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Pay Per Click Fraud – The Inside Story

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Pay Per Click Fraud – The Inside Story

Pay Per Click Fraud – The Inside Story

As my readers know I do my best to always write from an impartial viewpoint but when talking about click fraud it will be extremely difficult for me to maintain that perspective. I have strong personal beliefs on this issue and many of those philosophies have become ingrained into the way BlowSearch is currently doing business. If this article reads as promotional in any way, my apologies.

Keep in mind that this article is not the “official word” of BlowSearch, it is my own. If you have specific comments and questions relating to this article submit a comment to me on my weblog. I’ll be happy to answer your questions on my own site. With that disclaimer in place let’s move on.

I will be disclosing some common business practices in the pay per click business model. Some of these comments will make a lot of advertisers extremely unhappy and it may draw backlash from some of the engines. Frankly, I don’t really care. My only concern is that someone from inside the pay per click industry finally address the issue of click fraud, head on, without skirting the truth. I will be confirming some of the pay per click advertiser’s biggest concerns and telling you the real story about the PPC business model from behind the scenes. This is my insider information. It’s what I know from working within the search engine market and talking to employees of other engines over the last (nearly) three years. Out of respect for those people I will not name names and I will not point fingers. Click fraud is an industry wide issue and that is how I am approaching this article.

Now for a little history lesson on the origin of click fraud.

Cost per click advertising (CPC, hence PPC) actually began in large scale with PPC banner and text link advertising programs in the adult market around 5 to 7 years ago. The most educated people I know on the topic of click fraud come from the adult industry. PPC banner ads and text links was a major revenue stream for adult site affiliates before PPC finally was fazed out of the adult market due to click fraud. PPC banner and text advertising was a norm on adult sites for quite some time. Ultimately, it was also responsible for the closure of many adult affiliate programs.

Adult companies built huge affiliate networks on the PPC model of paying affiliates for displaying banners and text links. In the end, many of these same companies also went out of business because of click fraud. The adult industry could not stop click fraud back then because the technology was no good. The same issues exist today with pay per click search engine advertising. Nothing has changed in over 5 years.

Today click fraud in the adult market is related to “traffic trading scripts”. These scripts automatically trade traffic from one adult site to another in an effort to maximize traffic flow. Some of the network’s out there trading traffic in the adult space would make Google’s monthly search volume figures look minuscule. There are some huge networks in the adult market controlling more user traffic than you could ever imagine.

With a traffic trading script in place the user clicks a link on the adult site and is redirected to another adult site automatically. The scripting does a little math and sends traffic back to other sites based on the amount of traffic incoming from that site. Traffic trading scripts suffer the same dilemmas as PPC advertising. Someone in the network can artificially inflate clicks in order to earn more traffic from their traffic trading partner(s). It’s a “you send me clicks – I send you clicks back” framework. This process can be abused with an automated “hit bot” or “click bot”. These are similar in nature to the bots that plague the PPC advertising industry.

Detection of fraudulent clicks is increasingly difficult to accomplish and the tools fraudsters use to perpetrate their CRIME are becoming more advanced. Click fraud is as much of a problem now as it was back then in the adult market. In both cases we’re dealing with artificial clicks but with different objectives. In adult, it’s for more traffic and there is no revenue involved. In PPC advertising, it’s for your hard-earned dollars and almost $1 billion dollars per year is involved.

There are two basic types of click fraud in pay per click advertising. There is “competitor” and “automated” click fraud. Competitor based click fraud is when your competitors, a disgruntled employee, someone is paid to physically click, or just an average user maliciously clicks on your PPC ads. I define competitor click fraud as any physical click made on a paid link that is malicious and intended to purposely drain the advertiser’s budget.

Automated click fraud is a piece of software, a web server script, or other mechanism that is engineered or designed to artificially click on pay per click ads. This is the kind of stuff that is the scourge of online advertising. Many people believe that competitor based click fraud is the larger issue. That is what the search engines are telling the public because it is what they want you to believe. It’s PR spin folks. It masks the real problem of what is going on right now.

Competitor based click fraud is minuscule as compared to automated click fraud.

