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 Cost 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.

Use of a computer to commit this type of fraud is a crime in many states and countries, covered by Penal code 502 in California and the Computer Misuse Act 1990 in the United Kingdom. There have been arrests relating to click fraud with regard to malicious clicking in order to deplete a competitor s advertising budget.

=Pay per click advertising=

Pay per click advertising or PPC advertising is when webmasters (operators of web sites), acting as publishers, display clickable links from advertisers, in exchange for a Cost Per Click. As this industry evolved, a number of advertising networks developed, who acted as middlemen between these two groups (publishers and advertisers). Each time a (believed to be) valid web user clicks on an ad, the advertiser pays the advertising network, who in turn pays the publisher a share of this money. This revenue sharing system is seen as an incentive for click fraud.

The largest of the advertising networks, Google(AdWords) and Yahoo! Search Marketing, act in a dual role, since they are also publishers themselves (on their search engines). According to critics, this complex relationship may create a conflict of interest. For instance, Google loses money to undetected click fraud when it pays out to the publisher, but it makes money, when it collects it from the advertiser. However, defenders of Google would counter that they always reverse payments and charges when fraud is suspected, and it s in their own interest to eliminate any fraud, in order to maintain customer confidence.

Some networks are now purposely witholding certain billing information about advertiser s campaigns when click fraud claims are made, they state this is because they are preserving the integrity of their network. This is a major slap in the face for the advertiser spending millions of dollars per year, the network is in effect telling the advertiser they are not a trusted party. It is difficult to see how they can maintain this, the argument is unlikely to stand up in court.

=Non-contracting parties=

A secondary source of click fraud is non-contracting parties, who are not part of any pay-per-click agreement. This type of fraud is even harder to police because perpetrators generally can not be sued for breach of contract, or charged criminally with fraud. Examples of non-contracting parties are: *Competitors of advertisers: These parties may wish to harm a competitor who advertises in the same market by clicking on their ads. The perpetrators don t profit directly, but force advertiser to pay for irrelevant clicks, thus weakening or eliminating a source of competition. *Competitors of publishers: These persons may wish to frame a publisher. It is made to look like the publisher is clicking on their own ads. The advertising network may then terminate the relationship. Many publishers rely exclusively on revenue from advertising, and can be put out of business by such an attack. *Other malicious intent: As with vandalism, there s an array of motives for wishing to cause harm to either an advertiser or a publisher, even by people who have nothing to gain financially. Motives include political and personal vendettas. These cases are often the hardest to deal with, since it is hard to track down the culprit, and if found, there s little legal action that can be taken against them. *Unwanted friends of the publisher: Sometimes upon learning a publisher profits from ads being clicked, a supporter of the publisher (like a fan, family member, or personal friend), will click on the ads, to help . However, this can backfire when the publisher (not the friend ) is accused of click fraud.

Advertising networks try to stop fraud by all parties, but often do not know which clicks are legitimate. Unlike fraud committed by the publisher, it is hard to know who should pay when past click fraud is found. Publishers resent having to pay refunds for something that is not their fault. However, advertisers are adamant that they shouldn t have to pay for phony clicks.

=Organization=

Click fraud can be as simple as one person starting a small web site, becoming a publisher of ads, and clicking on those ads to generate revenue. Often, the number of clicks, and their value, is so small, that the fraud goes undetected. Often publishers will claim small amounts of such clicking is an accident, which is often the case.

Much larger scale fraud also occurs. Those engaged in large scale fraud will often run Scripting programming language, which simulate a human clicking on ads in web pages. However, huge numbers of clicks appearing to come from just one, or a small number, of computers, or single geographic area, look highly suspicious to the advertising network and advertisers. Clicks coming from a computer known to be that of a publisher, also look suspicious to those watching for click fraud. A person attempting large scale fraud, alone in their home, stands a good chance of being caught.

Organized crime can handle this by having many computers, with their own internet connection, in different geographic locations. Often scripts fail to mimic true human behaviour, so organized crime networks may employ people to do it manually. Often they pay workers in low-wage-countries such as People s Republic of China and India to sit and click on ads. Such clicks can also emanate from infected computers whose owners are unaware of this behavior because the trojan horse (computing) code is written so as to not interfere with the host computer.

Impression fraud is an insidious variant of click fraud where the advertiser is penalized for having an unacceptably low click-through rate for a given keyword. This involves making numerous searches for a keyword but without clicking of the ad. Such keywords are disabled automatically, enabling a competitor s lower-bid ad for the same keyword to continue while several high bidders (on the first page of the search results) have been eliminated.

It s very difficult for advertisers, advertising networks, and authorities to pursue cases against networks of people spread around multiple countries.

=Litigation=

Disputes over the issue have resulted in a number of lawsuits. In one case, Google (acting as both an advertiser and advertising network) won a lawsuit against a Texas company called Auction Experts (acting as a publisher), which Google accused of paying people to click on ads that appeared on Auction Experts site, costing advertisers $50,000[http://www.buffalonews.com/editorial/20050715/1067368.asp]. Despite networks efforts to stop it, publishers are suspicious of the motives of the advertising networks, because the advertising network receives money for each click, even if it is fraudulent.

=Solutions=

Proving click fraud can be very difficult, since it s hard to know who is behind a computer and what their intentions are. Often, the best an advertising network can do is to identify which clicks are most likely fraudulent, and not charge the account of the advertiser. Ever more sophisticated means of detection are used, but none are foolproof.

The pay-per-click industry is lobbying for tighter laws on the issue. Many hope to have laws that will cover those not bound by contracts.

A number of companies are developing viable solutions for click fraud identification and are developing intermediary relationships with advertising networks. Such solutions fall into two categories:

a) Forensic analysis of advertiser s web server log files

This analysis of the advertiser s web server data requires an in-depth look at the source and behavior of the traffic. As industry standard log files are used for the analysis, the data is verifiable by advertising networks.

b) Third-party corroboration

Third parties offer web-based solutions that might involve placement of single-pixel images or Javascript on the advertiser s web pages and suitable tagging of the ads. The visitor may be presented with a cookie. Visitor information is then collected in a third-party data store and made available for download. The better offerings make it easy to highlight suspicious clicks and they show the reasons for such a conclusion. Since an advertiser s log files can be tampered with, their accompaniment with corroborating data from a third party forms a more convincing body of evidence to present to the advertising network.

=Click fraud detection vendors=

*[http://www.adwatcher.com AdWatcher] *[http://www.clicklab.com Clicklab] *[http://www.whosclicklingwho.com Whosclickingwho.com] *[http://www.clickdetective.com Clickdetective]

=External links=