How To Analyze & Minimize Click Fraud

For many advertisers, pay per click ads are the holy grail of their business. By making a relatively small investment, they multiply their profits. PPC ads scale well and are provide fast results and performance feedback.

PPC ad campaigns have also earned themselves a bad reputation. Millions of people wasted their money either through their own mismanagement or through external factors that are less in their control. The same advertising miracle tool can transform into a money pit.

Marketers usually overestimate how many people they reach with their campaigns.

“If a hundred users see my ad, one or two should buy.”

They base predictions on campaign data, such as conversions and click-through rates.

But what if that data was wrong? Would you believe that an average 40% of the internet are bots or fake users? Whether you are browsing or advertising, click fraud is a real concern.

What is Pay Per Click Fraud?

PPC fraud is a common form of fraud that victimizes pay per click advertisers. The term refers to a person, or sometimes a script orbot, who clicks on ads in order to generate revenue or to damage an advertiser, but has no legitimate interest in the offer being promoted.

The perpetrator could be a competitor, a software developer, or an annoyed customer. The reasons may vary, but the goal is the same: money. The motivation behind click fraud is to personally gain financial benefits or to cause damage to the advertiser.

Everybody knows ads can boost your visibility. However, their efficiency will usually decrease as more advertisers join a particular network. The first ad ever had a 44% CTR, but today it averages around 0,5%.

Getting people’s attention is harder than ever. That’s why many people try to find new ways to make a profit, even if it’s illegal.

Who Does These PPC Scams?

PPC fraud can be executed on such a small scale as when a first time web master clicks contextual ads on his own website to earn a few cents, and range to large organizations running scripts and hiring manual workers to click on advertisements.

In other instances, it may be competing companies clicking on advertisements in the search engines in order to drive up the advertising expenses of their competition. In nearly all cases, the motivation for click fraud falls under one of the following reasons:

  • Internet publishers wanting to generate revenue for themselves by fraudulently clicking on advertisements, or encouraging others to click on ads when they visit the website.
  • Internet advertisers wanting to cause financial harm to competitors by intentionally clicking on their advertisements and driving up the cost of advertising.
  • Ignorance or misapprehension. Newcomers and young individuals are unaware of the damage they are causing to advertisers when they click on an advertisement they are actually not interested in. They don’t realize that the sponsors have to pay out of their pockets for each click. Sponsors have a lot of competitors and may pay a lot of money for one click. If all these clicks don’t convert into customers who really are interested in the website or product, false clicks could eventually add up so much to drive them out of business.
  • Support or charity. Online surfers who like a certain website sometimes feel the need to give back to the owner of the website. They do that by clicking advertisements on that particular page in with the intention of helping out a webmaster. While this idea might steam out of a genuine interest of wanting to help, one in fact harms the advertiser and his budget by doing this.
  • In rare cases, the advertising company who offers PPC advertisment to their customers, they themselves may be involved in click fraud to drive up their own revenue. This type of fraud is usually exclusive to small time ad networks, and generally will not be a problem if you are advertising with a reputable company.

PPC scam patterns can remind us a little of how accounting fraud works. The analyst receives wrong data thinking it’s accurate, and the fraudster profits from the expectation gap.

Origins Of Fake Clicks

One can profit a lot if they know how to trick the algorithm. What makes human behavior different from a bot? Is there something we can’t replicate? Someone who understands how PPC fraud prevention software works will try to reverse engineer the process to commit PPC fraud.

Manually clicking on ads a few times a day may be a drop in the ocean for everyone’s advertising spending, but there are more harmful ways to generate fake clicks.

Bots and Webcrawlers

Designed to search the web for information, usually for spam or to collect legitimate data. There may be “friendly” bots that only search for contact information, for example.

Or deliberately vindictive bots that have the sole purpose of making hundreds or thousands of clicks on your ads to exhaust your advertising budget. The problem of bot traffic is a complex one, as bots come in a variety of styles.

Click Farms

Either automated set ups, or human powered factories designed to click on specified links all day long. These usually exist in developing countries where people can be paid low monthly wages.

Click farms are used by all sorts of businesses, often to inflate their following or engagement. They can be hired to click on PPC adverts as specified or required.

Although the bulk of manual click farms can be based in developing countries, there are many instances of automated click farms based in developed countries.

Fraud Rings

Criminal gangs establish a mixture of publisher websites and automated bots to defraud advertisers. Fraudulent circles employ highly sophisticated scam bots with a complex set up which is designed to fraudulently click on ads using a network of computers and mobile phones.

Publisher Click Fraud

The overwhelming majority of click fraud occurs on publishers websites, and not in the search engines themselves. There is much more of a financial motivation when publishers can be paid for having people click on their advertisements.

Publishers create a website where they host banner and text ads and then direct fake clicks through the site to get a payout. This type of click fraud often involves placing ads on websites that have little chance of generating real traffic.

Real people may not be able to find them because the website is usually gibberish and of low quality, but the opportunity for the website owner to maximize their income through PPC fraud is still there.

Competitors

Click fraud can also occur on the search results pages on any search engine. This form of click fraud is usually someone who is trying to do financial damage to their competitors.

Your direct competitor may try to siphon off your pay per click budget so that his ad ranks higher in relevant searches. He could simply click on your ad every time he sees it, or he could instruct his staff to do so.

Although the competition may try to inflate your PPC budget manually, they might as well seek help from a fraudulent click ring. This usually only happens in highly competitive markets.

