Clicks2Customers | the pay per click Experts

Given the rapid development of the search engine advertising industry we deemed it necessary to update our previous click fraud risk calculator. Click fraud is a big concern for advertiser and search engines alike but because of lack of transparency it is difficult to get an accurate idea of how big the problem really is. Some third party companies estimate fraudulent clicks to make up as much as 30 percent of PPC traffic although from our experience we think these figures are highly exaggerated.

Our risk calculator is not intended as a predictor of the level of click fraud you are exposed to in your campaigns. Rather it assesses a number of factors which we have found to affect your click fraud risk profile.

But reducing your exposure to click fraud does not mean you have covered all your bases. It is not because you have a low risk profile that your industry cannot be extremely competitive and that your competitors will use every legitimate method possible to out-compete you. Gaining entry into a new market, increasing or maintaining your market share can be very daunting in the online world as you are potentially competing with the whole world. It is important to realize that there are no shortcuts to running to good campaign (although every now and then a window of opportunity may arise)

Our ongoing internal research into click fraud has led us to believe that the current search engines' click fraud systems are actually quite good. But in the end if someone really wants to commit click fraud there are plenty of ways to hide it. This is the known unknown of click fraud. But most fraudsters will leave some kind of trace or a detectable impact on your campaign's performance. Truth is, although fraudsters can sometimes be very clever, they are also often very lazy. They will use a limited number of IP addresses or geographical locations from which to click on your ads. Most likely they will also target only a small set of highly competitive keywords or and commit their fraud during certain times of the day (e.g. when you are sleeping). Detecting this fraud comes down to (human or algorithmic) pattern recognition yet despite the search engines' efforts, there are not able to prevent all click fraud. Detecting the fraudulent clicks that make it past the search engines' filters is a case of monitoring your campaign performance with a hawk's eye.

For instance, by monitoring the geo-location of your incoming traffic (analyze your weblogs) you should be able to quickly detect anomalies (e.g. if suddenly your traffic comes from a country you normally don't get visitors from). The same goes for spikes in traffic or costs for a small number of keywords. If you can't think of a valid reason why these spikes occurred (perhaps you are running a concurrent offline promotion which results in more people searching for your products online?) you should submit your weblogs to the relevant search engine with a detailed explanation why you think click fraud occurred. It will help them to prevent these events from happening in the future and you might be eligible for a refund.

Fighting click fraud is on ongoing battle but the major search engines are on your side. Although click fraud seems to increase their revenue in the short term (unless, like Google, they don't charge you for invalid clicks) it actually doesn't help their case in the long run. Google is quite transparent in its reporting on click fraud and will tell you the percentage of clicks it deemed 'invalid' and you will not be charged for those clicks (note: not all invalid clicks are fraudulent, some can be e.g. be the result of users double-clicking your ad � an honest mistake).

Campaign targeting options

Search targeting and content targeting are two very different concepts with very different underlying drivers of traffic. First of all, search is a 'pull' model where ads are served only where users are actively querying the search engine. You can to a large extent control the circumstances in which your ads will be shown to a potential customer and if you have a mature campaign, its performance will vary only gradually over time. Therefore it is relatively easy to spot irregularities in your campaigns that might be caused by click fraud. Content targeting is a 'push' model. The search engine algorithm decides based on the content of a webpage which advertisement may be relevant to the user viewing the page. Since it is more difficult under these circumstances to gauge the intent of the user seeing your ad, there will be more variability in your campaign's performance and click fraud patterns may be harder to spot. This doesn't necessarily mean there will be more click fraud but it definitely increases your risk profile. Secondly website owners often share in the revenue generated by the ads on their sites. Unless you specifically select the sites on which your ad appears ( e.g. with Google placement targeting) your ad can be shown on a myriad of questionable websites whose owners have no issue with generating fraudulent clicks in order to increase their own revenue.

