The rate of click fraud in online pay-per-click advertising rose to 16.6% in 2007’s fourth quarter, up from 14.2% a year earlier and 16.2% in the third quarter, according to the quarterly Click Fraud Index. It’s the highest level since the index started at year-end 2006.
The 2007 industry average click fraud rate was 15% higher than 2006’s industry average.
The index represents more than 4,000 online advertisers and their agencies that have joined the Click Fraud Network organized by click fraud detection service Click Forensics. It monitors online campaigns for click fraud by correlating data collected from search provider campaigns and the advertisers’ web sites.
Click fraud occurs in pay-per-click advertising when a web user or an automated system (botnet) clicks on an ad without having any actual interest in the advertised product, solely to generate a payment to the ad hoster. The primary reasons for click fraud are a competitor trying to deplete a marketer’s pay-per-click budget or a hosting service trying to generate revenue fraudulently.
During the fourth quarter, the average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.3%. That’s up from 19.2% for the same quarter in 2006 and 28.1% for the 2007’s third quarter.
Click fraud traffic from botnets was 15% higher than click fraud traffic from botnets in the third quarter, according to Click Forensics.
During the fourth quarter, of click fraud originating outside North America, India accounted for 4.3%; Germany, 3.9%; and South Korea, 3.7%.
“In 2007 we saw a significant jump in the industry average click fraud rate when compared with the average rate for 2006,” says Tom Cuthbert, president and CEO of Click Forensics. “As the (Federal Bureau of Investigation) and USA Today have reported, fraudsters are using more sophisticated means to perpetrate click fraud, including infiltrating mom-and-pop e-commerce sites. As a result, it’s more important than ever before for advertisers, publishers, ad networks and search engines to cooperate and share data in order to stem what’s on target to be an even worse 2008.”
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