This week's cover story in BusinessWeek is "Click Fraud, The Dark Side of Advertising". Some highlights:
"Fleischmann is a victim of click fraud: a dizzying collection of scams and deceptions that inflate advertising bills for thousands of companies of all sizes. The spreading scourge poses the single biggest threat to the Internet's advertising gold mine and is the most nettlesome question facing Google and Yahoo, whose digital empires depend on all that gold."
"'Paid to read' rings with hundreds or thousands of members each, all of them pressing PC mice over and over in living rooms and dens around the world. In some cases, "clickbot" software generates page hits automatically and anonymously."
"Spending on Internet ads is growing faster than any other sector of the advertising industry and is expected to surge from $12.5 billion last year to $29 billion in 2010 in the U.S. alone, according to researcher eMarketer Inc."
"Most academics and consultants who study online advertising estimate that 10% to 15% of ad clicks are fake, representing roughly $1 billion in annual billings."
Advertisers continue to spend heavily online despite the concerns. Why?
1. As one reader points out on the BusinessWeek post, waste occurs in almost all forms of advertising. What distinguishes the PPC medium is how accurately the waste can be measured.
2. PPC is effective.
3. PPC is inexpensive compared to print advertising.
4. More and more people are abandoning print media and coming to search engines to find products and services.
Still, advertisers are not taking click fraud lying down. Some are seeking legal remedy. Earlier this year, Google settled a class action click fraud suit with a $90 million payout. That may inspire the secretive search engine leader to do a better job of policing its ads. New advertising models may also ease the pain. CPA, or cost-per-acquistion, is an advertiser-friendly online approach where publishers are paid only when specific actions are taken by the customer.
The BusinessWeek article is a positive step. Perhaps more than anything else, awareness of click fraud will lead to less of it.
