October 23, 2008, 1:23 PM — The incidence of click fraud, the bane of the highly profitable search advertising business to which Google owes its success, fell slightly in the third quarter, but remains a serious problem.
That's the conclusion of a Click Forensics quarterly report, which estimates that the rate of click fraud dropped to 16 percent of all clicks, industrywide, from 16.2 percent in the second quarter.
"The overall rate continues to dip, as advertisers continue to take more initiative [in monitoring click fraud] and as search engines are starting to take things a bit more seriously," said Tom Cuthbert, president of Click Forensics, which provides services to monitor ad campaigns for click fraud. "That's favorable, but 16 percent is still a very high number, still something to be concerned about."
The problem arises when someone clicks on a pay-per-click (PPC) ad with malicious intent or by mistake. For example, a competitor may click on a rival's PPC ads in order to drive up their ad spending. Also, a publisher may click on PPC ads on its site to trigger more commissions. Click fraud also includes non-malicious activity that nonetheless yields a click of little or no value to the advertiser, such as when someone clicks on an ad by mistake or two consecutive times.
In the third quarter, Click Forensics found that the use of botnets to perpetrate click fraud continues to rise, reaching almost 28 percent of all fraudulent or invalid clicks, up from 25.2 percent in the second quarter. This is a very concerning trend, according to Cuthbert.
"Click fraud traffic from botnets is very difficult to catch and identify because it's coming from individual machines. It's becoming a very big part of the problem," he said.
A botnet is a network of computers that have been secretly compromised by malicious hackers who use them for a variety of tasks, such as sending spam and, in this case, perpetrating click fraud.
Click Forensics generates its quarterly click fraud incidence report using its Click Fraud Index, which gathers data from more than 4,500 online advertisers and agencies that use ad services from all major search engines.
Although the overall click fraud rate was 16 percent, the average on search engine content networks -- third party Web sites that run ads from Google and Yahoo and others in exchange for commissions -- was 27.1 percent. That's down slightly from the second quarter as well.