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Are Click Fraud Numbers Being Exaggerated by the Traditional Media?

As you certainly noticed, a lot of traditional media has recently been focusing on click fraud. Is it as big of an issue as it is made out to be, compared to traditional advertising? Unfortunately Eytan Elbaz of Google will not answer this question with statistics, but he lets us know that Google has the problem under control.

Here are some notes based on the Click Fraud Session at the Targeted Traffic Conference in Hollywood, Florida last week.

How does traditional media provide viewer/reader metrics?

Traditional media does not really provide verifiable metrics for their viewer numbers and circulation statistics. While TV statistics are becoming more precise with the help of digital cable and bi-directional networks, circulation metrics for papers are still very much basic estimates.

Newspaper circulation is measured with the help of two main numbers: Paid and free circulation. How reliable are those numbers?

Let's take a look at an example provided by lawyer John Berryhill: Some years ago, hotels started giving us "free" newspapers in the morning, that most of us do not read. These papers are included in the newspaper's circulation numbers, which are used in order to calculate the advertising rates.

Since those papers in the hotels were originally free, they had to be included in the "free" circulation numbers, which of course meant less value to the advertiser than a "paid" copy.

So the hotels and paper publishers decided to include the free paper in your room price, and allow you to get a credit if you return the paper to the hotel front desk. It now was a paid copy, which could be counted towards the "paid" circulation numbers — even though the value is more likely to be comparable to the value of a "free" copy.

The traditional print media is running out of advertisers. Thus it is of course in their best interest to discredit their biggest opponent, online advertising. Could this possibly be the main explanation for the frequent coverage of the "click fraud" issues in print media?

Some advantages of Internet advertising vs. traditional media advertising

  • you can tell which context the ad was viewed in (you cannot tell if the reader read a certain page of a newspaper)
  • "circulation" numbers are more reliable
  • conversation rates from ads can be tracked
  • smart pricing for advertising, i.e. depending on conversion rates

An issue that might affect publisher payouts was brought up by Rick [of OffShoring.com]: 'Shaving' by advertisers, meaning the manipulation of conversion rates. Since the online advertising systems rely on the advertiser to track the 'action/conversion' (by adding some tracking code to their "sale complete" page), they are in a position to manipulate the number of closed sales.

Another comment brought up by Joe [of CentralNIC] was that additional transparency, (i.e. publishing click fraud numbers), could be used to counteract the perception that clickfraud is a big issue.

By Frank Michlick, Founder at Domain Cocoon

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Comments

Re: Are Click Fraud Numbers Being Exaggerated by the Traditional Media? By Marc Trachtenberg  –  Nov 01, 2006 12:38 pm PDT

With the amount of cybersquatting, trademark abuse, phishing, and general fraud present online, your assertion that click fraud is not rampant as well is off the mark, especially in light of how easy it is to design technology to perpetrate it.  Click fraud is perpetrated not only by those looking to illegitimately generate pay per click revenue for websites they operate, but increasingly by businesses looking to drive up the advertising cost of their competitors.

Your suggestion that traditional print media has purposely overhyped click fraud is similarly off the mark.  While it is undeniable that online advertising has taken a huge chunk of revenue from traditional print media, internet media outlets have given this story more attention than print media, which is known to have generally poor coverage of internet related issues except for several focused publications.  I would hardly call some of the sources giving this issue the most coverage such as CNet and Wired.com traditional print media.

Judging by your listed credentials, it is difficult to believe you would be naive enough to really believe the assertions in your post.  Thus, I can't help but wonder what interest of yours could have motivated you to post it.

Re: Are Click Fraud Numbers Being Exaggerated by the Traditional Media? By Frank Michlick  –  Nov 01, 2006 1:49 pm PDT

Marc,

Thank you for your comments. Please note the question mark in the title of my post - and consider it a conversation starter.

While I do agree (and I never said the opposite) that click fraud is an issue, I do indeed think that traditional advertising has a bigger issues with providing tracking and accountability to their advertisers than PPC advertising.

I am not quite sure why you are connecting cybersquatting, trademark abuse, phishing and general fraud with click fraud - and while there is some connection, I would consider each one of these a very separate issue.

Maybe we need to see if we can agree on a common definition of "click fraud". For you it seems to be about more than an actual fraudulent click.

But rest assured that there is no hidden agenda here. My main point is to show that despite any click fraud issue there might be, PPC advertising provides many more metrics than traditional advertising.

