While bailouts and stimulus plans have largely dominated the economic headlines in early 2009, another recently released batch of quarterly click fraud data underscores what many of us in the industry have been saying for quite awhile–the severity of the threat click fraud poses to online advertisers and by extension, broader economic recovery, is growing by the day.
The picture painted by the Click Fraud Index, the industry’s barometer of click fraud activity compiled by Click Forensics, is not a pretty one. The overall industry average click fraud rate for Q4 2008 was up to a record-high 17.1 percent, while fraud on the CPC advertisements utilized by many small-budget internet advertisers on content sites like Google and Yahoo increased again as well. Perhaps most alarming, click fraud from ‘botnets’ swelled for an eighth straight quarter and now account for more than 30 percent of overall click fraud, another record high for the CFI’s monitoring.
In the aftermath of the CFI report, a debate has emerged over the legitimacy of the CFI’s data. The discussion, fueled largely by Google itself, focuses on what exactly constitutes a fraudulent click. Though the CFI stands by its numbers and the methods it uses to collect them, there are some who openly question if the data includes clicks that Google and others already account for as fraudulent, thus inaccurately inflating the overall click fraud rate.
Now, while this may be pertinent to the click fraud issue on the whole, unfortunately, it distracts us from the bigger picture. We are losing the battle against click-fraud at a most inopportune time and the economic expansion we seek as a nation will be that much harder to realize without a broad, concerted effort to fight back.
Whatever the numbers may ultimately be, click fraud has evolved into much more than just a pesky nuisance. Simply put, it equates to millions of dollars in lost revenue for advertisers and marketers at a time when many of them are scrambling to simply survive. Many of those are small and mid-sized businesses, whose success is crucial to job creation and strong economic performance. But as click fraud continues to expand, those that are relying on internet advertising to grow are finding their bottom lines severely diminished as a result.
As the data indicates, the botnets are faster and smarter than ever, hitting from different IP addresses at varying times and evading the filters designed to stop them. Link farms, groups of people hired exclusively to conduct fraudulent clicking, are also back in full force. As a result, online advertisers are going to be forced to allocate even more budgetary dollars towards combating the problem this year. And it doesn’t take a seasoned economist to understand the domino effect such actions will have on consumers and spending.
Absent any outside or government intervention, the onus for combating click fraud still lies with the advertisers themselves. A diligent and concentrated approach is crucial—one that carefully monitors traffic and analyzes click logs on a regular basis to spot the practices and trends normally employed by botnets. Advertisers must maintain strong relationships with their network providers as well, keeping them abreast of possible fraud with periodic reports and requests for investigations into suspicious activity. Finally, some may benefit from diversifying their advertising budgets with the incorporation of CPA (cost per acquisition) and ‘monthly flat rate’ models that can be just as effective while offering less risk.
Though these steps will likely result in higher short-terms costs and a greater time commitment, the continued high rate of click fraud leaves no real alternatives—our economic future, and the viability of our status as world leaders in technology and innovation depends on strong and swift action.