Human Error

People looking for something on a search engine may inadvertently click on your site in SERPs or on a publisher’s website. They might not even notice that it is a paid ad.

Technically, this would not be considered click fraud, but rather an invalid click. This is not strategic sabotage, it is simply a mistake, although repeated mistakes can cost advertisers a lot of money.

Identifying Click Fraud

Click fraud is a pretty big problem, with many variations and the potential to really jam your cash flow. So how do you recognize if you have been a target of click fraud?

There are several manual checks that you can do yourself to see if there has been fraudulent activity in your advertising campaigns. These may not always give an accurate picture of what is happening, but they can serve as an useful overview and may uncover some of the more obvious offenses.

Check Visitor IP Addresses

Google Analytics does not give you access to review IP addresses that have visited your website. Try to use other tracking tools besides Google Analytics that give you access to IP data. Each software uses different analytical modules and data. You can compare the data from these analytical tools to help detect fraudulent trends.

You can also check the visitor logs of your website to see how often the same IP address appears in a given period of time. If you find that the same obscure location or IP address visited your site regularly, you may see a red flag and thus block that IP address or location.

Review The Publishers

If you advertise on the websites of other publishers, you may be exposed to one of the most popular forms of click fraud. Check your publisher list and try to identify a questionable website, and then keep an eye on it.

Check referring websites that send high traffic to you for suspicious activity. If you think any of these websites could be fraudulent, you can block them from your publishers list. A few giveaways that a site is fraudulent include:

  • Sites that appear to be covered by ads.
  • No or only a very low amount content of substance.
  • Recently registered domains.
  • Websites with questionable traffic sources.
  • Websites with duplicate content.
Tip: Analyze the suspected domains with tools like ahrefs, alexa, builtwith, whois, copyscape and similarweb. These will uncover different data about the website and may help you spot the scams the ad platform didn’t detect.

Supervision of Campaign Activities

Dubious timing or peaks in engagement can be a sign that someone is targeting your ads. Particularly if you seem to get a lot of clicks and little engagement.

You might also notice a high click rate from a country that has little to do with your target market. For example, if you are a US-based company and it appears that you are getting many clicks from a country like the Philippines and no conversions at the same time, this could be a sign that you were the victim of a click fraud campaign.

PPC Fraud Protection Software

Forms of fraud that mimic human behavior or hide behind proxy servers will be difficult for you to detect manually. And as the processes and techniques become more sophisticated, it can be a daunting task to keep track of developments and fraud. This is where click fraud protection software comes in and can really make a big difference.

Minimizing The Risks Of Click Fraud

Advertising networks have made drastic improvements to prevent click fraud over the years, and continuously improve security measures on an ongoing basis, click fraud still exists, and if you are an internet advertiser, you have to expect that it will happen to you. While it is going to happen on occasion, there are some things you can do to minimize the risk of it happening to you:

  • Only advertise on reputable search networks and other advertising companies that have extensive click fraud prevention methods in place. Many smaller networks don’t have any protection in place, therefore exposing you to a much larger amount of risk.
  • If you advertise on contextual networks, keep a close eye on your clicks, conversions, and where your ads are being displayed. The larger networks all have advanced targeting options in place that allow you to monitor where your clicks are coming from. Keep a close eye on this, and if you suspect fraud, pull your advertisements from those websites.
  • Plan for it. It’s estimated that between 2% to over 35% of all clicks on the internet are fraudulent. No one knows for sure, but you need to plan for it. A good rule of thumb on the larger networks is to plan for 15% of your budget to be lost due to click fraud.
  • Use click fraud prevention software. There are countless programs on the market built specifically to help advertisers detect click fraud. If you think that you are losing money to click fraud, then investing in one of these programs is probably a smart idea.
  • If you are not looking to increase your general reach at this point in time, then remarketing could be a useful campaign strategy. One of the main advantages of remarketing campaigns is that they only appear for people who have already shown interest in your business. Thus, it should also limit your exposure to bots or click farms.
  • By optimizing the targeting of your advertising campaigns, you can greatly reduce the risk of fraudulent activity in your PPC campaigns. Excluding certain geographic locations, languages, demographics and devices can greatly impact the success of your advertising.
  • Report it if you think it’s happening to you. If you’re experiencing click fraud, report it to the advertising network. In many cases if the advertising network discovers that you are receiving fraudulent clicks, they will offer you a refund and help you to put a stop to the fraud.

Will Click Fraud Ever Stop?

We’ll unlikely get rid of PPC scams completely, at least in the near future. It’s too easy to cheat and fly under the radar. And people have their own reasons to get involved.

It may be your competitor. His website is unable to reach your level of success (good job), so they set up obstacles for you. They use click farms to reduce your ad revenue and steal your traffic.

Perhaps it’s your customers. Someone didn’t get the refund he wanted, and now they try to take revenge from the company.

Webmasters can take advantage of visitors too. They don’t mind installing malware on visitors computers that contains hidden ads.

As an internet advertiser you need to be aware of the risks that click fraud presents to your business. You also need to understand that completely preventing click fraud is impossible. It’s a part of the business that you will need to learn to plan for.

Click fraud is a serious issue, but if you are smart about it, you can drastically reduce the impact that it has on your business. Even with the problems presented, studies show that pay per click advertising is still one of the best ways to advertise your business, because it allows for extremely detailed tracking of ad performance and overall return on investment.

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