Here's a vexing question for advertisers today: where should they place their advertising dollars to get the most bang for their bucks? Okay, this is not exactly a new, modern problem. As long as people have needed to advertise their products and services, there have been the complex issues of where and when.
The Internet is just another medium to contend with. At the end of the day, the idea is to connect with people and persuade them to open their wallets. Google isn't the first outfit to offer the pay-per-click (PPC) format to advertisers, but together with its online competitors, Yahoo and MSN, has garnered the most attention. Not the kind of attention that they really want, but something they need to work out if they are to survive.
Click fraud comes in many flavors. Its exact definition is still nebulous, but at its core, click fraud refers to charging advertisers for a service that hasn't delivered in good faith. Take a look at this very site you are reading this blog on. It's adorned with various advertising sections. There's Google Adsense, by which links from advertisers are displayed. This is known as contextual advertising. Google digests the contents of a particular page and displays the most relevant ads it has in its repertoire. Click on one the ads and Google will collect a fee from that particular advertiser. Then it will throw the site owner (myself, in this case) a percentage of that fee as commission.
Other ads might be from ecommerce sites like Amazon or eBay. Those are pay-per-performance ads. Click all you want, but no money changes hands until an actual purchase is made. The Google ads and those from other PPC networks are the ones in hot water these days. Advertisers claim that many of the clicks they are being charged for are fraudulent and frivolous. Some are done by rivals to siphon money out of their competitors' coffers. Others are done by unscrupulous partners that have set up sites just to collect commissions via fraudulent clicks.
The PPC networks claim that they have taken measures to thwart fraudulent clicks, but this is a tough nut to crack. Winning the advertisers' confidence is material to their survival, but not every fraudulent click can be identified. Turn the screws too tight, and many legitimate clicks might be tagged as fraudulent.
In the past few years operating this site, I probably have clicked on three or four links myself. Those were impulse clicks based on some legitimate interest I had on a product or service. Generally if I see an interesting ad on my own site, I type the URL in the browser rather than clicking the link, but I wonder even if those few clicks constitute fraud. I certainly had no intention to make ill-gotten gains from my action. You see why click fraud is so difficult to define.
There is however another valid argument to consider here. Advertisers realize that not every click or impression would result in a sale. We all see countless ads and commercials during the day. Web pages, billboards, magazines, newspapers, busses, radio, and TV are rife with them. Do we take action every time we encounter an ad? Of course not. If every advertisers expected that, advertising would have become extinct long ago. Advertisers pay based on reach, as in how many subscribers a newspaper has or how many viewers a TV program might have. It's a numbers game and the idea is that a percentage of the audience can be converted into paid clients, hopefully enough to defray the cost of advertising and then pocket the rest. If one method doesn't work for them, then they take corrective steps, by changing the format, changing the frequency, or abandoning the medium altogether. In that sense PPC, as with other types of advertising, does have an inherent self-corrective nature. Given that argument and a willingness by the networks to implement steps to combat fraud, PPC should prove no less valuable than other types of advertising at the least. It's up to the advertisers to gauge how they can best utilize it, or not use it at all.