The automated fraud is the larger issue industry wide. If click fraud is estimated at 20% of all clicks, then automated click fraud is 19% of all those clicks. There are some pretty rich software programmers out there who do nothing but “game the engines” on a daily basis. Engines have no way of automatically finding this kind of fraud right now. It has to be found with manual checking. Looking at server logs and checking IP’s, referrer URL’s, and other info gleaned from server logs. It is a very tedious and time-consuming process.

I am not happy about the click fraud situation in the PPC industry.

I do not think advertisers are speaking loud enough about the click fraud issue. All existing technology to detect fraudulent clicks is severely lacking in functionality. Pay Per Click networks must be forced to find a way to automate the solution to click fraud. I spoke to Matt Cutts from Google at SES and he said that they have a team of “engineers” looking at raw data logs all day long. Well Matt, Google needs to go back to the drawing board because it is obviously not working. Google is no better than anyone else is when it comes to detecting click fraud.

The days of PPC services “snowing” their advertisers into believing “we do everything possible to deter click fraud” are over.

Why aren’t engines directly addressing the click fraud issue? Frankly it is because it will blow up in their face if they do. Google, Yahoo!, FindWhat, and every other provider is simply helpless to stop click fraud. They just don’t know how to. Nor do they want to until they are forced to do so. There is too much revenue involved for them to block all that traffic, or rather, that revenue.

None of the major PPC providers can turn around tomorrow and say that they have a “new” solution in place to block “all” click fraud. Why? That would raise the question of whether or not they have had the solution all along and simply chose to ignore it because their revenue was growing.

All PPC providers use similar technology to detect click fraud. As a matter of fact Digital Envoy is one solution used by Google and a number of other PPC programs. Just about every engine has a team, or at least one employee, dedicated to detecting click fraud and getting rid of the sites that cheat the system. However those employees are only to “effectively manage the bad traffic”. It is not necessarily their job to eliminate it. Remember we are talking about public companies here with lots on stock and revenue projections involved. They can’t eliminate traffic unless they know where they can replace the lost revenue first. They have financial numbers to hit every quarter.

Snippet from a recent New York Times Article:

    “There are a lot of players in this game,” said Patrick Giordani, the head of loss prevention at Overture, part of Yahoo. “It’s our job to stay one step ahead of them.” Mr. Giordani described a team of data analysts, statisticians, computer scientists and others working hard at Overture to prevent click fraud. Like Google, Overture does not charge advertisers for many clicks that fail at the outset to pass through a host of filters configured to block suspect traffic. The companies then scrutinize the remaining clicks.
    “We do a series of very thorough investigations,” Mr. Giordani said. “We’re looking at hundreds of thousands of rows of data, looking for unqualified traffic. If we see any, we immediately credit the advertiser’s account and update the filters.”
    In addition to monitoring and enforcement efforts under way at Google, a series of processes built into its systems limit the impact of click fraud, said Salar Kamangar, director for product management for Google. On the most basic level, the Internet remains a measurable medium, he said, adding that advertisers can help prevent or detect click fraud by closely monitoring their pay-per-click campaigns.
    “There will be some component of this that will remain with us, but its scope is limited and manageable,” Mr. Kamangar said.

Er, WHAT? Since when is a potential $1 Billion dollars a year in click fraud industry wide ‘limited in scope and manageable’ Mr. Kamangar? Are you kidding me?

The sad part is that you, the advertiser, is really buying this garbage!

Look, did you notice that Mr. Giordani said “If we see any, we immediately credit the advertiser’s account and update the filters.” Yes, THAT advertiser. What about all the other advertisers that got hit by the traffic? AYE, there’s the rub!

They don’t credit the others and I bet they can’t provide documentation to prove it either. All the advertisers on that specific term during the time frame that the fraud was taking place received refunds for that traffic? Hmmmm….. Somehow I really don’t think so especially if it is a heavy revenue category.

Human eyes trained to look for abnormalities and patterns in click behavior can only do so much. I have sat in front of a screen for days on end looking through server logs and still missed obvious click fraud. I am an experienced web developer and marketer with over 7 years of experience. I have seen thousands of rows of data. Even I will miss fraud looking at a log and investigating it. You could have a team of 25 people and they will still miss 25% of the click fraud scrolling past their face in a server log.

