Click Fraud: What You Need To KnowVanda Williams
The last two decades have brought about a marketing revolution, with online advertising entirely altering the way businesses reach out to and influence consumers. Today, online advertising enables businesses to reach more customers than traditional marketing methods (billboards, TV ads, etc.) and at a fraction of the price.
Not only can businesses target more people for a lesser cost, but they can also target specific demographics, making their campaigns more relevant and more impactful. When combined with real-time analytics, the ability to closely monitor advertising spend, and the flexibility to pivot, it’s no surprise that online advertising has become so widespread.
Over time, online advertising has seen many different models throughout its short history; from banners with a fixed monthly fee, to ads that run on a cost to impression basis. However, no model comes close to the flexibility and control which pay per click marketing offers. In order to understand click fraud, we must first understand the nuances of PPC marketing.
What is pay per click (PPC) advertising?
PPC advertising is by far the biggest online advertising model out there and is utilised by hundreds of websites like Google, Facebook, Bing, and more.
With PPC, both advertisers and publishers benefit. For instance, advertisers can split their budget between hundreds of keywords and have the freedom to change them or adjust their spend at any time, whereas publishers benefit from the pay per click model by using it to take advantage of the constant change in demand for keywords.
So, how does PPC work?
In essence, advertisers bid against each other to display their ads on a given search engine or network.
PPC history: Google AdWords
In 2000, the newly launched search engine Google introduced its search engine advertising service titled, “AdWords”. Despite no one knowing who or what they were, AdWords would become the biggest platform in PPC history. The service was initially launched as a cost per thousand impressions framework but would quickly transform into the cost per interaction or cost per click model we know today.
Advertising on a search engine, however, was different from other advertising models prior that were priced at a fixed monthly cost. Since there were only a certain number of advertising slots per search term, advertisers had to bid against each other to win the right to display their ads. This type of keyword bidding gave rise to the pay per click advertising model which is still the most widely used and favoured advertising method today.
What is click fraud?
Click fraud is essentially fraudulent clicks on an advertisement campaign to generate fraudulent charges for advertisers. Because advertisers are charged for every click on their PPC ad, they can lose some serious money if those clicks lead nowhere. According to a Statista forecast from 2019, costs related to digital advertising fraud worldwide are expected to “grow exponentially within the four years between 2018 and 2022, from 19 billion to 44 billion U.S. dollars.”
Not only does click fraud increase ad expenses for businesses but it also skews analytical data which many companies rely on to make informed marketing decisions. In 2020 alone, 11% of search ad clicks were fraudulent or invalid whereas 36% of display ad clicks were fraudulent or invalid. Unfortunately, the assumption that every ad click comes from a real person interested in buying your product is no longer valid.
But who’s responsible for this? Why are they doing it and what do they get out of it?
Who is responsible for click fraud?
Sometimes humans are responsible for click fraud, not bots. However, click fraud can take on many forms. Click fraud can impact a plethora of industries and businesses in different ways. Let’s take a look at the four most common offenders:
1. Fraud rings
These large groups of people specifically target expensive keywords backed by big companies in order to extricate the most amount of money in the shortest time possible. The group, or click farm, can generate millions of fraudulent clicks a day using an array of automated programmes.
They are usually responsible for the vast majority of click fraud. Your competition can gain a competitive advantage by wasting your PPC budget to prevent potential customers from seeing those ads. No matter what keyword you’re bidding on, there’s a high probability you won’t be the only person doing so. When other businesses compete for the same keyword, it can often turn into a fierce battle.
Almost every webmaster is allowed to display Google ads on their website. They simply create an AdSense account and can start displaying ads immediately. For every person who clicks on their ad, they get 68% of the amount paid to Google. Webmasters can take advantage of your PPC campaign to gain more income from displaying the ads on their site.
4. Dissatisfied customers
Ideally, you want your customers to click on your ad once and then convert. However, this is often not the case. Sometimes it takes more than 1 click to convert a customer which will naturally increase your average conversion cost. Some disgruntled customers may hold grudges and may purposely click the same advert to try and get back at you through financial loss. Although rare, this can still cost businesses money and lower conversion rates.
What’s the most susceptible industry to click fraud?
When analysing how click fraud affects certain industries, it can be tapered down to two main factors: the amount of site traffic and the average cost per click.
According to The Global PPC Click Fraud Report 2020-21, the most affected industry in 2020 was the education industry with 31.14% of all clicks being fraudulent; meanwhile the least affected was the travel industry. Due to Covid-19, the educational industry saw an abrupt increase in ad spend, which also encouraged the upsurge in fraudulent pursuits and payouts for the click-fraudsters, as well as increased activity from unethical competitors. On the other hand, the travel industry saw the lowest level of click fraud due to the pandemic’s impact on travel and the lack of ads running.
Top 3 industries affected by click fraud in 2020:
- local trades
Think about it this way: if fraudsters want to click your ad undetected, then they want to make sure they are making the most money while keeping it under the radar. The more competitive the industry and the more clicks there are per day, then finding a few fraudulent clicks seem like a futile task. Compare this to a much slower industry with a lower cost per click, and the chance of click fraud is greatly reduced.