25% of all Clicks are Fraudulent: What does this mean?
According to my friends at Click Forensics, 22.3 of all clicks that they recorded in Q3 were considered fraud by their firm. If you are going to take this at face value, this means that one in four of all clicks recorded on the internet are fraudulent, meaning that many companies are overspending by at least that much and not seeing results. The culprit still is botnets and similar proxy scams, but as Click Forensics pointed out, the growth is mobile and video, with enormous amounts of fraud dominating that space. If these numbers are correct, we are in deep trouble in the interactive advertising community as fraud is taking over.
I wasn’t totally honest in my title or introduction, as you may have gathered. First, the obvious part is that only 22.3 of the clicks were fraudulent not 25% as my title said. Secondly, I don’t actually believe this number to be an accurate representation at all of fraud in my industry. Since it makes for a really good title and gets people to read the article, I felt it was a way to start my analysis. Similarly, it’s what Click Forensics did in their report in order to garner attention for their product. Saying that 22.3% of all clicks are fraud will definitely get attention and enormous press as that number is downright scary. If this was correct, the implications are astounding and mean that we have a bigger issue than anyone has ever thought.
ClickForensics is a great company and I recommend often that people use them on a frequent basis. When it comes to ClickFraud, I am not sure I would recommend any other company over them. They are a great experience team of people, above board, honest and open. They are the type of firm that any fraud detection company should be.
Still, their number is completely misleading based on one simple fact. A vast majority of the people who go to Click Forensics for services do, specifically because they have a click fraud issue. They have been victims of click fraud and for whatever reason can’t control the issue themselves, often because of the wide variety of advertising they buy, mixed with the sources of media. They aren’t relying on Google or Yahoo as their only source of income, but instead using sub-tier advertising networks, paying for visits and often finding large-scale fraud systems trying to get money from them. By the very definition, they are a high risk category of people who will often be the targets of fraudsters.
On top of that, for those who are victims of fraud, the fraudsters often engage in high volume fraud in order to try to get paid a large amount of money immediately after fake results are seen. Note RedOrbit’s case against fraudster Torq Cisek, where hundreds of thousands of clicks a day were generated via 1×1 pixels. If we were going to use that as an example, for that month a vast majority of the clicks generated were fraudulent only because of one scammer who tried to game the system. Fraud almost always has an above average weight on any system, because its specific purpose is to make substantial change for monetary gain and those affected are always significant affected.
The conclusion is obvious: the actual amount of click fraud is much less than 25%. The actual numbers are unknown because very few companies wish to share the results. For those companies who are not in a high risk, such as small businesses exclusively advertising on Google, it’s probably a statistically insignificant number and Google’s own system filters out any questionable people almost immediately. While click fraud is an issue, it’s not the worse issue right now.
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Good stuff Pace.
Do you know the average fraud rate in the CPA industry?