Click fraud is a cat and mouse game. When a PPC provider figures out a way to block a fraudster then the fraudster builds better click bots or switches around their network. Then the engine spots a new problem and the fraudsters build another solution. It’s a vicious cycle.

The bottom line is that the click fraud detection technology that exists today is pathetic and the fraudsters know it. Google, Yahoo!, and others are no better than any other engine. Don’t assume bigger companies have better technology in this area. You’ll be sadly disappointed.
Good click fraud detection technology DOES NOT exist, YET.

Click fraud in pay per click advertising is a hot topic right now.

At search Engine Strategies in New York I attended the session “Click Fraud: A Legal Look”. Tired as all hell from the Yahoo! Party (and a few more than that) the night before I muddled my way through the session and took away a couple of interesting tidbits:

  • Pay per click advertisers seem to feel that there is an “acceptable level” of click fraud. It’s looked at as a “cost of doing business”.
  • Most people feel the “middle market” or “second tier” PPC advertising companies are rampant with click fraud.
  • When given refunds advertisers expect a detailed explanation and breakdown of why an account credit is issued. Including detailed reports of the abuse and who is responsible.
  • Most advertisers believe that the PPC programs will never fully eliminate click fraud because it is not in their financial best interest to do so. Too much money is “left on the table” if they stamp it out completely.
  • What is the most glaring issue?

  • People don’t realize that there are ways to eliminate most, if not all, click fraud from pay per click advertising. This includes both competitor AND affiliate click fraud.
  • You might be interested to hear that at the end of the session the representatives from various PPC providers in the audience were invited up to the front of the room to discuss click fraud issues with interested attendees one-on-one. In attendance were representatives from Google, Overture, FindWhat, Kanoodle, and Enhance Interactive, among others. Point of note. Matt Cutts of Google and I were the only two representatives brave enough to stick around and answer questions. Kudos to Matt because it’s not even his job to answer those kinds of questions. All of the other engines ducked out of the room as fast as possible. What does that tell you?

    Pay per click advertisers seem to feel that there is an “acceptable level” of click fraud. It’s looked at as a “cost of doing business”.

    In my view, there is no acceptable level of click fraud, period. Some experts say that up to 20% of all clicks are bogus. I believe the number is much higher than that across all PPC programs. Not just middle market players either. I estimate that click fraud is really around 35% on most engines and can be a higher or lower percentage depending on the amount of unique traffic the PPC provider has on its own domain(s).

    Click fraud is a much larger issue industry wide than the engines are telling the public. If you are advertising in pay per click I would be severely concerned about the quality of traffic you receive from your campaign. If you are not tracking and screening the traffic you are being provided you are …. flat out ….. bottom line …… foolish.

    Look, click fraud is not acceptable. As an advertiser you should be policing your listings, tracking your ROI, and making absolutely sure you can trust the providers you do business with. Implement a click fraud detection system from one of the many providers out there who specialize in click fraud detection. Is their technology capable of catching all click fraud? No, but even if they know a little more than you do it does not hurt to use one of their solutions. It might cost you a little extra but at least you’ll have a third party looking out for you. Some of these companies include:

      www.trackingroi.com
      www.clicklab.com
      www.alchemistmedia.com

    ….among others who are out there.

    Most people feel the “middle market” or “second tier” PPC advertising companies are rampant with click fraud.

    Web searchers do not go to findwhat.com, goclick.com, 7search.com, xuppa.com, kanoodle.com, enhance.com, to perform their web searches. Those domains have NO branding to the average search user. Therefore they have very little unique traffic of their own. Only search engine marketers and advertisers know about these sites and what they are for.

    The traffic advertisers are getting from middle market pay per click programs is generated by networks of “distribution partners” who display the PPC results of other programs. These partners are typically called “affiliates”. This means that because SearchFeed displays pay per click listings from FindWhat in its search results, that SearchFeed is an affiliate of FindWhat (Yes, I know FindWhat owns SearchFeed.). On the same token since MSN search displays paid listings from Overture that means that MSN Search is an affiliate of Overture. Small and large publishers alike, whenever another site carries PPC listings from another web property, it makes that site an affiliate.

