It's hard to determine who's right and who's wrong when it comes to calculating the amount of click fraud on the Internet. Search engine companies like Google and Yahoo, which make billions worldwide from online ad sales, maintain that everything is under control, yet reports from independent researchers tell a different story.
And the stakes in the PR war are soaring.
Online advertising revenue in Canada is expected to grow to $1.34-billion this year, according to the Interactive Advertising Bureau of Canada. But as the market continues to expand and businesses increasingly turn to the Internet to promote products and services, the number of online fraudsters is also growing, according to Click Forensics Inc., an independent click fraud reporting service.
The latest figures from Click Forensics show the industry's average click fraud rate was 15.8 per cent in the second quarter of 2007, up from 14.1 per cent last year. The information is gathered from a network of more than 4,000 online advertisers that send advertising results to the U.S.-based company.
Click fraud is the blanket term the marketers came up with to describe the shady practices scammers have used to get a piece of the big online advertising cash cow. When ads are clicked without the intention of purchasing the product, the advertiser is left wondering why their bigger-than-expected ad bill doesn't match up with their sales. The scope can range in the millions, depending on if a human or computer program is doing the clicking.
"The damage it's doing to advertisers is pretty phenomenal," says Tom Cuthburt, Click's president and chief executive officer. "Click fraud is the new spam. … It's such a tidal wave of activity that's growing so rapidly, that it's just very hard to [manage it]."
Understandably, the big search engines say click fraud isn't out of control and is, in fact, widely prevented.
Shuman Ghosemajumder, Google Inc.'s business product manager for trust and safety, maintains click fraud is being properly managed by search engines.
"Those reports have serious problems with their methodology … where out of the thousands of advertisers they say work with them, we've only seen two reports submitted by Click Forensics' advertisers in the past year and none of the clicks they charged as fraudulent were charged [by advertisers] in the first place," Mr. Ghosemajumder says.
Google, which makes about 99 per cent of its revenue through online advertising, says fewer than 0.02 per cent of all clicks are the result of suspicious behaviour from spammers or sophisticated computer networks programmed to repeatedly click on ads.
"What we do is look at all the clicks that look suspicious and cast our net as wide as possible to be able to protect advertisers. Anyone who says that here is the set of clicks that are definitely fraudulent … is overselling the capability that scientifically exists that says what the intent of a click was," Mr. Ghosemajumder says.
To combat the negative publicity, last week Google launched its Ad Traffic Quality Resource Center, which intends to provide advertisers with information on click fraud and Google's efforts in fighting it. Mr. Ghosemajumder recommends advertisers educate themselves and learn how to better monitor the performance of their advertising campaigns.
Similarly, Microsoft Research program manager Brendan Kitts e-mailed a blanket statement that says Microsoft is "committed to providing a high quality network for our customers by aggressively filtering out clicks that are likely to be invalid. The proof of our efforts is in our customers' high conversion rates, which have been confirmed by several independent studies."
Representatives from Yahoo Canada, the other major search engine affected by click fraud, did not respond to requests for an interview.
Canadian businesses, however, are not waiting around for a consensus on the proliferation of click fraud.
Anwar Sumar, director of e-business for Dell Canada Inc., says that the risk of being affected forced him to bolster his online ad system to ensure money spent on ads wasn't wasted.
But unlike other Canadian businesses, Dell Canada has the resources for a detection system. Mr. Sumar says while his company no longer sees much click fraud due to in-house software and databases that filter out most frauds, smaller online businesses may see click fraud rates near the levels suggested by Click Forensics.
"If you are an Internet advertiser that doesn't have a very robust reporting system, much experience in advertising online or in dealing with click fraud, my gut feeling is that [click fraud] could be somewhere in the 10-per-cent range and I'd suspect that over time it's going to get worse," Mr. Sumar says.
Although it may be difficult to get a read on how much fraudulent activity exists on the Internet, Gord Hotchkiss, director of the Search Engine Marketing Professional Organization and president of Enquiro, a Kelowna, B.C.-based search engine marketing company, agrees with Mr. Sumar and says that the true impact of click fraud on Canadian businesses may still be years away.
"With the Canadian market about two to three years behind the U.S., it opens the potential for click fraud to maybe be more prevalent in the Canadian market since the same checks and balances are currently not in place yet," Mr. Hotchkiss says.
"In a lot of cases, advertisers aren't going to be as mature in their tracking methodology and analytics, so there's a bigger crack for fraudulent activity to slip through."
So, who's right when it comes to click fraud — Google or Click Forensics? The answer is somewhere in between, Mr. Hotchkiss says. "It's kind of a weird place because there's really no third-party auditing body. There's nobody external to the engines that's recognized as having a large enough data set that can provide some scope."
Some examples of click fraud:
- Web developers, who receive a commission based upon the number of times hosted ads get clicked, may try to make a little extra cash by repeatedly clicking on ads with no intention of actually buying the product or service.
- Businesses may click on a rival's ads in an attempt to fool search engines to charge their competitor for erroneous clicks.
- Networks of computers can be made to repeatedly click on ads. Such "scripts" simulate an Internet user clicking on ads in Web pages. Because large numbers of clicks that appear to come from only a few sources immediately raise flags, hackers spread worms to infect unprotected computers to do their dirty work.