Industry attractiveness

Industry attractiveness is hard to quantify although there are some traditional models such as Porter's five forces model that can be applied to the search engine marketing space. We have identified a set of factors that are relevant in this regard. As a search engine marketer, your business model determines what type of click fraud you are exposed to. Agencies and in-house marketing teams are mainly exposed to fraud from rival brands and companies selling competing products. But trademark protection and search engine's editorial policies generally offer a fairly good protection against that kind of click fraud. In many cases, the risk to the fraudster (e.g. being banned by the search engines, damage to reputation) is too high to warrant unlawful behavior. Affiliates marketers however are often defrauded by other affiliates who care little about building long-term relationships with their clients. If you are just 'one of many' affiliates in a lucrative affiliate program you can almost be certain that at some stage you are going to be the victim of click fraud. And this click fraud is directly targeting your bottom line which increases your risk profile substantially. If your industry requires specific knowledge or expertise in order to run a successful search engine marketing campaign it will lower the attractiveness of your industry to newcomers and your exposure to click fraud. Industry attractiveness in the end will determine the level of competition in your market and the extent to which competitors will go to gain entry into that market.

Average cost per click (CPC)

In some way the average CPC of your campaign is an indicator of the competitiveness of your industry and including it in the risk calculation may seem like double counting. However your average CPC will tell you more than just the level of competition. The major search engines discount your CPC based on the quality score of your keyword/advertisement/landing page/etc... So a low average CPC in a competitive industry means that you are running a solid campaign and it will be difficult for competitors to outcompete you even if they resort to fraud. This doesn't mean you will not be the victim of click fraud but it does lower your risk because the impact of the fraud will be lessened by the overall quality of your campaign.

Keywords generating traffic

If you rely on a small number of keywords to generate traffic to your site you are quite vulnerable to click fraud. Often the only immediate remedy against click fraud is pausing the keywords that are being targeted by the fraudster while you investigate further possible steps. Although this stops you from losing more money to fraud it presents an opportunity costs as you lose out on many potential customers. Generating traffic through a large number of specific keywords (the so called long tail) will limit your vulnerability to losing much revenue due to a click fraud attack. Do note that merely having a large number of keywords in your campaign does not count. You need a large number of keywords generating traffic to your site to spread your risk.

Campaign geo-targeting

The wider the reach of your PPC campaign the more you are at risk of being the victim of click fraud. Not only because you are competing with a larger number of advertisers but also because is it much more difficult to spot anomalies in your campaigns if your targeted user base is very diverse. Fraudulent traffic from one country could be masked by the traffic coming from other countries. By having separate campaigns targeted to a specific country or region you will be able to get a feel for the behavior of your campaign much quicker and detect irregularities more rapidly.

Average ad position (high position equals a low rank)

The main reason for people to commit click fraud on the search network is to gain market share (impression share). Fraudsters seek to increase your costs to the extent that you withdraw from bidding on certain keywords so they can take you place in the search engine sponsored listings. This means that if you enjoy a high average position across your campaign, you are much more likely to be targeted by fraudsters as they try to gain more prominent positions. On the content network, the incentive for fraud is different and less likely to be perpetrated by your competitors. However in the case of Google, ranking in the top three positions makes you eligible to have your ads displayed on the google partner networks, which are less regulated and more prone to click fraud. So although having a high average position is generally something to strive for it also increases your exposure to click fraud.

How often do you monitor your campaign metrics?

If you run a PPC for long enough it is almost a certainty that at one time or another you will be the target of click fraud. The only way to lower your risk to 'know' your campaign so that you can quickly spot irregularities that made it past the search engines' filters. With knowledge and experience you will detect any fraud in an early stage and you can minimize your losses while you consider further action.

Further information

For further information on click fraud you can visit the Google Adwords blog (http://www.adwords.blogspot.com/2006/03/about-invalid-clicks.html) download this comprehensive analysis of the click fraud phenomenon compiled by the Google click fraud team. http://www.google.com/adwords/adtrafficquality/files/adfraud_anecdotes.pdf