Click Fraud Could Cost As Much As $4.35 Billion

by Laurie Sullivan, Jul 23, 2009, 5:56 PM

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Click Forensics and Anchor Intelligence released separate click fraud reports Thursday. Despite the mixed reviews, experts suggest that marketers remain vigilant to safeguard PPC investments.

Researchers found that scripted programs that click on ads increased and the incidents of publisher collusion fraud rose in the second quarter of 2009.

Click Forensics reported that overall industry average click fraud rate was 12.7% in the second quarter, down from 13.8%, sequentially, and 16.2% in the year ago quarter. Click fraud traffic from sophisticated sources and scripted programs rose. This included a rise in the incidents of publisher collusion fraud on ad networks.

"It's impossible to know the exact amount of money lost due to click fraud because search providers don't share the total discount amounts they provide to advertisers for invalid clicks," says Steve O'Brien, VP of marketing for Click Forensics. "But for 2008, it could be as high as $4.35 billion if none of the fraud were detected."

Increasingly, sophisticated attacks, such as publisher collusion fraud, remain a concern. Ad networks should pay close attention to such threats in the coming months.

Collusion fraud, unknown to some PPC marketers, occurs when publishers rotate IP addresses, or botnets to click ads on their own sites to generate inflated commissions from unprotected ad networks. Ad networks have difficulty differentiating such attacks from valid clicks.

Anchor Intelligence reports 21.7% and 22.9% attempted click fraud rates for the first and second quarters in 2009, respectively. Clients using the company's ClearMark system can identify fraudulent clicks as they happen and prevent them from impacting investments in online ads. The technology distinguishes between clicks or impressions generated with malicious intent or other invalid traffic, such as double clicks, traffic from self-identified robots, and internal clicks.

Based on Anchor Intelligence's analysis of data from customers, the average rate of invalid traffic clicks remained virtually flat at 27.9% in the first quarter to 27.1% in the second.

Attempted click fraud in Q1 was 21.7%, and up to 22.9% in Q2. The innocuous invalid rate was 6.2 % in Q1 and 4.2% in Q2. The innocuous rate registers double clicks and robotic traffic from search engines, such as Yahoo and Google crawlers.

The amount of fraud from Vietnam between January and June proved staggering. "Vietnam stands out in terms of the fraud as a percentage of all traffic," says Richard Sim, VP of product and marketing at Anchor Intelligence. "Nearly one out of every two clicks from Vietnam was registered as click fraud."

Anchor Intelligence also works with Shadowserver, a company specializing in gathering information on malware infections. They also confirmed that in Vietnam the rate of infections during the first half of 2009 for the Conficker virus increased by a magnitude of 100%, Sim says.

The countries with the highest attempted click fraud rates for the quarters were Vietnam, 48.3%; Canada, 27.7%; and the U.S., 25.6%.

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