Click Fraud and PPC Search Advertising — Is Your Campaign At Risk?
By Sage Peterson
February 2005
It seems everyone is talking about click fraud. It's a hot topic because it is so scary — so nefarious. The possibility that search marketers' hard earned dollars are being siphoned from their budgets and into the pockets of the search engines because their competitors — or someone angry with them — wants a measure of payback is just so titillating.
It's no wonder that reporters are devoting more and more ink to this topic — it has to sell more magazines!
But how serious a problem is it really? Well, I think that click-fraud is a lot like West Nile virus. It only strikes a few of us, so the odds of getting it are low, but if you get it, it's no fun at all. In fact it's serious.
So how likely is it that your campaign will be subjected to click-fraud? It depends.
In many vertical markets it has not been a problem for our clients. In fact, we've identified click-fraud in only a rare few client campaigns. The key is identifying it, and then stopping it quickly.
The odds that you will be able to identify click fraud increase greatly if you are running your campaign with a sophisticated bid management tool. Automated bidding agents are based on sophisticated algorithms that raise and lower bid prices based on some business objective. That algorithm develops an understanding of click-through rates by day of the week, hour of the day, and even month of the year as it bids on your terms and tracks those clicks through to a conversion outcome.
Over a period of time, it determines that a given keyword receives some number of predictable clicks and conversions per hour and even down to the hour of the day of the week.
When a competitor launches a "click-attack" — often using some automated software tool to click and then return and click again, it throws the ratios on a given keyword out of whack. The bidding agent can detect that sudden change and withdraw bidding activity on that keyword. If it happens frequently, your campaign manager will likely contact the search engine and ask for an investigation.
Manual bidding methods are usually less forgiving. Often, the detection of click-fraud happens forensically: (i.e. after you've incurred a significant loss). It's harder for someone manually managing bids on hundreds of keywords using a spreadsheet to notice a sudden spike in clicks and a drop in conversions.
Click-fraud happens. Except in very rare instances, it is usually not a show stopper. If you anticipate it, and work with a vendor or tool provider whose bidding agent technology has some ability or mechanism to detect and quickly stop it, your campaign will likely succeed despite some unethical person's best efforts. As is the case with many things, technology is the key to ensuring your marketing dollars are being spent to attract customers instead of crooks.
