Click fraud in pay-per-click (PPC) online advertising refers to the premeditated practice of clicking on ads without the intent to do business with advertisers.
Click fraud can be perpetrated by persons or software that systematically click on links to either garner a profit for themselves through click commissions (affiliate fraud) or to purposefully deplete the PPC funds of a competitor (competitor fraud).
Pay Per Click is a paid inclusion model used by some search engine companies that usually requires you to bid on words (keywords) or phrases (keyphrases) that your target market might use when performing searches. Many search engine companies rely on extended network of content publishers who display paid ads and receive a commission for each click. In effect, PPC search engines act as a middleman between advertisers and publishers.
PPC networks are notorious for withholding click fraud related billing information from their advertisers. The argument is that they must protect their intellectual property and trade secrets, so as to prevent click fraud perpetrators from "beating the system." This secrecy and lack of information exchange undermines trust and credibility between the parties.
Legal agreements between PPC networks, content publishers, and advertisers expressly forbid any actions that may result in click fraud.
Click fraud perpetrated by 3rd parties
Another source of click fraud are 3rd parties, usually competitors of publishers or advertisers who haven't entered into agreement with PPC networks. This type of click fraud is next to impossible to prosecute because there isn't an instance of breach of contract or criminal fraud. Examples of competitor click fraud include:
- Competitors of advertisers benefit from purposefully depleting PPC funds of the competition and obtaining higher positions for themselves.
- Competitors of publishers may generate fraudulent clicks to make it look as if the publisher tried to defraud the PPC network in order to receive illegitimate commissions, and cause the PPC network to terminate the publisher agreement.
Click fraud mechanics
Click fraud can be as minor as an affiliate who clicks on an ad once a day to bump up his revenues, or a competitor who occasionally clicks on an ad out of spite. Major click fraud is well organized, fleecing millions of dollars from advertisers each year. Some perpetrators employ complex software scripts to generate thousands of fraudulent clicks.
There are also ready-made software products, freely available on the market, for generating fraudulent clicks. For example, SwitchProxy, a third party extension for Mozilla Firefox browser, allows anyone to click on the same paid links repeatedly from a different IP address (that of a proxy server) without ever switching an Internet connection. There are commercial tools you can download, such as FakeZilla and I-FAKER, based in Bulgaria and Ireland.
Other click fraud methods employ the teams of people in developing countries, such as India, China, or networks of zombie PCs (i.e. home or office computers that are attached to the Internet permanently which have been infected by a virus allowing them to be controlled remotely), to click on PPC ads.
Click fraud solutions
Proving click fraud can be tough, because of the lack of common definitions for click fraud and difficulty in establishing fraudulent intent.
There is little a PPC search engine can do beyond not charging the advertiser (or issuing a refund) for clicks that were determined to be fraudulent. Besides, there aren't foolproof methods for detecting click fraud, especially as perpetrators are becoming increasingly more sophisticated. In addition, PPC networks typically refuse to share information on click fraud with advertisers. For these reasons, it is necessary for advertisers to use an independent third party click fraud detection and click fraud audit services such as Clicklab's.