• by Seana Mulcahy , March 7, 2005

Everywhere you look someone is talking about search engine marketing (SEM). Sales in the United States from advertiser-paid search results are expected to increase 25 percent this year to $3.2 billion, up from $2.5 billion in 2003, according to eMarketer. I couldn't attend the Search Engine Strategies show recently but my colleagues said it was still clad with clutter. Everyone claimed to have "proprietary" tools, killer services, and the best solution out there. Well that's a lot of crap.

If someone is trying to sell you SEM services nowadays (and I'm sure they are), ask them what their opinion on click fraud is. Then ask them how they proactively tackle this. The answers may surprise you.

Perhaps if you are reading this today, then you've seen all the ink on click fraud already. It is a reality in the pay-for-performance search industry, and many articles are enough to down right scare you. According to CNET, it's an estimated $4 to $5 billion market this year.

Online advertising has grown at a high speed mostly due to search. It gives advertisers and marketers the ability to efficiency drive qualified traffic. However, like just about anything on the Net, now there is a fair share of pilfering.

In a recent News.com article, search fraud was explained as follows:

1) Advertiser bids for top placement in search results
2) Top bidders' ad appears in search results
3) Ad is also distributed to Web sites of Google's partners
4) Rogue site is set up specifically for displaying Google
5) Rogue site hires people to click on ads on its site or creates a bot to deliver multiple clicks
6) Advertiser pays Google for clicks; Google shares that revenue with the rogue site that generated the clicks

Google, Yahoo!, and others do not break out activity in terms of fraud. However, many say it's up to 5 to 20 percent of all pay-for-performance search activity today.

So how do you continue to utilize effective pay-per-performance search methods without having your entire budget gobbled up by fraudsters? Well if you or your team can't monitor activities 24/7, then I'd suggest employing tools from a provider.

Click fraud can come from bots programmed to click on ads, or humans employed at a low cost. These people are most likely from India, China, and other countries. They are hired to click on text links and other ads. An increasing number of people click on rival ads to skew search results and wipe up their marketing budgets.

As a result it can be extremely difficult to detect. John Squire, vice president of business development of Coremetrics, a Web analytics firm, was recently quoted as saying, "Click fraud is a fin sticking out of the water: You're not sure if it's a great white shark or a dolphin."

In recent documents filed with the Securities and Exchange Commission, Google recognized click fraud as a threat to its revenue (95 percent is derived from advertising). Google and other search networks provide refunds to advertisers when click fraud has been discovered. This often takes a very long time to get compensated.

I spent quite a long time discussing the issue with Udayan Bose, expert and head of BidOptima, a SEM firm in Texas. Udayan explained how difficult it can be for marketers and advertisers to detect click fraud. For instance, his firm has tools and services to continuously watch:

-Masked or shared IPs
-Spikes in visitor activity
-Spikes that are not bot generated but generated by individuals being paid to click on the ad by a competitor
-Cyclical clicking
-Impression fraud. Google's listings depend on click-through rates (CTRs) and cost-per-click (CPC). A low CTR can push a site out of the advertising space. No tool can track impression frauds where multiple times the competitors' ads are seen/viewed but not clicked upon. The CTR goes down drastically. The advertiser is likely to pay much more than s/he otherwise would have to.

"The bottom line is the only way to reduce the impact is to ensure that the campaign and the logs are monitored 24/7. This can never be done by any tool," Bose notes. "We have several proprietary tools in place as well as people to constantly take a proactive approach to this problem."

For this writer, click fraud is out there, but don't (fully) believe the hype. Advertisers must proactively tackle this. I don't think its anything to be overly paranoid about though. So tell me dear readers, has click fraud exposed a big weakness in SEM?