    Is the middle market rife with click fraud? Let me point something out here. The middle market does not have any more click fraud than the top tier PPC providers do. Here is my hypothesis and I think it bears some weight.

    What we’re dealing with is a “percentage game”. Sites like MSN, Yahoo!, or Google have a much higher percentage of visitors stemming directly from their own domain(s). Therefore the ratio of fraudulent clicks to real clicks on top tier sites would be a much lower percentage than with middle market PPC networks. The fraudulent clicks are easier to hide on bigger PPC networks because the massive volume of users buries them. Yes, there is the aspect of bigger PPC’s have a better network of partners, and hence, better traffic as a result. There is a lot to be said for that but that’s not necessarily true. By the way of example only, who is to say MSN doesn’t run click bots on their Overture advertising? There is so much traffic that they could feasibly get away with it and maybe never get caught.

    Middle market providers rely heavily on their network of affiliates to create traffic to PPC ads because they have little user traffic on their own domains. They must deliver their PPC listings to their affiliates in order to gain traffic. This can result in higher click fraud percentages simply because there is much less traffic to go around. The percentages are skewed and out of balance in proportion to the top tier engines. If the middle market players had more of their own traffic their situation would not be as dire relating to click fraud, and their reputation in the industry would not be as bad.

    BlowSearch actually does 30 million unique searches per month on its own domain(s) so we’re a little different than most middle market players. We “own” quite a bit of our own traffic. There’s the BlowSearch Toolbar and the BlowSearch Secured Instant Messenger thrown into the mix too. The company is focused on tools to retain users which makes better traffic for the advertiser in the long run. However, even BlowSearch has affiliates who display our advertiser’s listings and those affiliates need to be monitored for quality.

    Should advertisers ignore the middle market search engines? Yes, with exceptions. Since none of them will come clean as to exactly what they do, then guess what? You should not be advertising with them. It’s just common sense. Why advertise with a company that is going to rip you off, knowingly or unknowingly, on their part? This same logic should apply to the top tier PPC’s too as far as I am concerned.

    Did the SVP of Marketing for a middle market PPC player just say that middle market traffic should be avoided by advertisers?

    Yes I did, with exceptions. The exceptions can only be determined by educating yourself on what to look for in a reputable search engine pay per click advertising program and being proactive in detecting click fraud. It is your money. If you don’t care how it is being spent why do you expect a pay per click network to care?

    If you find click fraud you need to work with the PPC provider so that they can block it – if they CHOOSE to. Most often a PPC provider will not completely block a whole traffic source? Nope, blocking on most PPC providers is done on the account or individual keyword level. In most cases they DO NOT eliminate the traffic source responsible for the problem. They just warn them and if too many advertisers catch on that the traffic is bad – then the source gets eliminated.

    Keep in mind there is a difference between traffic that is legitimately click fraud and traffic that “just didn’t work for me”. Most advertisers think that just because their sites did not convert into one sale with a $50.00 PPC ad spend and 10 keywords in their account, that the traffic must be bad. This is just not true. It takes a lot more analysis than simply saying, “engine XYZ sucks because they didn’t send me a sale”. How much did you spend? Did you track it? What real proof do you have to claim click fraud? Could it possibly be your own web site that is the culprit of your poor conversions? “NO, never, not my site!” Hmmmmm.

    More than 70% of the time advertisers have no idea what their results are with their pay per click advertising. They are not tracking their ROI even though the tools are available to do it. That’s foolish on the advertiser’s part, and in my opinion, irresponsible sales and marketing by the PPC providers for letting it happen. Education is the key to success. Educate your advertiser and you have a happy advertiser.

    If I had it my way every advertiser would be forced to use ROI tracking or a campaign woulod not be allowed to go live. Would you believe that there is an incredible amount of resistance in getting the advertiser to implement one line of HTML code on their web page in order to make ROI tracking work? You have no idea how hard cutting, pasting, and uploading one line of HTML really is! The tool is there and the advertiser still does not care to use it. By the way, these are the same advertisers who come running back screaming about click fraud even though they can’t prove it.

    When given refunds advertisers expect a detailed explanation and breakdown of why an account credit is issued. Including a detailed report of the abuse, who is responsible, and the methods used to detect it.

