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Click Fraud: Are Bots Eating Your Ad Budget?

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Click Fraud: Are Bots Eating Your Ad Budget?

Your computer has been hacked!

But what does that mean, exactly?

Hackers might be trying to learn your email or bank account passwords, steal your identity, or...

...click online ads?!

That's right — some malware is made just for the purpose of surreptitiously clicking online ads.

Why Hackers Target Ads

So, why would hackers go to the trouble of creating malware just to click on online ads? What do they get out of it? Simple: money.

This practice is known as "click fraud." And it is a huge industry. Some estimate that click fraud takes up about a third of all digital ad spending. Pages displaying ads make more money the more clicks those ads get, whether or not they're made by a real person.

Competitor click fraud can also occur. This is where the perpetrator purposely drives up their competitor's advertising costs by clicking on their ads over and over.

Click fraud is estimated to cost advertisers tens of billions of dollars a year.

The Failed Promise of Perfect Online Marketing

The web seems like a perfect marketing opportunity: companies like Google and Facebook gather detailed demographic and behavioral data about their users, and then use it to sell highly targeted ads to businesses. Want to advertise your business only to 30 year old stay-at-home moms who are interested in yoga? The web makes that cheap and easy. Compared to expensive advertising on TV, magazines, or billboards, it's a no-brainer.

Unfortunately, click fraud can make even digital advertising costly, and greatly reduce its effectiveness.

Many of those highly targeted clicks you are paying for are actually from bots or low-paid workers.

Thinking about buying ads for your business? Advertising online can be an incredibly effective method to grow your business, but only if you're aware of click fraud and take steps to minimize it.

Find out how it all works in the graphic below.

Click Fraud: Are Bots Eating Your Ad Budget?

Click Fraud: Are Bots Eating Your Ad Budget?

Digital advertising has grown into a multibillion-dollar industry, but are all those clicks and views generated by real people looking to purchase, or are they fraudulent bots costing companies billions in misused ad space every year?

Why Worry About Click Fraud?

  • Everyone should be aware of click fraud because:
    • Malware manipulates online payments into hacker accounts
    • Fraudulent ad space takes marketing opportunities away from companies who pay for the space
  • Fraud techniques
    • Crowdsourcing and Click Farms
      • Low-paid workers manually go through pages and click on the ads
    • Malware
      • Malicious software running silently on infected computers click ads on the pages of client websites
    • Retargeting Fraud
      • Imitates human actions by appearing to have an interest in a specific brand or topic for targeted clicks on sites and ads
    • Mobile Simulators
      • Mimics smartphone activity using a computer to create traffic on in-app mobile ads
    • Ad Stacking
      • Ads are loaded simultaneously behind other ads, creating traffic for ads not seen by users
    • Toolbars
      • Branded toolbars that users download as part of a software bundle that take over their browser and change search engine settings to enable specific ads
    • Ad Injection
      • Often included in software bundles and disguised as deal finders for online shopping to put unauthorized ads on real websites

The State of the Digital Ad Industry

  • Global digital ad budgets continue to grow:
    • They were estimated to be about $140 billion in 2014
      • Around 25% of total paid media budgets
      • 17% higher than 2013
    • The U.S. digital ad market was estimated at $50 billion in 2014
  • Automatic ad placement is becoming the industry norm because users can:
    • Buy them quickly and in bulk
    • Software automatically places ads on relevant sites based on a company's media plan
    • 80% of digital ads will be bought and placed programmatically by 2024

Panic Over Click Fraud

The real costs of click fraud are likely immense:

  • It could have cost marketers $11.6 billion in 2014 alone
  • Cost of it is up 22% from 2013
  • Various marketing reports show growth in click fraud between 23% and 50% in the last two years
  • In 2013 Google disabled:
    • 2 million bad ads on Adwords
    • 5,000 AdSense accounts for copyright violations
    • 400,000 sites on its Google network for disguising malware
    • 10,000 sites on its Google network for pushing get-rich-quick schemes
  • Major brands have complained about click fraud:
    • L'Oreal
    • General Motors
    • Verizon
      • Claims $1 million worth of fraud
    • Mercedes-Benz
      • Security firm Telemetry claims 57% of ads were viewed by bots
      • Ad tech company Rocket Fuel, who ran the ads, claims their numbers say only 6% of the digital ad campaign was questionable and possibly fraudulent
    • Limited Run
      • Accused Facebook of allowing up to 80% of its ad traffic to come from bots
  • Experts agree that click fraud is a problem, but disagree on how widespread it is:
    • ComScore Senior Vice-President Brian Pugh says that bots may account for anywhere from 4% to 36% of online traffic
    • White Ops, a web security company, says fraud costs marketers at least $6 billion (roughly 4% of ad buys) every year:
      • They suggest one sixth of all U.S. computers are infected with bots that fraudulently visit sites
    • Medialink, a networking products company, says about 25% of online ad budgets go toward fraudulent traffic
    • Advertisers usually say the problem is huge
      • The Association of National Advertisers suggests it is around 50% of digital ad budgets

Reduce Your Risk of Click Fraud

  • Know how fraud happens, and stay up to date on techniques and risks:
    • Watch out for easy-to-fake measurements, like:
      • Ad views
      • Click-through rate
      • Completion rate
      • Cookie attribution
    • Focus on return on investment (ROI), because it shows the real effectiveness of campaigns
      • Know your goals
        • Increased inquiries
        • New customers
      • Carefully measure results using human interaction metrics like:
        • Purchases
        • Subscriptions
        • Inquiries
      • Utilize third party tools to analyze ROI and possible click fraud
        • Improvely
          • Click/conversion tracking and click fraud detection
        • Voluum
          • Marketing analytics in real time
        • There are also services like those from Marin Software that monitor and optimize PPC traffic
  • Design your ad campaign correctly
    • Target your market as closely as possible
      • Specific geographic areas
      • Longer keyword phrases
    • Be prepared to pay more for genuine media
      • Targeted, quality ads cost more than low-quality, randomly-placed ads
    • Work with reliable advertising agencies and brokers
      • With good reputations
      • Committed to aggressive fraud detection techniques
  • Be proactive with your ad campaigns
    • Create unique landing pages for PPC traffic to better track data
      • Landing pages with unique URLs allow you to isolate PPC from regular traffic
    • Study ad stats for unusual patterns
      • Sudden increases in bounce rate
      • Duplicate IP addresses
      • Sudden spikes in PPC traffic with no corresponding ROI

Although fraudulent traffic will be a problem as online advertising grows, you can mitigate the risks of click fraud. Keep hackers from destroying your digital ad campaigns, and reach real customers for your business.


KeriLynn Engel

About KeriLynn Engel

KeriLynn has worked as a freelance writer for various websites. She is an advocate for domestic abuse victims and has way too many hobbies.


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