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Pay Per Click Fraud puts Online Advertisers at Risk
Participants in popular pay-per-click advertising programs face the risk of fraud from fraudulent clicks designed to put advertising commissions in the pockets of Internet scammers or deplete your advertising budget.
Indianapolis, IN July 25, 2004 -- As the price for online "pay-per-click" internet advertising has increased, website operators are becoming alarmed about "Click Fraud." According to Indianapolis based Internet marketing firm e-Practical Solutions www.e-psinc.com, click fraud is a scheme that takes advantage of online advertising programs like those offered by Google, MarketBanker and Yahoo's Overture division. A fraudulent website is set up that participates in programs like Google's AdSense program. Unlike legitimate websites that attract human visitors to the site, fraudsters use software "bots" or boiler-rooms of low wage employees to generate clicks on ads, and then collect commission from pay-per-click programs.
In June, a federal grand jury returned an indictment against Michael Anthony Bradley of Oak Park California who was charged with interfering with commerce and 10 counts of wire fraud for a scheme involving Google's cost-per-click program. Bradley's arrest is a rarity due to the fact that Click Fraud is very difficult to detect. In addition it can be devastating for companies that count on cost-per-click advertising to find customers. According to e-Practical's Seidle, "We've seen prices for pay-per-click go from $ 0.15 cents to an average of $ .40 cents to several dollars in some categories per click in the last two years. This cost increase has not equated to an increase in sales for many website operators which has many people asking why they are paying more."
Click fraud hurts advertisers by driving up the cost of each click because many online advertising programs adjust the price of each click based on the popularity of the click and the number of competing advertisers. Because it can take less than a few seconds to register thousands of clicks, "Click fraud can quickly deplete your pay per click marketing program and leave you with very little to show for it," says e-Practical Solutions consultant Mike Seidle.
In a recent filing to the Securities and Exchange Commission, Google acknowledged ,"We are exposed to the risk of fraudulent clicks on our ads. We have regularly paid refunds related to fraudulent clicks and expect to do so in the future. If we are unable to stop this fraudulent activity, these refunds may increase. If we find new evidence of past fraudulent clicks we may have to issue refunds retroactively of amounts previously paid to our Google Network members." Website operators can reduce the risk of being hit by click fraud by regularly auditing their websites log and immediately reporting suspicious traffic to pay-per-click programs. Web site operators who are unfamiliar with analyzing their sites raw web log files, e-Practical's Seidle points out, "There are some great off the shelf log software products like ClickTracks, WebTrends, and AWStats that make it fairly easy to identify patterns in your website's traffic."
"That's one reason we advise our clients to build complete Internet marketing programs, with traffic tracking, around a variety of lead building sources so you don't pay for every visit to your website and can identify suspicious activity." Other Internet marketing programs include organic search engine optimization; affiliate programs and professional email marketing services like those offered by Indianapolis firms Neighborhood E-mail - www.neighborhoodemail.com and Exact Target www.exactarget.com
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Company: E-Practical Solutions
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