Is Click Fraud a Problem?

If somebody were to tell you that up to 20% of what you spend on pay-per-click advertising may be wasted due to fraudulent activity, would you be worried? If you advertise on pay-per-click search engines, such as Google AdWords, Yahoo! Search Marketing, Microsoft adCenter and others, then you have a reason to be concerned.

According to industry metrics (see "In The News"), up to 20% of all pay-per-click traffic delivered to advertisers from search engines originates from fraudulent sources. And it's up to the advertiser to deal with the problem.

More Information:

Causes of Click Fraud
Click Fraud In the News
Click Fraud Calculator - How Much Am I Losing?
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There are a number of sources of fraudulent clicks, but the majority of click fraud originates from:

COMPETITORS - your competition has a vested interest in draining your advertising budget. Not only does this deal a financial blow to your business, but your competitors’ advertising campaigns also benefit. By generating false clicks, they force you to lower your bids or drop out of keyword bidding altogether. With you out of the picture, your competitors can bid less and rank higher.

PUBLISHERS - thousands of publishers (website owners) work with search engines such as Google and Yahoo! in a revenue-sharing system. They agree to feature ads supplied by the search engines on their own websites, thus providing the advertisers with wider exposure and distribution, in return for receiving part of the revenue generated by every click sent to the advertiser. Unfortunately, some unscrupulous publishers attempt to increase their revenue from this system by clicking on the ads or encouraging their visitors to do so - without any intent of purchasing.

One of the biggest problems is that you may only be getting a few fraudulent clicks from each source, which may be too small a problem for the search engine to notice. However, when you add this up among dozens of competitors and hundreds of publishers and multiple this number over every day in a month, the number of potential fraudulent clicks skyrockets.

In the News

The problem of click fraud has recently attracted a great deal of media attention and has been investigated by all major media outlets, including The New York Times, The Wall Street Journal, CNN and many others. Here is just a short list of the most recent stories covering the issue:

The Washington Post
Click Fraud Threatens Foundation of Web Ads
Business Week Online
Click Fraud - The dark side of online advertising
B to B
Click fraud of growing concern to search marketers
Click fraud poses a threat to the boom in internet advertising
Financial Times
Click fraud rattles web marketing budgets

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