Click Fraud – Threatening the Internet
Economy
by Ross MacIver
One of the most popular forms of Internet advertising is pay-per-click
(PPC). Merchants place ads with search engines like Google or
MSN and the ad appears whenever someone enters a relevant search.
If the ad is clicked the merchant pays a fee – anywhere
from 5 cents to $100. It’s a fabulous idea – ad campaigns
targeted at your most likely customers.
It’s such a fabulous idea that Google, the king of PPC,
grossed $1.24 billion in the first 3 months of this year –
most of it from advertising revenue.
Watch out, though. There’s trouble in PPC land. The flip
side to PPC is a phenomenon called “click fraud” or
“click spam.”
There are two types of click fraud. The first type occurs when
someone maliciously clicks on your PPC ad to drive up your advertising
costs. It could be a competitor or a disgruntled former employee.
The second type of fraud involves clicking on affiliate ads
to generate income. Affiliate ads are placed on third party
web sites and each time someone clicks on an affiliate ad the
web site owner receives a commission.
Industry observers believe that affiliate click fraud is the
biggest problem of the two. Either way, the result is the same
– advertising budget depletion with little gain for the
merchant.
Either type of click fraud can be accomplished with the use
of automated “robots” or by hiring an army of workers.
The India Times reported in 2004 that a “growing number
of housewives, college graduates, and even working professionals
across metropolitan cities are rushing to click paid Internet
ads to make $100 to $200 per month.”
How serious is the problem? It’s hard to judge exactly,
but click fraud is commonly estimated at 20% to 35% of all PPC
ad campaigns.
A recently launched lawsuit alleges that Google is aware of
the magnitude of click fraud and does not do enough to alert
advertisers of the problem.
The class action suit launched by Click Defence says that "Google
has an inherent conflict of interest in preventing click fraud
since it derives the same amount of income from each fraudulent
click as it does from each legitimate click."
The $10 million lawsuit quotes Google Chief Financial Officer
George Reyes as saying that click fraud is “the biggest
threat to the Internet economy.”
Click Defense is a Colorado company specializing in click fraud
detection. They claim that they themselves became a victim of
click fraud when they advertised with Google’s Adwords
program this year.
They are seeking damages for breach of contract, negligence,
unjust enrichment, and unfair business practices.
A Google spokesman said that the case is unmerited and that
Google will defend itself “vigorously.”
About the Author
Copyright 2010 by Ross MacIver
This article may be redistributed freely on the Internet or
in ezines as long as the resource box and hyperlinks remain
intact.
Ross MacIver is the director of Best Online Content. We provide
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