How Much Is PPC Fraud Really Costing Your Business?

How Much Is PPC Fraud Really Costing Your Business?

Written by ClickCease ClickCease 3.5K Reads

Is it true that PPC fraud (click fraud) really costs the average business 20% of their marketing budget?

You already have enough on your plate in these extreme times.

You shouldn’t have to worry about how much of your ad spend is being defrauded.

And although the 20% mentioned above is a fair approximation, understanding what are the common practices and how ad fraud works will enable all of us to minimize our exposure to it, so that maybe the era of COVID-19 won’t be as devastating.

The practice of PPC fraud is nothing new.

In fact, PPC fraud has been around since the early years of PPC advertising.

However, the techniques and the technology have been growing increasingly sophisticated over the years, with the volume of PPC ad fraud holding fairly steady.

In this report, we’ll take a look at:

  • What exactly is PPC ad fraud?
  • Examples of ad fraud in action.
  • Industries affected by click fraud.
  • How it affects your business and your budget.
  • What is being done to beat the fraud.
  • How you can beat click fraud.

What Is PPC Ad Fraud?

PPC fraud is often referred to by a whole plethora of names such as ad fraud, click fraud, invalid clicks, or click bot attacks.

There are also specific practices such as click spoofing, click spamming, and click injection which all have their own super technical processes to defraud you of your ad spend.

If your head is spinning right now with all these terms, we’ll break it down with some simple definitions of ad fraud practices:

Invalid Clicks

This is the term used by Google to describe a click on a paid link that is not genuine in some way.

Invalid clicks may not actually be fraudulent, and can also include honest mistakes such as accidental clicks and repeated clicks by genuine site visitors.

However, under Google’s umbrella term, invalid clicks can also apply to many of the fraudulent practices that follow.

PPC Fraud

This catch-all title refers to any fraudulent practice carried out on PPC advertising.

As such, all of the following terms can be labeled PPC fraud, although the specific definitions that follow can help to pinpoint exactly how you’re being defrauded.

Click Fraud

Referring to any click on your paid links that are not genuine and are often malicious, the definition of click fraud is often applied to clicks on SERP results.

That is, if you’re paying to show at the top of Google or Bing, a fraudulent party may click on your paid links with the aim of depleting your budget and removing you from the paid results.

It also applies to fraudulent clicks on display ads or banners.

Ad Fraud

Here, it gets a little more complicated. The definition of ad fraud is that your paid ads, usually in banner or video format, are hosted on a website that is designed to capitalize on ad payout.

For example, an unscrupulous marketer will make a website designed to host multiple ads (such as yours) and then channel fake traffic through it to collect the payout on clicks or impressions.

You, the marketer, however, pay for lots of clicks and get zero leads or customers.

Click Spoofing, Spamming & Injection

These relatively modern additions to the PPC fraud canon apply mostly to apps and mobile traffic.

It is normally undertaken by an app that is made to generate fake clicks on a device in the hope of collecting the payout for genuine organic installs or clicks.

You, the marketer, may get a genuine customer, but your data will look like you had a huge amount of clicks and the fraudster will collect a payout even from organic installs they have no claim to.

“By definition, click fraud affects pretty much every type of pay per click campaign. Although some of the most targeted industries might be quite obvious, some of the others might come as more of a surprise.”

How Do These Types of PPC Fraud Work?

Broadly speaking, there are two types of ways you can fall victim to PPC fraud:

  • Human interaction.
  • Automated interaction.

The most common ways you’ll find this kind of fraudulent click action are as follows:

Repetitive Clicks

The simplest way to commit click fraud is to simply click on a paid ad every time you see it.

Unhappy customers, disgruntled ex-employees, or other people with a grudge against your company are happy to waste a few bucks of your marketing budget for fun.

Organized Click Campaigns

Leveling up on the repetitive clicks here, if you really want to cause some damage you can pay for sustained traffic to any link.

You may have heard of click farms, which are organizations designed to generate clicks for a whole variety of reasons, from social media boosting to vindictive clicking on paid ads.

