I always like the idea of starting an article with a definition, but I hope that most people reading this article already know what click fraud is. In a nutshell, it’s when people click on our ads without any intention of buying what we sell.
Our company is now handling a combined AdWords expenditure of around US$2 million a year; roughly 1.4 million Euro a year, but thanks to the ever-dwindling exchange rate, that will probably have dropped to 1.2 million by the time you’ve finished reading this article.
In the past we never used to concern ourselves too much about click fraud. It definitely existed, but so did the risk of being struck by lightning. Today that analogy would be absurd.
In a recent survey of my brain (yes my brain), I estimated that around 40% of Google AdWords advertisers don’t worry about click fraud. I also estimated that another 40% were driven away by it. Around 10% probably waste too much time looking for it, 9.9% are on top of it but fail to do anything about it, and around 0.1% realise when it happens and manage to get back most of the money they lost.
As much as I value the incredible accuracy of my own brain, I wanted to back these figures up with something a little more tangible. A recent SEMPO study reported that 6% of those questioned had identified click fraud as significant, 19% had classed it as moderate, 45% hadn’t identified the problem but were concerned about, it25% were not concerned, and 5% (who apparently pay someone to handle their adwords while they live on an island without internet access) had never heard of it.
The problem with statistics like these (unlike those taken from my brain) is that they are usually based on little more than intuition. Asking people to quantify a problem they may not understand may render any drawn conclusions meaningless.
The reality is that too many advertisers are either oblivious to a very real problem, or see click fraud where none exists.
Based on my own experiences over the last few years, I have seen irrefutable evidence that click fraud has taken place for some of our clients. Some have involved only a few dollars, others considerably more.
Realistically, however, as much as I dislike the idea, I have also probably failed to spot some cases of click fraud too. Like many crimes, some of the best examples are never even identified, making it more likely for the perpetrators to get away with their ill-gotten gains. After all, if Google themselves fail to spot it, how can you or I?
As a general rule, Google are reluctant to acknowledge individual claims of fraud. In fact despite having seen refunds issued by Google, I am yet to hear them attribute this to anything other than a goodwill gesture. And who can blame them? I have no idea of the actual figures involved, but I would hazard a guess that over 99% of click fraud claims filed with Google involve little more than misunderstanding and advertisers jumping to the wrong conclusions.
I also believe that Google have extensive, highly-effective and powerful systems in place to detect real click fraud. Why? Because AdWords is Google’s main source of revenue. They therefore have far more to lose than you and I from this threat.
Consider a hypothetical scenario. Click fraud becomes rife, everyone knows about it, and you start to see blatant evidence of it in your own account. How long will it take you to slash your costs to a bare minimum or close the account entirely? And if an increasing number of companies start doing the same, then Google’s life-source could shrink to a dribble. Not a pretty picture.
For you and I, closing our AdWords account may mean a significant loss of income. But new opportunities would take their place. That void would have to be filled. To Google it could spell the beginning of the end.
Let’s consider the main parties involved from the anti-fraud side of things.
(1) Individual companies.
Anti click fraud efforts are likely to be somewhere between futile and ineffective, and it will be impossible to ascertain how effective they actually are. Realistically, the fraudsters have more to gain than individual companies have to lose. Consider the person who steals $10 a week every week for years, compared with one who steals $500 at a time. An effective parasite will keep its host alive as long as possible.
(2) Google.
The most effective at identifying and preventing click fraud, mainly because they have the most to lose. More than the fraudsters and more than the individual advertisers combined.
(3) Anti Fraud Companies.
I know they exist, but to date have never worked with any of them. I do know, however, that their businesses are problem-based. Take away the problem and they are rendered useless overnight. It therefore strikes me that they don’t have quite the same agendas as any of the other parties.
Ultimately Google have the most to lose. So what options do they have in dealing with the problem?
(1) Stay quiet.
Some believe that they did this for quite some time, and if that were the case who can blame them? However, that option is no longer viable. The problem is growing and next year less than 5% of their advertisers will have not heard of click fraud.
(2) Be seen to take some steps.
Like most forms of crime, the majority will be clumsy and ineffectual. A cynic may argue that preventing the simple-to-spot attempts will look good, and will keep the most obvious cases of fraud out of sight in most accounts. Doing so would be easy to implement and would not involve major costs. There are those who consider me a cynic.
(3) Stamp down hard.
Some fraudsters have a great deal to lose. And just like in the world of spam, the small number of people who make a lot of money from such activities will be prepared and capable of throwing a lot of resources to stay one step ahead of Google. Eliminating the problem would therefore be more or less impossible.
The bottom line is that if Google stop all the easily-detectable fraud methods then everyone is happy. Apart from the advertisers with their eyes open.
The obvious question, therefore, is what to do about it.
The first step is obvious. Monitor your AdWords account on an ongoing basis, and look for dramatic surges or declines in the number of impressions, clicks and/or CTR.
While you’re doing so, make sure you keep a balanced perspective. Any of these warning signs may have perfectly reasonable explanations that have nothing to do with fraud. More clicks, for example, may be down to your competitor not bidding on a popular keyword, lowering their budget or even closing their account. More impressions may be due to other legitimate reasons. An article in a magazine or on the news, a new usage of one of your keywords and so on.
The second step is to be aware of impression fraud. If a dastardly competitor decided to try and make an impact on your account’s quality score, he might pay a group of people to repeatedly search for your keywords for days or weeks on end, without clicking your ads. If this goes on long enough with enough searches, and their own campaigns are paused, they can then step in, re-activate their ads and not be penalised for high impressions and low clicks.
The third step is to look at the information in your AdWords account on a regular basis. Their reports are flexible and configurable, and you can even set them to be sent your way automatically every week.
The fourth step is to take a look at www.adwordsreporter.com. This is a great piece of software that can help you spot suspicious activity and general trends in literally seconds. Anyone spending more than a few dollars a day on their AdWords account should buy this software. And no, we get nothing for telling you this. They are not our clients.
The fifth step is to look in your web logs for unusual activity. Are your AdWords visitors spending less time than usual on your landing pages? If so then why?
Whatever you are doing, if you do come across some suspicious activity then log it. Record every screenshot, report and fluctuation in as many formats as you can. If (and only if) you’re convinced it’s fraud, send all the evidence to an AdWords rep. The more information you have to back up your claim, the less you look and sound like (yet another) crazy-paranoid. And let common sense prevail. If you think you’ve been losing a dollar a day for the last week, is it really worth trying to speak to Larry Page about it?
The bottom line is that click fraud exists, is a growing problem for all AdWords account holders, and will most likely hit your account at some point. And not for the first time either.
There are steps that can be taken, and much of it is detectable, preventable and ultimately refundable. But if you’re not looking for it you’ll never even know that you’re pockets are being emptied as you read this.
Be seen, be aware, be sold.
The Competitive Edge newsletter is a monthly in-depth look at the issues faced by independent software developers today.
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