I ultimately believe in a model that would actually combine PayPayView, PayPerClick and PayPayAction with a rising payout scale to the publisher. And advertisers with badly converting landing pages should be punished as well.

/Frank

Re: Are Click Fraud Numbers Being Exaggerated by the Traditional Media? By Marc Trachtenberg  –  Nov 01, 2006 4:10 pm PDT

Frank,

I connect cybersquatting, trademark abuse, phishing and general fraud with click fraud in the sense that they are all illegitimate online activities perpetrated for the purpose of making money.  If incidences of cybersquatting, trademark abuse, phishing and general fraud, which are all more illegal and carry much higher risks and penalties are rampant, then it only stands to reason that incidences of click fraud are just as high if not higher by virtue of the ease in which it can be accomplished.

I agree that traditional advertising has some serious issues in ts ability to provide tracking and accountability to advertisers.  However, I don't know that it is necessarily greater than that of PPC advertising, especially based upon the frequency with which online media outlets suspect click fraud occurs (a recent study found as many as 29.5 clicks may be fraudulent).  The fact that the major advertising networks won't release any statistics also indicates that the percentage of fraudulent clicks is extremely high.

As far as a definintion, I would define "click fraud" as any intentional click on a paid link by one who has no intention of using your services.  Typically, the intention will be to
increase the entity's own PPC revenue, or increase the advertising costs of others, but definining click fraud in this way might unnecessarily narrow the scope of the term.

Re: Are Click Fraud Numbers Being Exaggerated by the Traditional Media? By Frank Michlick  –  Nov 02, 2006 9:14 am PDT

Marc,

Sharing click fraud numbers might help clearing things up, but I disagree with your conclusion that the numbers are very high just because Google/Yahoo! do not publish any numbers.

If you advertise on Google adwords, there are already many metrics applied so that in turn you should actually neither see nor pay for fraudulent clicks on your ads.

Please note that the wired article you cite just says that click fraud can be "as much as 29.5%". If you track this to the original survey data, it actually is "Alleged Click Fraud". In the three campaigns that were compared, both other campaigns had numbers under 10%. See the original report here.

The group of people that have an interest in showing that click fraud could be a big issue is rather large:

* Advertisers (bring down cost, blame publishers for bad conversion rates)
* Click Fraud Service providers (who btw, also advertise in search engines for their services - in a way an oxymoron)
* Traditional Media (losing their advertisers)

/Frank

Re: Are Click Fraud Numbers Being Exaggerated by the Traditional Media? By Marc Trachtenberg  –  Nov 02, 2006 9:40 am PDT

Frank,

To be clear, I don't conclude with certainty that the click fraud numbers are high only becuase the major advertising networks won't release the numbers.  I said that this "indicates" that the percentage of fraudulent clicks is extremely high. I probably should have said "suggests" rather than "indicates" which is what I meant.

As far as Google's internal metrics which it applies so that advertisers don't pay for fraudulent clicks, excuse me if I do not have much faith in them, as an advertiser would never know if they are effective since Google does not release any data.  I hardly think Google is investing a significant portion of its vast resources in metrics that take money out of its pockets.

I agree that the group of people that have an interest in showing that click fraud could be a big issue is rather large.  However, regardless of how large this group is or how great their interest, the only people that could shed any light on the situation are the large advertsing networks themselves since they control all the data.  It is highly unlikley that these networks will do so as access to this information could threaten the multi-billion dollar revenue stream that ads generate, which is the foundation of their entire business model.  Thus, the advertising networks have left the rest of us no choice but to rely on theoretical conclusions of allleged click fraud.  If these theoretical conclusions of the high percentage of click fraud are exaggerated, let Google and Yahoo prove it since are the only ones with access to the information.

Publishing click fraud numbers sounds interesting By Justin Cooke  –  Jul 14, 2009 8:37 pm PDT

I really like the idea of publishing click fraud numbers.  In addition to avoiding areas where click fraud seems to run rampant, it would allow you to find a better ROI and a CPRC (Cost per REAL click) that would help marketing efforts.  My concern with PPC as an agency is that the margins have to be awfully thin to deliver your client a reasonable ROI.  The person really making money out of this is Google…

It's hard to argue with PPC as a legitimate marketing strategy, but I'm much more fond of traditional SEO and having it done offshore...but this happens to be easy as an outsourcing company.

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