I’ve been asked about something called “click fraud” several times recently. It is a concern that many folks have, and my clients who have been using Google Adwords or Adsense, and similar, are worried about it. Even more interestingly, there have been several articles in newspapers and trade mags recently. Well, it isn’t much a concern for most people. Here’s why-
Advertising programs, such ad Adwords, are based on several very simple propositions. A customer buys an ad that is placed on a Web site. Adwords go on Google’s search returns pages, for instance. In other programs the ads are placed on “third party” Web sites. Everytime somebody clicks on the ad the buyer of the ad pays a certain amount of money.
The amount of money that the ad buyer pays may be split several ways, depending on the advertising program. In the case of Adwords, Google keeps the fee. In a third party program some of the fee goes to the ad seller and another part goes to the Web site that hosts the ad. Some ad buyers may purchase an ad directly on a Web site, and in such an instance the fee goes directly to the Web site with no split.
So, how what is this so-called “click fraud?” It depends on the nature of the advertising program. In the early days of online advertising the ad sellers would create “click farms” where groups of people would repeatedly click on the ads. Each click then increased the income of the ad seller slightly.
The other version is that an advertisers competition would click, often with a click farm, on the ad in an effort to drive up the cost of the advertisers campaign. While that may sound very cute, it really isn’t effect anymore.
Google is the primary seller of online advertising through their Adwords and Adsense programs. Each of these programs has built in safeguards to prevent trouble. In the case of Adwords, it is important to understand that not only are there safeguards, but for most advertisers the cost is very low.
Let’s look at Adwords for a moment. Ad placement on a Google search return page is a matter of how the ad fares in what amounts to be an auction. Depending on the nature of the campaign, the top placed ad may pay the most amount of money, the second one down may pay the next to the most amount, and so on. However, if an ad is not popular, if it is not successful, it is likely to move down the list. Then a series of complicated calculations take place that results in the true cost of an ad. The condensed version of the story is that as an ad moves down the list the cost is decreased, and the top placed ad may not actually pay the full bid price.
While the very top ad on a page might by fifty cents, a dollar, or even five dollars per click, the ads lower down may pay only a few cents per click. In addition, each advertiser sets a dollar value to his or her ad campaign. The monthly budget could be many thousands of dollars, but on the other hand it could be much, much less.
Ads are also placed based on region. Imagine that an ad buyer wants to advertise in the Albany, New York area, but not in the Albany, Oregon vicinity. The Adwords program allows the buyer to specify where the ad will appear. This prevents the cost of the ad from spiraling out of control when the ad is clicked by viewers out of the buyers normal business region.
All that sounds good, but what happens if somebody starts to click on an ad over and over again? It is extremely important to understand that everything on the Web is counted. The most important and valuable “thing” on the Web is not what they call “content.” The programming and material on the Web is not that big of a deal. The actual value on the Web is the data. The data is, as you might guess, the information that is derived by the clicks.
What does this data consist of? That is pretty much everything. Some of it is simple stuff, such as the time of day a visitor clicks, the browser and operating system they use, and information such as that. It also includes the tons of additional information that can be obtained by tracking a visitor’s browsing history.
Because everything is countable, the ad sellers, such as Google, know when an attempt at a scam or click fraud is being perpetrated. When that happens the IP (Internet protocol) address is logged and noted. Too many clicks from an IP address results in the address being flagged. The advertisers then are not charged for the excess clicks.
These safety systems were put in place very early in the history of online advertising when a few folks with unfortunate intentions tried to boost their income as described near the top of this post. There is a long history of attempting to defeat and prevent fraud, and for the most part these attempts have been very successful.
What does that mean for the average Web advertisers. In short, it means that Google and the other online ad providers “have their backs,” as they say in the detective shows. A massive fraud related expense is not a concern for most advertisers. In addition to the limits that they have on their programs, because their cost per click is so amazingly low, the cost is very rarely going to be much more than the cost of a small coffee at Starbucks.