Click Fraud In The Digital Ad Industry

On the 27th October 1994, the first documented online advertisement was recorded. HotWired, now wired.com, used a short and sweet banner at the top of their website which simply said “Have you ever clicked your mouse right here? You will.” While this might not seem like much now, this was one of a kind in 1994 and actually went on to start an advertising revolution. Not only was the idea genius, it also allowed for statistics and data analysis, as this technology gave customers the ability to track the number of people that had clicked on their adverts and interacted with them, unlike traditional forms of adverts like billboards of newspaper articles.

This enabled businesses to understand how effective their new mode of advertising was. The change was instant. The banner ad used by HotWired showed an impressive 44% click through rate, which swamps the usual click through in 2018, which is only a measly 0.19%. Online advertisers wanted to ride the wave of this new technology and very quickly introduced geographical targeting.

Businesses were now able to pinpoint their exact target demographic, while avoiding those who they knew would not be interested in their good or service, once again, making this extremely cost effective. Unfortunately for them, this led to an onslaught of people jumping on the bandwagon and, soon enough, the battle for your attention was on. In 1997, Ethan Zuckerman introduced yet another way to capture customers focus using online advertising – the popup ad. Though his intentions may be pure, as the main aim was to associate an ad with a web page while not actually putting the ad on the web page itself, many other companies and businesses caught wind of his idea and soon the internet was flooded with more popup ads than you could imagine. Ultimately, this led to people getting annoyed and frustrated and installing many different types of ad-blockers.

AdWords

As soon as the early 2000’s rolled around, with the introduction of large search engines, the battle for online advertisements continued to grow. Google initially introduced the concept of “AdWords” and this service quickly developed into a cost per interaction, or pay per click model.

Pay per click is really as simple as it sounds. When you advertise your business on a search engine, for example, you have a large audience that could potentially buy your good or service. Once a customer has clicked on your advert, you are charged for it, regardless whether or not they actually purchase anything from your website. It is very similar to distributing leaflets, your costs are the same whenever you hand them out, but your return may vary.

One of the major benefits of pay per click, however, is the ability to ensure that your target audience is going to see your advert, thanks to the geographical targeting that we discussed earlier. As there are limited spaces for people to advertise on search engines, this type of technology is what introduced the concept of “keyboard bidding” and it is still the most popular and widely used form of advertising to date. The pay per click method is also extremely beneficial for publishers as well, as they are able to take advantage and change their prices for key words depending on the time of year, economy, media trends and so on and so forth.

Click Fraud

However, pay per click advertising is not always a walk in the park. The rapid introduction of pay per click advertising, also saw the rapid introduction of click fraud. What is that, you may ask? Well to put it simply, click fraud is the defined as ‘the fraudulent clicking of pay per click adverts to generate fraudulent charges for advertisers.’

While this might not seem like such a big deal, the numbers are shocking. In fact, in 2017 alone, every 1 in 5 clicks on adverts have since been identified as being a fraudulent click. Effectively, companies are paying for people to ruin their advertising techniques. This type of harmful activity is specific to pay per click advertising, as it will directly affect the keywords that you as a business have selected to try and drum up your business and encourage interactions from your target audience.

Not only does click fraud increase the prices that businesses have to pay as it will charge them per click, regardless of whether or not it is a real click or a fraudulent click, it also does not allow for them to create valid and reliable data analysis, as all of their figures will be skewed, as they are not coming from potential customers. This means that companies will have to spend a lot more money and invest a lot more of their time on their market research, which is what they are relying on to create effective advertisements.

This is incredibly demotivating and time consuming to the average business. Eventually, it might end up costing them too much money to continuously change their key words and to keep paying for fraudulent clicks, that some smaller businesses decide that this form of online advertising is no longer cost effective for them, so they branch out into different avenues.

Though click fraud has one blanket definition, it can come in many forms. Sometimes these clicks are genuine accidents, while other times they are a deliberate attempt to mess with a companies advertising. One of the most obvious groups of people that would be responsible for click fraud are other competitors in the same market. People are constantly aiming for their company to have the most customers and for their websites to have the highest number of visitors, so it would make sense for them to try and jeopardize their competition.

Another threat can come from a group of webmasters. Almost any webmaster has permission to display Google adverts on their page, which includes pay per click adverts. In fact, webmasters can keep up to 68% of the money that is paid to Google, so it is a very quick way for these individuals to raise a lot of money. One of the most serious threats to click fraud are groups of people know as fraud rings. While these rings will only target larger business, using a huge variety of programmes can generate millions of fraudulent clicks in a single day. Not all types of click fraud are so sinister in nature. Sometimes, these clicks are simply from unhappy or unsatisfied customers.

Click fraud can really have a huge impact on any business, but in particular, three industries have been identified as to being hit the hardest. According to a 2015 Bloomberg report, the three most affected industries are finance, family and food. These companies have many striking similarities. For example, not only are their pay per click adverts expensive to buy, they also have a lot of disposable income to spend on marketing and advertising. They are also in constant demand, so they are going to be more of a target than other industries and companies that are seasonal in nature.

Solution

When we look into the history of online marketing, we can see that this idea evolved almost instantaneously. Technology is constantly developing and businesses are always working hard to make sure that their adverts are being seen at the right time by the right people. As well as trying to make them as effective as possible, it is also the job different companies to protect themselves from click fraud and other possible threats as they want to be as cost effective as possible. While technology has made it easier for people to keep an eye on their data analyse, data misuse and collection has been made much more difficult in recent years. As their technology grows, so does the devious nature of their competitors, as thus, the vicious cycle continues. For a completely different monetization model, not involving any ads or data collection, try Gath3r’s Early Adopters Program and see how technology has allowed for a big change in the traditional ways of generating revenue online.