You've heard the stories. Click fraud has run rampant on Google, Yahoo, and MSN. This is evidenced by the numerous law suits that have been filed.
One of the most notable cases occurred this year when Google settled their own click fraud case to the tune of 90 million dollars. In fact, Google and Yahoo have each settled a class action lawsuit filed by marketers.
Click Fraud - What It Is
So, what is click fraud and how does it occur? Wikipedia provides us with a definition:
"Click fraud occurs in pay per click online advertising when a person, automated script, or computer program imitates a legitimate user of a web browser clicking on an ad, for the purpose of generating an improper charge per click. Click fraud is the subject of some controversy and increasing litigation due to the advertising networks being a key beneficiary of the fraud whether they like it or not."
However, I would like to simplify this definition. Click fraud is a crime, plain and simple. Cybercrime, however, is hard to track. Law enforcement has only just recently started focusing on the threat of click fraud.
Click fraud is now being targeted by some of the industry's biggest names. This movement has both the American court and government system involved. Business Week recently announced that major brands including Expedia.com and mortgage broker LendingTree.com planned to go public with their disputes over click fraud in late September.
Who can blame them? When it's your money that's going out the door, you need to be asking questions. Unfortunately, Google and Yahoo haven't come up with many answers.
They have certainly paid lip service, indicating that they have systems in place to deter it, but the click fraud numbers continue to rise.
The Threat to a Popular Advertising Model
The Interactive Advertising Bureau estimates that 20 to 35 percent of ad clicks are fraudulent. The multi-billion dollar search industry is under attack and the problem is not going away anytime soon.
Advertisers are being cheated and the search engines appear to be sitting on the sidelines, leaving much of the responsibility for detecting click fraud with advertisers, the majority of whom lack the tools and knowledge to detect it.
The high level of click fraud has undermined advertisers' confidence and some have even pulled their entire ad campaigns. For small to medium-sized businesses click fraud effectively erodes ROI, impacting the bottom line and future marketing initiatives.
Click fraud is also the single biggest threat to companies like Google and Yahoo, whose digital empires are largely dependent on their advertising revenues. Google's $6 billion-a-year advertising business is especially at risk. Despite the threat, or maybe because of it, Google is saying little about click fraud and the pay-per-click concept as a whole.
While Google maintains its silence, many advertisers and savvy online entrepreneurs wonder where pay-per-click is headed. Click fraud threatens to destroy the very business that Google thrives on. In fact, click fraud losses have surpassed the total loss attributed to credit card fraud in the U.S.
Do the current click fraud problems have the power to slow the growth of pay-per-click search advertising or even bring it to a screeching halt?
Well, that's hard to say, but the industry as a whole is certainly being crippled by this problem. Pay-per-click may not be the future. Many advertisers are now starting to look at advertising options that offer an uncorrupted alternative. Flat-fee advertising, pay-per-percentage, and pay-per-action are all possibilities, but there is one alternative in particular that deserves attention.
This search engine advertising model was first put forward by ExactSeek.com and then promoted through the ISEDN (Independent Search Engine & Directory Network) which ExactSeek founded in June, 2005. The model promulgated by ExactSeek and the ISEDN does not eliminate click fraud but does eliminate the cost associated with it.
How the ISEDN Model Works
The ISEDN charges a flat fee for advertising, making click fraud a pointless endeavor for scam artists, "paid to read" rings and cutthroat competitors. Your competition could click on your ISEDN listings all day long and it wouldn't cost you a single penny more than what you originally paid.
$3-$4 provides you with an entire month's worth of advertising across a network of 235+ search engines and web directories. If you choose to buy in volume, you can even expect some significant discounts.
Let's face it, pay-per-click advertising is expensive. There are a number of companies who spend $5,000 to $10,000 per month on paid search marketing. Competition is fierce with many keywords costing $5 per click or more.
The problem is then compounded when you consider that 20 to 35 percent of those advertising dollars are wasted on fraudulent clicks. Just imagine. If you are paying $1,000 dollars per month to advertise on Google, $200 - $350 of those dollars are wasted on click fraud.
If you want to lower your click fraud costs, you need to buy click fraud monitoring software, which is quite pricey. Unfortunately, few click fraud monitoring companies target small to medium sized businesses.
The ISEDN offers an affordable alternative that charges a one-time, flat fee. The initial cost is the only cost.
Within this unique advertising model, the sale of any keyword or phrase is limited to 30 advertisers. Regardless of whether a keyword term is sold 5 or 30 times, ads rotate within the SERPs and throughout the ISEDN. The rotation ensures that every ad appears in the top 10 search results. In the worst case scenario, a listing would appear on the first page of results approximately once out of every 3 searches.
Of course, you can't expect the same exposure provided by Google or Overture. Google alone receives millions of searches per day. However, if you are looking for a consistent return on your investment without wasting a penny on click fraud, then the ISEDN provides an affordable and lucrative solution.
Not to mention, the ISEDN is growing every day. An average of 3- 5 search engines are added every week. As the network continues to grow, your ad automatically receives more exposure.
This program gives advertisers the benefit of advertising with smaller search engines on a massive scale without the fear of click fraud and without the hassle of managing multiple advertising accounts. For more information on the ISEDN, visit ExactSeek.com or ISEDN.org.
Summing It Up
The rules in search engine advertising are shifting and the winners are adapting.
As for Google, Yahoo, and MSN, you can definitely expect to see some changes being made with their paid search programs in the near future. Cybercrime is still a crime and law enforcers are finally starting to take these problems seriously.
The pay-per-click model is inherently flawed and must be altered to survive. Google and the other major search engines know that their business will be crippled if they do not adapt. The challenge for them is how to adapt and still maintain those multi-billion dollar bottom lines.
Fortunately, there are individuals, groups, companies and organizations more interested in finding and providing solutions to the problem of click fraud than in propping up a flawed concept. Those leading the fight against click-fraud, like the ISEDN, may never see 10 figure bottom lines like Yahoo or Google, but the revenue they do make won't be based on fraudulent clicks and at your expense.
About The Author
Kim Roach is a staff writer and editor for the SiteProNews and SEO-News newsletters. You can also find additional tips and news on webmaster and SEO topics by Kim at the SiteProNews blog. Kim's email is: kim @ seo-news.com
By Kim Roach (c) 2006 (c), ©Copyright 2006
