October 29, 2007, 12:00 AM

Search marketing click fraud up 17.4% in Q3

The rate of fraud in online pay-per-click advertising hit 16.2% in Q3, up 17.4% year-over-year and the highest level this year, according to the quarterly Click Fraud Index.

Click fraud

The rate of click fraud in online pay-per-click advertising hit 16.2% in the third quarter, up 17.4% from 13.8% a year earlier and the highest level this year, according to the quarterly Click Fraud Index. The click fraud rate for affiliate sites was 28.1%, up from 19.4% at year-end 2006, when the index first began tracking affiliate click fraud activity.

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’ own web sites.

Click fraud occurs in pay-per-click advertising when a web user or an automated system 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 site trying to generate revenue fraudulently.

During the third quarter, of click fraud originating outside North America, France accounted for 4.2%; China, 4.1%; and Germany, 3.7%.

The overall click fraud rate has edged higher since the beginning of the year, hitting 14.8% in the first quarter and 15.8% in the second quarter. The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, also has risen steadily in 2007, reaching 21.9% in the first quarter and 25.6% in the second quarter.

Over 60% of traffic from parked domains and made-for-ad sites was click fraud, according to the index. A parked domain is an inactive domain reserved for later use or one that points to another existing domain.

“Click fraud activity continues to grow, especially on made-for-ad sites, parked domains and on the content networks,” says Tom Cuthbert, president and CEO of Click Forensics. “Advertisers, publishers and search engines need to take notice because content networks are becoming the fastest growing source of click fraud. Ensuring their quality is essential for the pay-per-click advertising market to continue its growth.”


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