Click Fraud Rises for Fourth Consecutive Quarter

Click fraud on cost-per-click (CPC) sites has risen steadily each quarter for the past year, according to Click Forensics’ latest Click Fraud Index.

The overall industry average click fraud rate was 17.4 percent in the first quarter of 2010, which reflects an increase from 15.3 percent in the fourth quarter of 2009.

The click fraud rate was 14.1 percent in the third quarter of 2009, 12.7 percent in the second quarter of 2009 and 13.8 percent in the first quarter of 2009, according to Click Forensics.

“This sequential increase continues a trend observed over the past two quarters, but is somewhat surprising because the fourth quarter of each calendar year normally shows a seasonal uptick in click fraud while the first quarter typically demonstrates a regression to the mean,” the report notes. “The busy online holiday shopping period promotes increased bids for keywords and provides greater incentive for fraud. Additionally, because it’s often the busiest time of year for online businesses they have less time to find and fight fraud. Perpetrators see an opportunity and attempt to seize it.”

Besides 2009, since the click fraud rate was reported by the company in the first quarter of 2006, when the rate was 14.2 percent, “there has been an annual increase in every year,” the report shows.

Click Forensics reported that more than 15 different types of invalid click types were observed in the first quarter, ranging from simple repeat clicks (“invalid, but not fraudulent”) to anomalies in volume or distribution.

“Publisher collusion” was one of the most sophisticated types of click fraud found. This occurs when fraudsters try to mimic valid traffic patterns by disseminating botnets or malware across a wide range of computers, which consequently click on ads in an apparently random manner.

The company “observed an increase in traffic from social media sites across the community of advertisers and ad networks monitored by Click Forensics.”

Social media sites with observed traffic included Bebo, Facebook, Friendster, Hi5, LinkedIn, MySpace, Orkut, PerfSpot, Twitter and Zorpia.

For social media sites overall, the click fraud rate was 11.5 percent, which was notably lower than the overall rate of 17.4 percent. This shouldn’t be surprising, according to Click Forensics, which points out that social networks are closed networks and that the “only motivation for generating invalid clicks on a CPC ad might be to exhaust the budget of a competitor in the hopes of receiving more favorable ad placement, commonly referred to as ‘competitor fraud.’”

Social networks also require logins, which make it easy to shut down perpetrators, the company notes. The majority of click fraud on these sites is from botnets and spiders/crawlers.

The Philippines, Ukraine and China were the countries outside of North America with significant CPC traffic resulting in the greatest volume of click fraud during the first quarter.

Sources:

http://www.clickforensics.com/resources/click-fraud-index.html

http://images.clickforensics.com/clickindex/click-fraud-report-q1-2010.pdf

http://www.marketingcharts.com/direct/click-fraud-rises-in-q1-2010-12972/