable doing online advertising is measuring ROI, not just raw clicks. So you adjust your spend based on how well your ads are doing. If the effectiveness drops 15%, you tend to drop your spend by 15% and still come out even. And since everyone else is doing the same thing, and since Google is a bidding market, everything pretty much just works out.

    The only people who care about this are those that aren’t watching their ROI. And they deserve what’s coming. :)

  30. Kevin Fodor

    February 22nd, 2008 at 12:41 pm

    Sorry…but I don’t see how anyone can say CF is “BS”.

    I am proof. I know who did it to me. The person admitted it to an outside party.

    Some competitors to products are becoming absolute predators who are obsessed with keeping their ad “on top of Google” or “on top of Yahoo”. Keeping a competitor off and their ad on top is their goal.

  31. Xeskino

    February 22nd, 2008 at 12:57 pm

    What if a concurrent website or someone “jealous” is responsible for alot of “fake clicks”? I know a couple of people whose websites have been blocked by Google to show ads. They tried to contact their customer service center, but all in vain. I think that Google is only protecting the interests of advertisers (because they earn money through them) but don’t care about the publishers. I don’t like their arrogance.

  32. Kevin Fodor

    February 22nd, 2008 at 1:05 pm

    And that’s the point.

    Google is only interested the revenue. Why? They have a financial interest in seeing you bid up your “key words”. Therefore, they almost encourage click fraud…(in a wierd way)…because they know it infuriates you to be outclicked.

  33. jackmayhofferr

    February 22nd, 2008 at 1:09 pm

    that is why CPM is the way to buy and sell.

  34. Adtoll Forums

    February 22nd, 2008 at 2:16 pm

    wow i had to laugh when i saw mexico in red. Also great map glad USA is not that bad for click fraud.

  35. G1

    February 22nd, 2008 at 2:37 pm

    #10 . I kinda like your english … it sounds poetic :-) I had to read it a couple of times to understand

  36. David

    February 22nd, 2008 at 2:38 pm

    First of all, the Google conspiracy theories can end. There have been some search engines notorious for having lots of click fraud, and advertisers and agencies have shifted budget away from them.

    Secondly, it’s sad to see TechCrunch just regurgitating these numbers when there’s nothing to back them up.

    Lastly, yes, Google does provide refunds for clicks it suspects are invalid.

  37. Damien

    February 22nd, 2008 at 3:13 pm

    “Clickfraud for the most part is pure BS, just fear tatics from companies to sell products.”

    There are plenty of agencies and hireforwork companies out there that will conduct “market research” for a small hourly fee as to where your “competitors” clicks go.

    In fact it’s $1100 a month to hire a junior in singapore that will do this for you and run it through various proxies to keep it looking clean.

    I’ve got a $24k/month adword campaign running and a weak person would surely fall for ways to cut that bill by a third. (or reach more customers in fact).

    In fact click fraud is one of those so apparent and obvious ways to short out a competitor it’s a wonder it’s not rampant.

  38. Al Woods

    February 22nd, 2008 at 3:31 pm

    I think the ads on websites, blogs and message boards are invisible to people. Every website has ads and I don’t see what the big deal is.

    The whole thing is for advertisers to get exposure for their websites, blogs and message boards. The ads to me are invisible. Click and keep on clicking. Fraud is everywhere.

  39. Amit Raman

    February 22nd, 2008 at 3:46 pm

    Go India!

  40. Z

    February 22nd, 2008 at 9:14 pm

    American companies have outsoucced many jobs to India, now they get fraudulent clicks in return.

  41. Eric Dewhirst

    February 22nd, 2008 at 9:49 pm

    Bottom line looks like you should advertise in Australia. I always knew Duncan was keeping the peace in the land down under!

    Cheers - Eric

  42. Rational Beaver

    February 22nd, 2008 at 10:12 pm

    Several people in this thread asked how click fraud might be measured. There are a few ways, but an easy example would be to look for multiple clicks in a short time frame all coming from the same ip. That’s the most obvious.

    That example also highlights a problem with Click Forensics. Google employs a multi-tiered click fraud detection system which allows them to identify a large portion of fraudulent clicks which advertisers are never charged for (or if they are charged, they are later refunded). Like if you click an ad, load the page, hit the back button and then click the ad again, Google would not charge the advertiser for the second click. So, while CF can do a decent job of detecting fraud, they have no clue whether that fraud matters (i.e. you actually got charged for it).

  43. JosefVirek

    February 23rd, 2008 at 12:30 am

    CPA is the answer.

  44. aster

    February 23rd, 2008 at 3:35 am

    http://www. i-guide .ro
    fraud will always occur in the world

  45. Chris L

    February 23rd, 2008 at 9:31 am

    CPA is not really the answer or at least not the total answer.

    They only work for things that people buy the first time they see it. If people go away from a site and come back later the publisher won’t get credit. (That could be partially solved by cookies) What if they just end up buying from a separate computer?

  46. Nigel

    February 23rd, 2008 at 7:36 pm

    This report is total BS.

    They got real issues with defining click fraud for starters. And if you can’t really measure it properly how can you label some countries more click fraud prone than others.

    I also find it suspicious that the U.S. seems like a greenish color, which would give an impression that there is less click fraud coming from that area, which is blatant BS.

    Which all confirms that any data coming about click issues coming from companies other than Google or Yahoo is not worth the paper it is written on.

  47. Laurent Nicolas (Alenty)

    February 25th, 2008 at 2:39 am

    If click fraud is achieved through robots, a way to decrease it is to detect robots, just like for comments.
    Google won’t make effort to decrease their revenues, the editors won’t either because they won’t shoot into their own foot.
    So only a third party can do this, but this third party should be paid by the advertisers (who are the only ones losing money with this fraud).
    So, how can we set up a system where advertisers pay a third party to monitor ad clicks on websites that they don’t control whatsoever? Tricky question…

  48. Vanessa_Organic

    February 25th, 2008 at 7:10 am

    End users rely on the integrity of the search engine. Most people clicking adword links are your competitors. If you are going to spend online marketing dollars - “organic seo” is the key word.

  49. Hrithik Roshan

    February 25th, 2008 at 4:28 pm

    You guys should check out The Eyes have it . The author also has excellent columns at clickz.com.

  50. Hrithik Roshan

    February 25th, 2008 at 4:31 pm

    Sorry the correct url is The Eyes have it

  51. Aditya

    March 11th, 2008 at 10:30 am

    No surprises wat so ever

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