Practical Ecommerce

No Click To Pick

You’ve got nothing to show for it – your online advertising campaign that is. Hundreds if not thousands of dollars out the window after those creative, catchy ads didn’t reel in the customers you hoped they would.

Could be that the copy wasn’t quite as striking as you thought. That’s common.

Might be that your ads weren’t leading people to the parts of your website that would be most likely to induce sales. For example, lots of advertisers promote products, and then point potential customers to the company home page instead of the web store.

Not a good idea.

However, there might be another reason your online advertising campaign hasn’t grown the legs needed to make this summer a profitable one: click fraud.

What is click fraud?

A growing problem in the pay-per-click (PPC) services industry, click fraud is reaching epidemic proportions. Click fraud happens when someone or something (a program, for example) repeatedly clicks on your ads without any intention of making a purchase and with every intention of defrauding you.

Sometimes, click fraud is a manual process by which somebody clicks your ad over and over and over. Perhaps he’s a competitor who knows your advertising campaign costs increase the more he clicks your ad – the dirty %#$@#$!!!

Maybe he’s an affiliate marketer who makes money for every click your ad gets. Argh. The business of affiliate marketing is predicated on the notion that a third-party (an affiliate site) earns money every time a visitor clicks on your ad. Affiliate marketers have been known to hire cheap labor from across the planet to click your ads, earning a few bucks for those folks while profiting the affiliate marketer handsomely.

More often than not, however, click fraud is committed by software applications designed to hit your ad over and over while disguising the deception in such a way that the source of the program isn’t easily traceable. Again, this is typically done for the purpose of netting an affiliate marketer a boat-load of money, although it’s sometimes done by competitors, or anybody who might wish your business bad tidings.

“Unfortunately, we live on a greedy planet,” says John Carreras, owner of PPC Audit Inc., a company that created software to help business owners combat this scourge.

Like other entrepreneurs who came up with brilliant ideas from sheer necessity, Carreras found himself the victim of click fraud a couple of years ago. It was while attending a trade show – he owned a trade-show business – where he noticed something quite odd about his advertising statistics.

He was getting just as many sales that week; however, his costs were significantly lower. His PPC accounts weren’t nearly as depleted as they had been recently. When the convention was over, his campaigns were again producing inflated traffic numbers without a proportional number of conversions.

That’s when John Carreras had an epiphany of sorts, in the heart of Las Vegas nonetheless: All his competitors were at this particular trade show. Like a novice gambler who finally masters the ins-and-outs of casino craps, Carreras realized those extra clicks might be the work of his competitors, driving up his PPC bill.

“Jackpot,” as one might say in Sin City. What now?

Before the hype-to-threat ratio seems too much, most PPC service providers are unable to specify, for sure, just how prevalent click fraud is. Some figures suggest that as many as 35 percent of all ad clicks are fraudulent. The most common number is 20 percent. However, nobody’s for sure.

But, when it happens to you, there’s definitely a sense of violation, not unlike when somebody burglarizes your brick-and-mortar store.

“It’s just like stealing,” Carreras said.

He was understandably furious after his experience with click fraud, but he put that frustration to good use. He created the WhosClickingWho.com?™ Auditing Service, a tool that helps identify click fraud. It’s one of many services on the market nowadays to battle a problem even Google has acknowledged as being a legitimate threat to the PPC services industry.

How do you know whether or not your ad campaign has fallen victim to fraudulent click practices?

First, you need to be able to access and understand your web statistics:

  • Are you getting an unusually high number of hits within a short period of time?
  • Are these hits coming from one locale: China, for example?
  • Are only a handful of IP addresses responsible for these traffic spikes?
  • Do these clicks produce no sales, newsletter registrations or nothing more than superficial site traffic?

Communicate with your pay-per-click provider

You might be a victim of click fraud. However, what’s the second step, if you’ve been able to establish your suspicions? Document your web traffic analyses. Document anything and everything. Print out your web stats, highlight them and compare them to statistics during normal traffic periods. Then, make your case to your PPC service provider. It’s absolutely in the best interest of these companies (e.g., Google and Yahoo! Search Marketing) to help you combat click fraud.

Until recently, however, refunds were hard to come by. Sure, there have been some refunds successfully negotiated. There’s even a potential class-action lawsuit pending against PPC providers filed on behalf of several advertisers, led by Arkansas-based Lane’s Gifts and Collectibles. It alleges that PPC providers such as Google, Yahoo!, Ask Jeeves, AOL, LookSmart and FindWhat (now Miva) improperly charged advertisers for fraudulent click traffic.

This could be only the first of many class-action lawsuits, but it should be noted that PPC providers are fighting back. In November 2004, Google filed its own suit against Texas-based Auctions Expert International, alleging that the organization set up affiliate ads and then fraudulently clicked on them to profit from Google’s AdSense program. According to a November 2004 CNETNews.com report, “Google did not say how much money was lost, but the company is seeking compensatory and punitive damages to be determined at trial.”

Both PPC service providers and online advertisers might agree that it’s particularly disconcerting that nothing is in place to punish the click fraud perpetrator criminally. Not yet. Carreras figures that codifying penalties for those who purposefully defraud online businesses will happen eventually.

“The way things are boiling up, it’ll be a legal deal,” he said.

What can business owners do in the interim?

Carreras’ software, for example, tracks every click of any ad in your campaign you want to track. If one Web surfer clicks on an ad too many times too quickly, a measurement set by the software user, then that surfer is greeted by a friendly pop-up message (unstoppable by pop-up blockers). The nature of click fraud is such that simply interrupting an inundation of clicks will reduce your fraud somewhat.

Of course, there’s nothing like a warning message to make normally good but misguided folks squirm a bit before continuing.

There are homemade ways to track your online ad campaigns. You can assign an ID to each ad, and set a cookie for each click that gets written to a database. However, that probably won’t work within the framework of most PPC operations. Besides, it’s likely to cost you a pretty penny up front in programming fees or time. Homemade solutions also don’t provide you with the depth of information that utilities like WhosClickingWho.com, Click Auditor, Click Defense, Clicklab and ClickRisk provide.

Carreras pointed out that many online advertisers are subscribing to his and other services for peace of mind, without the catalyst of click fraud victimization.

“It’s like a security blanket,” he said.

More than likely – and soon – click-fraud detection and prevention applications will become as prevalent in the collective lives of online business owners as anti-virus software and firewalls became to computer users a few years ago, in response to a global bombardment of email viruses and other cyber attacks.

All this legal activity on behalf of advertisers and the PPC providers doesn’t mean that click fraud will be going away anytime soon either. Anti-virus software and firewalls didn’t eliminate online miscreants as much as they did deter them. The same is likely to be said for any influx of click fraud application usage.

“As greedy as this planet is, I don’t see (click fraud) being gone,” Carreras said.

Practical Ecommerce

Practical Ecommerce

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