Combating Pay-Per-Click Fraud, Really Hurting Marketers

May 13, 2009 by Pablo Palatnik

One thing we really watch daily, if you do pay-per-click, is how fast, slow, or whatever the case may be your budget is spending per day.

In this economy, I think its safe to say there are no marketers just “spending away” on pay-per-click since cost have gone up (some may say down to less competition) and many companies seeing a decrease in sales.

In the New York Times today, there is an article titled, “Pay-Per-Click Web Advertisers Combat Costly Fraud” which discusses the issues that we face as marketers with click fraud in the search engines. Click fraud doesn’t necessarily comes from search engines, although I’ve always been skeptical of 2nd or 3rd tier engines, not all, but some, but comes in the form of other competitors trying to gain that edge to destroy your ROI or pick-up the pace of your budget so it depletes quicker.

“…Search engines like Google say that they have the problem under control. Google says that advertisers contend that fraudulent clicks account for just 0.02 percent of all online activity. If Google and an advertiser agree that a click is fraudulent, it offers the advertiser a credit.

(In 2006, Google settled a $90 million lawsuit after advertisers argued that it had not given them adequate compensation for fraudulent online ad clicks.)

“We are working hard as ever” to protect customers from fraud “and to innovate to detect click fraud,” said Shuman Ghosemajumder, Google’s business product manager of trust and safety. “And we’re getting fewer questions from advertisers about click fraud.”

Companies like Click Forensics are helping some large companies such as NewCars.com combat this issue which can be a good percentage of your ad spend, as described in this article, click fraud represented 20% of their ppc ad spend.