Bogus clicks undermine internet advertising

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Around 14 per cent of clicks on adverts sold by search engines are bogus, according to data gathered from more than 1,300 online advertisers.

Click Forensics, a monitoring service for advertisers, said a “Click Fraud Index” it had compiled showed bogus clicks increased from 13.7 per cent in the first quarter to 14.1 per cent in the second.

The figures are significant because search engines favour a “pay-per-click” business model, where advertisers bid to pay so much per click for their ads to figure prominently when users search for terms related to their businesses.

A high level of click fraud undermines advertisers’ confidence in the model and could hit the profits of search engines such as Google, where 99 per cent of its revenues come from advertising.

Google says its technology manages to recognise many of the bogus clicks. It does not charge advertisers for them or later grants them refunds.

But the Outsell media research firm said this month that its survey of more than 400 advertisers showed that on average they still felt 14.6 per cent of the clicks they were being billed for were fraudulent.

Motives for click fraud are a competitor clicking on the ads to drain its rival’s marketing budget or an affiliate site clicking on the ad to earn a percentage of what the advertiser pays the search engine.

Click Forensics’ statistics do not take into account the search engines identifying bogus clicks. But they suggest that top search engines such as Google and Yahoo have lower click-fraud rates - 12.8 per cent, compared to 20.3 and 27.1 per cent for second and third-tier search providers.

The average pay-per-click search-term cost was $4.51 across retail, financial services, health and fitness, technology and entertainment advertising and click fraud was higher for terms costing over $2 per click - at 20.2 per cent.

Tom Cuthbert, chief executive of Click Forensics, said: “For the first time we have industry data that clearly show what many have expected – organisations purchasing higher-priced search terms are significantly more vulnerable to click fraud.”

The greatest percentage of click fraud, more than 88 per cent, originated from within the US and Canada, while, outside North America, the largest amount of click fraud originated from within India, increasing 26 per cent in the second quarter.

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