    Advertisers have every right to expect PPC companies to disclose what happened to their advertising dollars. It is the advertiser’s hard earned money that PPC providers are spending. However a detailed report of fraudulent activity is not something the PPC provider will deliver. Why? It would mean that they would have to refund every advertiser who received traffic from that bad source. They prefer to refund only their premier advertisers instead.

    If you don’t tell the advertiser specifically what happened to cause the refund then there is no risk that other advertisers will seek refunds related to that traffic source. This is sneaky, but it’s a common practice across all major PPC providers. They keep the info in house so that they do not have to massively issue refunds to advertisers. It helps them retain revenue. Oh, I bet Sergey, Larry, and Eric are fuming mad at me right now! I’m glad I don’t work for Google……..

      Do no evil, right?

    Most advertisers believe that the PPC programs will never fully eliminate click fraud because it is not in their financial best interest to do so. By not fully disclosing click fraud PPC advertising programs minimize their revenue losses.

    Most PPC services do selectively issue refunds. Yes, there is even preferential treatment given to the largest advertisers. From largest to smallest PPC provider they are all hiding this information from you.

    Yes, it is true folks. PPC providers don’t tell you about their bad traffic because they simply don’t want you to know. As I said before, there is far too much click fraud out there and none of them truly know how to stop it. So as long as they keep you in the dark and give you lip service about “we have dedicated teams of engineers consistently monitoring our traffic” then you’ll leave them alone. Advertisers seem to have bought into that rhetoric. It’s a complete line of bull folks. None of the engines have a clue how to completely stop click fraud and they won’t because there is too much money involved.

    Advertisers are certainly not forcing PPC networks into disclosure with their wallets, so why should they disclose anything? If you are a PPC advertiser then you’re being complacent. It’s not the PPC’s fault. You haven’t stopped advertising long enough to force them into changing their ways. You haven’t made them accountable. I personally think that you should.

    Remember that all of the PPC’s are limited by the technology they have to detect click fraud. Until better technology comes along there will always be fraudulent clicks that get through the system. When they do catch it should they issue account credits across the board to all advertisers? ABSOLUTELY! But they won’t.

    Most engines are too large in scale to implement a working solution to prevent click fraud even if they had a clue on how to stop it. They would have to rework their entire infrastructure and place their click fraud detection system on every machine handling their click through traffic. This causes huge burdens on the click stream, slows page displays dramatically, and is just not practical to implement. Your platform must be capable of handling the new scale required to process the data if you put a solution in place. It must be built into your system from day one or you need to rebuild your entire infrastructure to make it work.

    People don’t realize that there are ways to eliminate most, if not all, click fraud from pay per click advertising.

    The solution to the click fraud problem lies solely on the shoulders of the PPC’s to invent the technologies necessary to stop click fraud from taking place. The pay per click industry is looking awfully dirty lately. How do we clean it up? Force the engines to change their ways. Speak with a louder voice and withhold your ad dollars from the engines that don’t comply. Work with SEMPO, the SMA-NA, and other marketing organizations to bring these issues to the forefront of the industry. Nothing speaks louder than money. Choose not to spend a dime until the engines solve this problem.

    Look, I will always be a site owner first and a search engine employee second. I’m on the advertiser’s side on the click fraud issue. I’m going to do everything in my power to make sure the issue gets addressed.

    If you are interested please see Part II. It is “promotional” but it will tell you what BlowSearch is doing to combat click fraud.

    Am I getting through to you? I don’t care if your conversions have never been better. I assure you that they would be even better if you knew for a fact that all the traffic was legitimate. Take back control of your PPC advertising. It’s on you, the advertiser, to force the industry to change. If you want to keep getting “snowed” by PPC providers that’s up to you. I told you here how it all works. The choice is yours to make. As the Verizon guy says in the commercials……

      “Can you hear me now?”

    Joe Holcomb is the Senior Vice President of Marketing at BlowSearch. He is a seven year veteran of search engine marketing and web development. His personal web site and weblog is available by visiting AGoToGuy.com. (please direct comments directly to Joe’s blog @ AGotoGuy.com)

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    Loren Baker

    Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing ... [Read full bio]

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