Bot Traffic

Automated bots have become a lot more sophisticated in recent years, including being designed to mimic human behavior on websites.

Bots can either be built into software such as apps, and harnessed as a co-ordinated network known as a ‘botnet’, or operated from servers in specific locations, such as click farms.

In recent years, there have been several high profile cases of organized crime syndicates operating ad fraud networks.

The most famous of which are Methbot, Hyphbot, and 3ve (Eve) which all made millions from generating bot traffic onto paid ad campaigns.

Bots and web crawlers aren’t always malicious, with many websites using this automated traffic to collect data and collate information.

However, the technology is a potent way to generate that traffic onto paid ads and collect the payout for unscrupulous ad fraudsters.

It is estimated that around half of all internet traffic today is automated.

This includes bots and web crawlers for non-malicious purposes.

On top of this, it is estimated that anything up to 25% of traffic online is generated for fraudulent means.

This Type of Fraud Doesn’t Happen to My Business, Does It?

Fraud affects pretty much every type of PPC campaign.

Although some of the most targeted industries might be quite obvious, some of the others might come as more of a surprise.

On-demand and local services often have a high cost-per-click and relatively fierce local competition.

For this reason, click fraud can be rife in industries such as:

  • Locksmiths.
  • Plumbers.
  • Waste disposal.
  • Building and remedial works.
  • Orthodontists and specialist health services.
  • Tourism-focused services.

Being on-demand, many of these businesses would expect that people searching for them to be ready to purchase.

There’s not a lot of research time when looking for an emergency plumber or a locksmith.

As such, the conversion on their clicks should be relatively high, which makes a $40-50 cost-per-click seem worthwhile.

A recent case study on a waste disposal service in Australia uncovered a practice that is all too common.

One competitor had orchestrated a campaign of clicking on the paid links of other businesses in the area, and only the combined efforts of several business owners using click fraud detection software uncovered the perpetrator.

This type of competitor click fraud is alarmingly common.

But you’re not an on-demand service?

You’re a startup or small business running a low key banner ad campaign, simple YouTube video ads or perhaps popping some ads on Facebook and Instagram.

Or maybe you work for an agency managing a broad range of client’s PPC ads.

If you run display ads on any network from Google or Bing, to Facebook’s increasingly diverse portfolio, you are in prime position to fall victim to ad fraud.

The Impact of PPC Fraud

The financial impact of PPC fraud is going to be one of the biggest concerns for any company.

Beyond being out of pocket, there are other ways that click fraud and ad fraud can cause problems to your marketing campaign.

Being knocked down the search engine result pages, or worse still, completely off them, is going to mean a lot of missed opportunities.

If click fraud is effective, and it uses up your daily budget, your target audience won’t see your ad.

Even if the money gets refunded down the line, it is a case of missed opportunities.

How many potential customers may have seen your ad and clicked on it that day?

That’s an income that can’t be replaced even if you do get the fraudulent ad spend replaced.

For businesses that focus the majority of their marketing on PPC advertising, this disruption can cause a knock-on effect on their business development.

Small businesses and startups increasingly rely on PPC advertising in important phases, such as product launches or for seasonal peaks.

Being hit for anything up to 20% of your marketing budget is one thing, but it’s the loss of income that will be much more important for most.

So How Much Is Click Fraud Costing My Business?

This depends on your industry and ad spend.

Ilan Missulawin, CMO of ClickCease, says, “We find that across all our accounts, most clients see anything between 4-20% of their PPC ads are subjected to fraud.”

It’s hard to define an average amount that companies spend on PPC ads, with the range running from $1,000 a month to $50,000 a month or more.

By some estimates, U.S.-based law firms spend anything up to $100,000 on ads each month.

Online gambling sites will spend multiples of hundreds of thousands monthly on PPC advertising, with some of the most lucrative potential returns.

Taking an average of 15% off those totals, and it becomes obvious why this form of fraud is so popular.

