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Click Fraud Level 1 – Google, Yahoo, Third Parties and You
By Jim Hedger (c) 2006

Some call it click fraud and some call it invalid click activity
but nobody questions that questionable clicks happen. How they
happen and to what degree might be up for debate but the
existence of industrial level skullduggery is a widely known but
poorly recognized secret of the search marketing industry.

This dirty little secret is made up of hundreds of millions of
dollars, which are unevenly split between tens of thousands of
participants. Some astute observers might suggest this
constitutes a conspiracy to commit fraud and is therefore
illegal behavior. In that, they would be half right. Click fraud
isn't actually illegal, at least not in a criminal sense. Not
yet anyway.

Google knows about issues associated with click fraud though it
doesn't like using the term "fraud". The popularity of AdWords
and ease of access to Google's lucrative AdSense distribution
system gave online scammers the two essential elements, motive
and opportunity. Google has been playing catch-up ever since.
Yahoo knows a lot about click fraud as well. Extremely credible
allegations have been made about Yahoo's commercial connections
with click fraud artists. Many in the shadier side of the search
marketing industry are in on the click-fraud secret as well, so
much so that they publish how-to guides and self-congratulatory
blogs. (http://seoblackhat.com/2005/11/28/black-hat-ppc/)
Frighteningly, spyware and malware makers are also in on the
secret, often benefiting by becoming unwanted content-delivery
partners.

Everyone's making a lot of money and, like the great insurance
scams of yesteryear, the costs to the ultimate victims are so
widely distributed they often seem negligible to individuals
affected. Negligible is, of course, a relative term. Is $10
negligible to you? How about $100 or $1000 or more?

Another group of people who've learned a great deal about click
fraud are the victims, which tend to be small online businesses.
Unfortunately, it is harder to track the impact on smaller
businesses because they often lack the resources to properly
police their own web and account logs. SEO-News.com
(http://seo-news.com) editor, Kim Roach, wrote a strong piece
titled, "Going Broke on Google AdWords"
(http://www.sitepronews.com/archives/2006/oct/11.html ) in
SiteProNews last week.

Victims of Click Fraud come in all sizes. While Kim's article
addressed damage done to smaller businesses, a July 2006 report
by online industry research firm Outsell estimated click fraud
accounted for $800 million of a total of $5.5 billion spent on
search engine advertising in 2005. Outsell reached these figures
by studying 407 online advertisers that collectively controlled
about $1 billion in ad spending.

Google disputes these figures along with other figures reported
by San Antonio based PPC-auditing firm Click Forensics in their
monthly Click Fraud Index (http://www.clickfraudindex.com/),
questioning the methodology used in determining incidents of
billed click fraud.

In an August 8, 2006 report titled, "How Fictitious Clicks Occur
in Third-Party Click Fraud Audit Reports" (http://www.google.com/
adwords/ReportonThird-PartyClickFraudAuditing.pdf) Google's Click
Quality Team found two serious issues served to consistently
inflate incidents of "fictitious clicks" recorded in third-party
analysis.

According to their findings, "The major root causes for
fictitious clicks falls into the two following categories: ...
detection of page reloads as ad-clicks", and, "... conflation
across advertisers and ad networks, or the counting of one
advertiser's traffic in another advertiser's reports."

The first cause of "fictitious clicks" noted by Google's team
suggests that sometimes users reload pages; use their back
buttons, or open landing pages in new windows. Each action could
be interpreted as a second, third or fourth click where only one
should have been recorded.

The second cause of "fictitious clicks" is a bit more confusing,
stemming from the massive AdSense system Google uses to
distribute AdWords advertising. Google has thousands, (perhaps
millions) of AdSense distribution partners. Some of these
partners are extremely large corporations though most are
independent webmasters. The largest of these partners often have
complicated advertising systems that mix and match different
types of ads (banners, AdWords, text-links, etc...) from different
advertising platforms. They have their own internal system for
measuring the effectiveness of these ads and sometimes those
internal systems cause subtle incongruities in tracking
ad-impressions. One such weirdness is the way some hits from the
AOL network are grouped together under a single block of IP
addresses.

