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Is Click Fraud Devouring Your Ad Budget?

My Post (1)Click fraud occurs when a pay-per-click advertisement is clicked on by a user with malicious or disingenuous intent. Click fraud first came to light in 2005, when several major cases were taken to court.

However, it continues to poison marketing campaigns—and find its way into more and more courtrooms. Juniper Research estimates that click fraud cost advertisers $42 billion in 2019.

In a time when advertising budgets are being cut and many businesses are facing economic uncertainty, putting every ad dollar to good use goes a long way.

This article explains what click fraud is, shows how it can impact your campaigns, and shares ways to reduce its impact on your marketing.

How click fraud works
There are many ways to implement click fraud. Here’s a rundown of causes:

1. Click farms. Some businesses approach companies on the “dark web” to click on ads on their website. The clicks aren’t from potential customers, but they’re often from real people.

These dodgy arrangements are often called click farms. Some networks are highly sophisticated, and organisers disguise their IP addresses. Click farms are often a combination of real people and bots.

2. Competing businesses. Competing businesses may click on each other’s PPC ads to waste money. If you conduct some intricate research (detailed below), you may be able to identify the IP address of competing businesses. If you can—great! Loads of PPC platforms (Google Ads included) allow you to blacklist IP addresses.

Competitive industries, such as insurance, travel, and finance are especially susceptible.

3. Potential buyers. Believe it or not, consumers who highly value particular brands click on competitors’ ads—knowing it will cost them money. Unfortunately, there isn’t much you can do about it.

Loyal buyers of other brands don’t care about your ad budget or your search terms. Thankfully, the effect of these types of clicks on your campaigns is minimal.

4. Automated programs (bots). Perhaps the biggest culprits of click fraud are robots—malicious computer programs (botnets) that automatically scan the internet and subtly carry out clicks, trying to pass as human.

Wired refers to these as “hordes of linked machines controlled by rogue software.” They may be random and created simply to annoy people and businesses.

A recent Imperva Incapsula Bot Traffic Report found that 48.2% of website visits are by humans and 51.8% by robots. (Some 22.9% are “good” robots and 28.9% “bad” robots.)

No matter the cause of click fraud, the losing party is the business paying for the ad. After all, they want potential customers clicking their ads, and each instance of click fraud makes advertising more costly.

So how much should you worry about it?

How much of an impact does click fraud have?
“Click fraud can be extremely unsettling for well-to-do publishers and advertisers on search,’ says Grayson Kemper, Content & Editorial Manager for Clutch, “particularly during a time when many businesses are operating with an incredibly tight budget.”

However, for most small businesses, systemic click fraud is rare, according to Marcus Miller of Bowler Hat:

You may lose some clicks to competitors and window shoppers, but we don’t see much of what we would consider true click fraud.

If traffic seems low quality, we will tweak targeting or, in very rare occasions, block IPs, etc.—but in most instances, this is just not that common.

Typically, just using very tight targeting, not showing ads in countries where there are higher instances of click fraud or click farming, and using paid social—which, as a closed network, seems much less susceptible to click fraud—seems to work.

That said, it’s not all hype, either, as Christian Nicolini, Senior Director of Paid Media at Ignite Visibility, notes:

Most click-fraud cases manifest from third-party display placements. However, we also see affiliate click fraud, competitor click fraud, click farms, and bots. While publishers have drastically improved their security, our team uses a combination of manual and automated tools to combat click fraud.

From a manual response, we create internal reports to collect click timestamps, action timestamps, user agents, IP addresses, and create a master exclusion list of speculative activity. We’ve also experimented with several automation tools, like ClickCease and Clixtell to automate this process at scale.

Our advice to advertisers with smaller budgets: Stick with buying ads on owned properties (e.g., Facebook ads, Gmail, Discovery, search) and monitor your audience targeting in third-party serving environments (e.g., Google Display Network).

Indeed, individual cases and the collective impact is staggering.

There are some major botnets out there. For example, “Chameleon” is estimated to cost advertisers upwards of $6 million every month. Ad Age estimates that $1 out of every $3 spent on PPC is subject to click fraud. FraudLogix said that 50% (yes, 50%) of all ads that gained an impression in 2016 were a result of non-human traffic. – Read more