Digital marketers have long been aware of the possibility of click fraud and ad fraud, but are often unaware of the facts. With questions around the issue of PPC fraud getting louder, marketers are starting to wonder exactly how much click fraud affects their PPC budget.
Pay-per-click advertising is of course the primary way to drive traffic for online business and generate sales. And with around $140 billion being spent by businesses in 2020, exactly how much of this is being siphoned off by fraudsters?
The answer, according to fraud-prevention firm ClickCease, is an average of 14%. Data from their own analysis shows that clicks on Google Ads text and display ads, YouTube ads, and Bing Ads contain anything between 11% to 60% invalid traffic.
But why this broad percentage range? And why does click fraud even happen?
Who Is Clicking Your PPC Ads?
Fake clicks on paid links come from a number of sources, including business rivals, brand haters, and organized click fraudsters operating botnets and fraudulent inventory.
This actually depends on your industry and targeted keywords. Case studies and data have found that competitive local industries such as waste management, locksmiths, and professional services have an especially high volume of competitive click fraud.
That is, inter-business rivals clicking each other’s ads to deplete their daily ad budget and knock them off the SERPs.
However, businesses with high-value keywords, such as those related to law, finance and casinos, and gambling, will find that a lot of the clicks on their ads come from organized ad fraud.
Zach Shipman, the senior business consultant for ClickCease, says that “Levels of fraud in some industries can be alarming. In fact, we saw that our software flagged up around 60% of all clicks on ads for locksmiths and photographers as fraudulent.
“We even had a waste removals company out in Australia do their own test, using our software, and found that a local rival was generating huge amounts of fake clicks on their ads.
“And when you consider that the keyword bid for this industry is around AU$50, it’s incredible how much some businesses are losing to fraud”.
However, it’s not just local businesses looking to get one over their rivals.
The Click Fraud Industry
Clicking on paid links for profit is actually a growing industry. There is a whole world of paid to click websites, such as NeoBux, Swagbucks, and Scarlet Clicks, who pay users to watch ads and click paid links.
For some, this is an easy and tempting way to make good money, especially in the lower-income countries of the world.
These sites have even seen a boom during the 2020 coronavirus pandemic, with new sign-ups and payouts reaching record levels.
However, the shady world of ad fraud is also seeing record gains, with botnets and fraudulent campaigns being uncovered regularly.
In 2020 alone, we’ve seen headlines around the Hydra botnet, 404 Bot, and Tekya/Haken, all being responsible for defrauding advertisers for millions of dollars.
A report from fraud prevention firm Cheq and the University of Baltimore found that click fraud cost advertisers $35 billion in 2020, which was up from their initial estimate of $24 billion.
What Can Be Done To Combat PPC Fraud?
Click fraud is an issue that the big ad platforms such as Google are well aware of. In fact, Google maintains their own department dedicated to eliminating fraud, and they have released statements to the effect that they prevent most fraud.
However, the stats from many of the fraud prevention services tell a different story. And the growth of the click fraud prevention industry also highlights that this is a problem that isn’t under control by the majors, by a long shot.
Invalid traffic, as it is referred to by the ad platforms, has been an issue since the birth of programmatic advertising.
But with the consistent growth of ad fraud botnets and headlines around money lost to click fraud increasing every year, it seems to be down to the independent click-fraud prevention companies to pick up the ball.
Zach from ClickCease says, “During the lockdowns of 2020 it seems that marketers started to notice that something was up with traffic on their ads. In fact, during the first global lockdowns in April and May 2020, fraudulent traffic jumped by 21%.
“It seems that marketers noticed this jump in fraudulent traffic, as we also saw a surge in sign-ups during this time”.
Managing PPC ads is a time-consuming job and one that needs regular analysis. If you’re looking for signs of fraud on your programmatic ads, keep an eye out for surges in traffic, high bounce rates, and the tell-tale sign of low conversions in tandem with traffic spikes.
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