Thursday, October 19, 2006

Click Fraud: It's More Than Just Cheating Competitors

What if I told you that I could be making $25 to several thousand dollars a month just by clicking on a bunch of online advertisements which I had no interest in?

Would you care?

What if I told you that some of these links I was clicking on were your links on which you're spending between $0.40 to $8.00 per click for?

Let me put it this way.....I could be stealing away your hard earned money and burning a hole in your ad spend budget.

I should have your complete attention by now.

Well, according to the cover story in the October 2nd 2006 issue of Business Week, an investigation has revealed "a thriving click-fraud underground that is populated by swarms of small-time players, making detection difficult."

And how easy is it these days to start making money off of click fraud? Too easy. A couple from Minnesota said they dabbled in click fraud last year and made more than $5,000. They employed a simple scheme in which they "set up dummy web sites filled with nothing but recycled Google and Yahoo advertisements. Then they paid others small amounts to visit the sites, where it was understood they would click away on the ads." They then split the resulting revenue generated from their dummy web site with the search engines.

With spending on internet ads growing faster than any other sector of the advertising industry and experts estimating that 10% to 15% of ad clicks are fake these days, you can start to see how click fraud is becoming a major issue.

But what makes up Click Fraud? Try these new terms on for size....

Parked Web Site: A site typically with little or no content except for lists of Internet ads, often supplied by Google or Yahoo; many of them are the source of false clicks.

Paid-To-Read: A PTR site pays members to look at other web sites and offers from marketers (ads); often used to generate false clicks on parked web sites.

Clickbot: Software that can be used to produce automatic clicks on ads; some versions employed in click fraud can mask the origin and timing of clicks.

Botnet: A collection of computers infected with software that allows them to be operated remotely; networks of thousands of mechanism's be used in click fraud.

Even though it sounds like some kind of sci-fi movie with all of these new high tech terms, how bad has click fraud actually become? The Business Week article talks about one Atlanta based businessman who estimates that click fraud has cost his company $100,000. On the other hand, a Russian software developer is making $10,000 a year from a clickbot he sells. And click fraud is so simple these these days that clickbots can be downloaded from the internet. The article states that "clickbots are popular among online cheats because they disguise a PC's unique numerical identification, or IP address, and can space clicks minutes apart to make them less conspicuous." It also states that "more skilled Chinese programmers modify the clickbots to outwit the American search engines (like Google and Yahoo)."

So what are the big search engines doing about click fraud? "Google and Yahoo say they can identify automated click fraud and discount advertisers bills accordingly." But advertisers have to prove that they are being cheated.

My question is, if clickbots are masking IP addresses, how is an advertiser supposed to prove they are being cheated?

I find it funny that as I'm writing this post, Google just released its earnings release. Once again, it was better than expected. Why? Because as I mentioned before, spending on internet ads are growing faster than any other sector of the advertising industry. And that means....more ads can be clicked. The more ads that are clicked, the more money search engines like Google and Yahoo make. And yet, click fraud is thriving more than ever.

But, I guess if more people are spending money to adverise with search engines, then apparently click fraud isn't a high priority issue for most advertisers.....

.....just don't tell the guy from Atlanta this!

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