So, if you’re working with a monthly marketing budget of $20,000, you can reasonably expect that around $3,000 of that is going to the fraudsters.

“Most companies are subject to some level of click fraud on their Google or Bing Ads, it’s just a case of how much,” Missulawin says. “It’s not always constant or consistent, but it happens, and much more regularly than people may think.”

Although there have been some recent cases of large advertisers suing fraudsters, in general, the practice of ad fraud isn’t one that is being tackled.

In fact, the stats for Google ad fraud have been consistent for years, and despite the odd closure of a click farm or fraudulent operation shut down, there are limited restrictions legally.

So what click fraud or ad fraud protection processes are in place currently?

What Are the Advertisers Doing to Tackle Fraud on PPC Ads?

Google attempts to fix issues with invalid clicks.

For some repeat clicks, or clicks from obvious fraudulent sources, Google automatically blocks these and will automatically issue a refund (although this can take time).

If you spot something that you think is fraudulent on your Google Ads you can raise this with their customer support for processing.

However, the definition and analysis of what makes an invalid click may be part of the issue here.

Google doesn’t focus on creating anti-click fraud software and, in fact, some issues that should be identified as fraudulent can often be missed.

The same applies to Bing, Facebook, Taboola, Outbrain, et al.

The way sources of clicks are identified is where the problems can start. Google treats each visit from each IP address as a unique occasion.

So if you have a cellphone that clicks on your ads in one location, then uses a VPN or logs on to a different wifi network and clicks again, it will look like a new visitor.

Organized click fraud often has processes to mask or change IP addresses regularly, making it hard for Google’s algorithms to keep up.

What Can I Do to Beat Click Fraudsters?

When it comes to avoiding click fraud, software solutions like ClickCease are without a doubt the easiest way to deal with everything that comes your way.

There are methods you can use to do it yourself too, so we’ll take a quick look at both options.

Anti-Click Fraud Software

There are plenty of choices, but ClickCease is the industry-leading option for good reason.

How does it work?

ClickCease assigns each device that clicks on your ads a unique device ID which helps to identify patterns of fraudulent activity.

This means that even if that IP address is changed, it’ll be clear that a specific device is a repeat visitor.

When it comes to botnets and click farms, ClickCease also keeps a blacklist of suspicious sources, so if there is a shady character doing the rounds you’ll be able to block them.

Using software such as ClickCease also saves you a lot of time doing the fiddly things that come as part of the manual option.

And, with a handy visual dashboard, you can view things like fraudulent sources locations, times, most affected campaigns and even get an overview of the type of traffic clicking on your ads.

For advertisers running multiple campaigns on Google or Bing, or for any business with a high cost-per-click, ClickCease will likely save you time, money, and stress.

The Manual Option

You don’t have to pay to block click fraud and ad fraud on your Google Ads or Microsoft Advertising networks.

Tweaking the settings in your Ads dashboard will limit your exposure, but be warned, with increasingly sophisticated techniques being deployed, these are not 100% guaranteed to work.

  • Timing: If you run your ads 24/7, look at when is the most effective time to run your ads and limit your chances of exposure to fraud.
  • Location: Target specific areas, the more specific the better. Also, try and exclude locations where you think fraud on your ads may happen.
  • Negative keywords: Fraudsters often target quite broad search terms, so get specific with your keyword tagging and don’t be afraid to use negative keywords.
  • Monitor ads daily: Make sure to regularly check your ads for suspicious IP addresses and activity. Spikes in activity but without corresponding conversions may indicate fraud in your ads.

Ready to Beat Click Fraud?

If you think your Google or Microsoft Ads are being targeted by ad fraud or click fraud, you can check for free using ClickCease.

Simply sign up for their 7-day free trial, register your site and your ad campaigns, and get a look at what’s really happening.

Eliminate PPC fraud on your ads and take back control over your marketing spend.

Sign up for your free 7-day ClickCease trial here.

Is click fraud costing you money?

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Is click fraud costing you money?