Google's business product manager for trust and safety, Shuman
Ghosemajumder, wrote a long post "About Invalid Clicks"
(http://adwords.blogspot.com/2006/03/about-invalid-clicks.html)
to the Inside AdWords blog in early August. In it, Ghosemajumder
suggests that surveys and reports from many click-analysts,
including Click Forensics, do not give a full view of factors as
seen by Google, or in some cases, by the analysts' own clients.

Ghosemajumder says Google's internal filters catch and cancel
charges for the vast majority of invalid clicks, even though
evidence of those clicks might be reflected in advertisers' log
files.

"If an advertiser is monitoring click activity, these
automatically filtered clicks may show up in an advertiser's
logs, but not in their bills. When invalid clicks are detected
after an advertiser is charged, we reimburse for them. Because
of our detection efforts, losses to advertisers from invalid
clicks are very small," Ghosemajumder's comments.

"Moreover", he continues, "the study does not indicate whether
the advertiser was actually charged for any of the clicks, only
that the traffic analysis suggested that the clicks may have
been invalid."

It isn't just the number of billed clicks that have advertisers
and analysts concerned. Another report produced by Click
Forensics showed that of 170 advertisers in the financial
services sector, over 6% reported recorded visits from sites
clearly identified as parked domains.

Dozens of third-party firms engage in ad-stuffing documents on
parked domains. If the general consensus that an invalid click
is one that is reasonably unlikely to lead to a potential
conversion, then counted clicks from parked domains are assumed
by many analysts to be invalid.

Parked domains are housed at URLs that, while owned, are not
really operating as most Internet users might expect. A page at
parked domain is generally one containing very limited
information and a number of PPC Ads. The page is basically a
placeholder being used as a billboard. Believe it or not, parked
domains are said to drive a significant amount of traffic,
especially under highly searched terms relating to health,
travel and financial services. Given the number of
click-throughs found in a report covering 170 financial services
companies, 6% represents a huge number of clicks, each costing
advertisers ten cents or more.

Jessie Stricchiola is considered one of the leading experts in
click fraud detection and analysis. On the website of her firm,
Alchemist Media (http://www.alchemistmedia.com/CPC_Click_Fraud.htm),
Sticchiola writes about an automated form of third-party click
fraud that was publicly associated with Yahoo by click fraud
researcher Ben Edelman (http://www.benedelman.org/news/040406-1.html).

"Another method of fraudulent clicking is initiated through
automated click generation methods, using "hitbots" - software
applications specifically designed to click on paid listings.
This kind of activity is also initiated by both competitors and
by search engine partners and/or affiliates, the latter often
instituting extensive technology arrangements to enable their
fraudulent click traffic to slip past the internal filtering
methods used by the CPC engines. For CPC affiliates, there is a
vested interest in generating as much traffic as possible to
increase their portion of the shared revenue generated by paid
listings. This is an often overlooked source of fraudulent click
activity."

The examples cited in this article are only some of the ways
used by the unscrupulous to scam unsuspecting advertisers in an
environment that is extremely difficult to police properly.
Indeed, in the absence of any external oversight, the only real
watchdogs are the search engines themselves. Click auditors
working with advertisers are, apparently, not privy to
information used by Google and Yahoo to examine the issue and,
therefore, are unable to effectively create reports recognized
by the two largest search advertising providers.

While Google and Yahoo both claim to be working on finding
solutions to the problems posed by invalid clicks, both admit
they are months or even years from finding foolproof solutions.
That both make a great deal of money from invalid clicks, clicks
directed from parked domains, and other third-party shenanigans
has lead some to speculate that the major search engines might
not be approaching the problem with missionary zeal. There is a
lot of murky ground. The only obvious things about the issue is
that there is an issue and that a solution, though not
immediately forthcoming, is desperately needed.
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Search marketing expert Jim Hedger is one of the most prolific
writers in the search sector with articles appearing in numerous
search related websites and newsletters, including SiteProNews,
Search Engine Journal, ISEDB.com, and Search Engine Guide.

He is currently Senior Editor for the Jayde Online news sources
SEO-News (http://www.seo-news.com) and SiteProNews
(http://www.sitepronews.com). You can also find additional tips
and news on webmaster and SEO topics by Jim at the SiteProNews
blog (http://blog.sitepronews.com/).
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