Preventing Click Fraud

After giving us an introduction to Online Customer Acqusition: SEM and Contextual Advertising, Bing (Director, Product Management & Marketing of Kriyari Inc) returns with a post on Click Fraud, in response to a request for the topic. Read on for some suggestions as to how to prevent click fraud.

What is it?
Click Fraud is defined as clicks that are generated from Cost-Per-Click (CPC) advertising when a source of malicious intent, be it a person or software, clicks on an ad with no actual interest in what is being advertised.

Who does it?
Affiliates/Publishers
Search affiliates display contextual CPC advertising on their website and receive a commission from the contextual network every time an ad on their website is clicked on. As such, by artificially increasing the number of clicks on the ads on their website, the more revenue they earn. These clicks are typically generated through human labor or automated scripts. The human-bots or click armies have been reported in India, China and Eastern Europe, although these days, there are numerous homegrown as well as commercial applications whose sole existence is to fake clicks.

Unethical Competitors
Unethical companies may have their employees click on competitor ads, thereby exhausting the competitor’s budget. In doing so, two things happen – firstly, the victim company realizes a negative ROI on their advertising budget. If the company is not vigilant or well-informed, they may very well just assume that CPC is cost-effective for them, thereby removing themselves from the search listings altogether, or reducing their daily budget. Secondly, by quickly exhausting the victim company’s daily budget, the unethical company can now come in and swoop more of the competitive keywords at a lower price, thus increasing their own ROI.

How to prevent it?
Click fraud is much like credit or identify fraud. You cannot prevent it, but you can plan for it by reducing your exposure, creating deterrents and monitoring.

Reduce Exposure
1. Diversify keywords: Keywords with high CPCs are always a desirable target for unscrupulous publishers since they make more per click. Some of the more popular target categories include home loans, other debt, legal, hosting, domain registration and dating, amongst others. Unless there are certain competitive keywords that you must bid on, and given that you have the budget for it, you’re probably better off bidding on well-researched, longer-tail, lower-CPC keywords. Chances are, a 4 word keyword phrase will be much less susceptible to click fraud then a 1 word keyword. Think about it this way, if you were the fraudster, the biggest bang for your buck would be the low-hanging fruit, right?

2. Target your ad: You wouldn’t strut around with your Prada handbag in the slums, so why would you display your ad to the wrong audience? CPC advertising is not separate from your marketing strategy. Hopefully, you have segmented your Total Available Market and have a target segment (the Total Addressable Market) you are pursuing. To the extent possible, make use of all of the targeting features available to you, like day-parting, age-targeting, etc.

3. Consider removing contextual: Contextual placements are more susceptible to click fraud due the publisher incentive. In addition to that, the majority of the 2nd-tier contextual networks have very poor matching algorithms for deciding where to place your ad. If that wasn’t bad enough, most of these networks have their inventory skewed towards certain verticals. If there isn’t a fit between your product or service and the network’s inventory, it’s a relationship that’s doomed from the start. If your rep can’t tell you where you can expect your ads to run, that’s a major red flag right way. Unless your offering appeals to a mass audience or your margins are still very healthy, I would recommend keeping your contextual spend to just Google or Yahoo, or removing it from your distribution strategy altogether.

4. Set caps: Always protect your potential down-side by setting caps, be they by campaign, hourly or daily.

Create a Deterrent
Who’s Clicking Who is a software tool created by John Carreras and Bruce Clay. It is simple and clever: It pops up a nice warning message each time the fraudster clicks on your ad (after 5 repeated clicks reveal lack of consumer intent). Use this popup, and “your fraudulent clicks drop dramatically,” claims Carrera’s site. This software works very much like the steering lock and wheel locks you have for your car. You car or rims can still get stolen, but hopefully it’s enough of a barrier that the robber will just pass it by for an easier target.

Close Monitoring
1. Know your business’ metrics: You need to make sure you are recording the right data – record the IP address of each click, time and date of the click, the keyword and the traffic source. This data can be found in your server logs, or you could invest in click-tracking software. Google Analytics is also a very useful tool. Regularly examine this data and set benchmarks for how long the traffic is staying for, and what your click-through rates, conversion rates and daily spend patterns are. It is imperative that you have ROI-tracking by keyword. Armed with this information, you can set triggers that will bring to your attention:
- sudden unplanned increases in spend
- keywords that don’t normally spend a lot of funds suddenly spending well
- certain traffic sources start spending more
- sudden changes in click-through rates and conversion rates

2. Automate it: There are many players in the click fraud monitoring and prevention space these days. I tend to favor the do-it-yourself method above if you are the business owner. It takes a little more time and effort but if your business relies partly on search advertising for generating sales, it would behoove you to go this route. You should, after all, know every important business metric that makes your business tick like the back of your hand. Some provides include: ClickRisk.com, AdWatcher, KeywordMax, ClickDetective, ClickDefence, ClickForensics and Nami Media.

Side note: Don’t cry wolf! Just because your conversion rate from a particular publisher is lower than expected doesn’t automatically mean fraud. The reality is click quality can be low even from reputable publishers. This also goes back to further refining your targeting, be it from where you buy inventory, to how compelling your ad copy is and how well it primes the clicker to take the desired action.

About the Author: Bing’s expertise is in online customer acquisition. As Director of Display Media at Netblue (now Connexus Corporation), she spearheaded product marketing, business development and operations while driving millions of dollars in revenue to the business. At her current position, she is responsible for developing compelling user experiences that drive transactions across Kriyari’s multi-channel merchandising network. She also manages all marketing and distribution efforts for the consumer shopping site, iStorez. Earlier, Bing held positions in software engineering and product management at Macromedia and Hewlett Packard, giving her a unique blend of experience across technology and marketing. Bing holds a B.S. in Computer Science from the University of Wisconsin-Madison and an M.B.A. from the Johnson Graduate School of Management at Cornell University, where she was an SC Johnson Merit Scholar.

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