October 28, 2004, 12:00 AM

Why some clicks go nowhere

Click fraud describes the practice of clicking on pay-per-click online ads with no intention of making a purchase. One provider of services used to detect click fraud estimates that as much as 50% of PPC advertising in some very competitive categories may be attributable to click fraud.

Click fraud describes the practice of clicking on pay-per-click online ads with no intention of making a purchase. It drives up commissions for those hosting the clickable links, forcing marketers to pay the percentage on the fraudulent "leads," and it can undermine the cost effectiveness of online PPC campaigns.

How much? One provider of services used to detect click fraud estimates that as much as 50% of PPC advertising in some very competitive categories may be attributable to click fraud. Dimitri Eroshenko, CEO of web analytics firm Clicklab, says his estimate is based on the experience of clients over the past two years.

Click thievery takes different forms online. Some affiliates set themselves up just to collect commissions on clicks, without adding any value to the exchange. Competitors represent a second group of click thieves, says Eroshenko. "By clicking on competitors` links they accomplish several things at once. It depletes the competitor`s daily budget. Click several times, and the competitor`s link disappears from the bidding competition entirely, so you can then raise your own links higher at less cost," he says.

At search engine Google, the issue of fraudulent clicks is so high on the radar screen that Google identified it among the risks listed in its pre-IPO filing. "At Google, listing priority depends on click-through rates. You can conduct an impression attack by generating an inordinate amount of page views but no clicks," Eroshenko explains. "According to Google`s algorithm, if that happens both your popularity and your ranking will go down."

Click fraud schemes are systematic, with some setting up programs to automatically generate the fake click-thorughs, he adds. They can be manually-operated as well. Recently, India-based media have reported on the phenomenon of local online ad clickers employed by hosting web sites to drive up click volume, who earn income by repeatedly clicking on the ads from their home computers.

Analytics providers are adding functionality to better identify click fraud. Clicklab, for example, has a score-based statistical algorithm that detects and documents it. Its web analytics software applies a series of tests to each visitor session to identify fraudulent session signatures, and then assigns penalty scores to each failed test. An inflation index gives advertisers an indication of the quality of traffic from each source and keyword.

"If you suspect your web site it is the victim of click fraud, your only recourse is to establish appropriate web metrics and conduct a thorough statistical analysis of web traffic originating from each source and keyword," Eroshenko says.

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