The national recession is forcing everyone to pinch pennies — both personally and professionally. For me, that meant planning a couple three-day weekend trips — like a recent excursion to Pittsburgh for a weekend of baseball (Go Reds!) — rather than a more extended vacation. Web advertisers have adapted by devoting their dollars to pay-per-click ads, for which advertisers pay based on the number of clicks. It’s a great idea, as ROI is important for any IMC endeavor and it’s easy to track with pay-per-click. According to the New York Times, pay-per-click is actually the only type of online advertising that grew in 2008. But there’s always a downside with new trends, and fraud has apparently become a problem for pay-per-click advertisers.
According to the New York Times, Click Forensics, a click fraud detection company based in Texas, indicated that 17 percent of all ad clicks during the last quarter of 2008 were fraudulent. And 20 percent of Newcars.com‘s ad clicks on Yahoo in 2007 were fraudulent. Frequent clicks from IP addresses in areas the company doesn’t serve and heavy click traffic in a short time frame are both indicators of fraud, which is typically designed to cost advertisers extra money and decrease competition. One way to address the problem, according to Center for Digital Democracy Group executive director Jeff Chester is through regulation.
“Click fraud should be at the top of the priority list with Obama and the F.T.C.,” Chester said. “The F.T.C. has seriously lagged in coming to grips with the problems surrounding the online ad market, specifically click fraud. It’s extremely important to address the problem because it ultimately affects the consumers, meaning what they end up paying.”
Here’s what I don’t understand about click fraud, however. Who’s responsible and why? Do other car sellers hire computers whizzes in far-off locations to repeatedly click on Newcars.com’s ads in an attempt to drive them out of business? A CNET News article published in 2004 indicated that that’s exactly what happens in some cases, but that seems like a poor strategy to combat your competition. In other cases, the article indicated that smaller search engines are to blame.
“Marketing executives say click fraud is pervasive among affiliates of search leaders Google, Yahoo-owned Overture Services and FindWhat.com. In a typical affiliation, any Web publisher can become a partner of these large networks by displaying their paid links on a Web page or within its own search results and then share in the profits with every click.”
Regardless of the rationale, it’s a troubling trend from the early days of the Internet that’s become a problem again due to the national economic situation. Click Forensics and other companies offer solutions that help reduce click fraud, but it costs money to hire those companies, too. Ultimately, it seems some companies might drive each other out of business, either through click fraud or the cost of combatting it. Whatever happened to friendly competition? Once upon a time, competition was considered a good thing, driving all the companies involved to improve their performance and/or product.