Click Fraud: This Seemingly-Innocuous Scheme May Do More Damage Than You Realize
Click fraud has been a big problem for quite a few years now. Back in 2016, for instance, losses due to click fraud already topped out at a whopping $7.2 billion. However, the problem is only getting worse with each successive year.
Click fraud rates jumped by 13% by 2022, bringing total global losses to roughly $44 billion at the start of 2023.
This is clearly an issue that isn’t going away. But then, how can advertisers and retailers promote their products and services while limiting their exposure to click fraud? Let’s take a look and find out.
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What is Click Fraud?
- Click Fraud
Click fraud is a form of ad fraud in which a third party deliberately clicks on an advertising link with no intention of doing business with the advertiser, as a way of artificially inflating click-through stats. It can happen with any sponsored ad or link, but it’s most prevalent (and most damaging) in affiliate marketing.
[noun]/klik • frôd/Like cookie stuffing and other ad-based threat sources, click fraud wastes advertisers’ money and distorts targeting data. It also drives up online advertising costs and can afflict several targets simultaneously, as we’ll see in the next section.
Some companies may use click fraud as a means to drive traffic away from their competitors or damage their ad budgets with warped PPC (“pay per click”) data. Some click fraud is committed by the advertisers themselves as a means to inflate their own ad figures and make products appear more attractive or popular than they actually are.
Cybercriminals especially love click fraud as a means of driving traffic toward malicious web pages in order to make them look more legitimate to unwitting consumers. Whatever the case may be, click fraud can have various motivations, and not all are financial.
How Big of a Problem is Click Fraud?
Like we noted at the top of the post, click fraud represents a fast-growing, multi-billion dollar liability for advertisers.
As ClickGUARD Founder Ralph Perrier noted, the inciting experience that inspired him to launch his company was noting that 20% of his previous business’s ad budget was going to waste because of competitor click fraud attacks. Again, that problem is only getting worse, as businesses are expected to lose roughly $44 billion to click fraud in 2023 alone.
Access to ad data was supposed to give marketers more insight than ever before. Digital ad campaigns were supposed to be an easy, affordable, and transparent way to reach customers. Now, though, with around 38% of online traffic being observably bot-driven or otherwise automated, click fraud has the potential to derail this dream.
Not only does click fraud drain your advertising dollars, it also generates bad data. This makes it harder to target legitimate customers and makes future campaigns less effective.
Sourced traffic — such as traffic from pay-per-click or other ad campaigns — is three times more likely to result in fraud, as compared with non-sourced traffic.
Source: ClickGUARD
Who’s Responsible for Fake Clicks?
Not all click fraud is malicious. For example, if your mom wants to brag about your success, she may tell everyone in her gardening club to Google your company and click on your ad. Or you may have customers who can never remember your web address, so they do a search and click on the ad every time.
It's all innocent and well-meaning, but it’s still costing you money. Plus, you're corrupting your customer marketing data with each unnecessary click.
That being said, there are two main culprits who might engage in malicious click fraud to try and hurt you:
How Does Click Fraud Work?
Generally speaking, fraudulent clicks fall into two main categories: manual and automated. The former involves human beings clicking a link, while automatic click fraud employs automated tools to work on a larger scale.
Manual click fraud tends to be more limited in scope because it requires warm bodies to click the ads. Manual click fraud is also harder to prove, as a human being can always say the click was accidental.
In contrast, more professionalized scammers can use automation to submit fake clicks at a much greater scale than manual clicks allow. “Automated,” in this case, can refer to anything that streamlines or accelerates the process, including:
10 Tips to Prevent Click Fraud
As with other forms of fraud, your best strategy is to pay attention. PPC advertising is an important part of a comprehensive online marketing strategy, so it’s wise to establish goals and keep a close eye on your campaigns.
We’ve pulled together a few tactics and best practices that you might find helpful. If you suspect that you might be targeted by click fraudsters, check out the ten tips outlined below:
#1 | Data is Key
Don’t judge the effectiveness of your online investment by clicks alone: test everything. Valuable transaction indicators include information from referring sites, sub-affiliate networks, IP addresses, geolocation, device fingerprinting, transaction trends, and more. The data is there. Use it.
#2 | Monitor Everything
If you pay attention to your advertising results, you’re more likely to notice when something is amiss. Track every metric you can (including information gathered about your competitors). Without legitimate numbers to use for comparison, you might not see an actual problem until it’s already sapped your ad budget.
#3 | Quality Over Quantity
Ad placement programs give you some control over where your ad will show up. Tweak your settings to target sites most likely to deliver potential customers. The lower the quality of sites where your ads appear, the higher the risk of click fraud. You may get fewer clicks this way, but each click will be much more valuable.
#4 | Price Can Make a Difference
With PPC advertising, you tell the provider how much you’re willing to pay per click. Adjusting these settings can optimize your responses and temper the risk of click fraud. You can find formulas online to help you get the results you want. A good rule of thumb is to start low, observe results, and bump the bid up as necessary.
#5 | It Pays to Be Exclusive
Most search platforms have built-in tools to track fraudulent clicks. These tools also let you exclude or limit the appearance of your ads for sub-par locations. It's dangerous to cut an entire geographical location from your ad targeting. But, if your target market is surfers, for example, then blocking your ad from sites in Siberia is a fair, calculated risk.
#6 | Revisit Terms & Conditions
When was the last time you examined your advertising or affiliate program contract? Keeping your terms and conditions up-to-date is one way to close loopholes and prevent affiliate fraud. A good attorney can catch exploitable factors that you might miss.
#7 | Enforce Terms
Advertisers need to make sure affiliates are aware of any changes to the terms and conditions of their service, no matter how minor. Once new terms are introduced, be stringent about enforcing them. After all, if you aren’t holding your affiliates accountable, who will?
#8 | Watch Where You Advertise
Some countries have different approaches to fraud, particularly concerning its definition and prosecutability. For instance, so-called “Fraud-as-a-Service,” or “FaaS” providers, often prefer to take advantage of poor labor standards and lenient fraud laws when perpetrating their crimes on a larger scale. Thus, it’s always wise to be aware of the laws regarding affiliates and advertising with respect to fraud before you opt to work with overseas sites or affiliates.
#9 | Get Technical
Do you simply lack the bandwidth to manage fraud on your own? If so, there are outside resources to help you limit click fraud, including software designed to identify and block invalid clicks. ClickGUARD, who we cited above, is one such brand. It’s true that this will be an investment, but it’s smart to fight click fraud using solutions designed just for that purpose.
#10 | Layer-Up Fraud Solutions
Unfortunately, there is no “one-size-fits-all” solution to fraud of every kind. For best results, merchants and advertisers are advised to deploy multiple fraud tools in tandem. While this might not be the answer to click fraud, specifically, it will reduce your overall risk exposure and help you protect your revenue.
Help is Just a Click Away
Click fraud may be a growing problem, but you don’t have to tackle it alone.
Affiliate Fraud Shield™ from Chargebacks911® has a proven track record of helping advertisers prevent affiliate fraud. This exclusive tool helps you prevent abuse while minimizing costs such as shipping, loss of product, and chargeback fees.
Let us show you how much ROI you can expect from this revolutionary solution today.
FAQs
What is click fraud?
Click fraud is a form of ad fraud in which a third party deliberately clicks on an advertising link with no intention of doing business with the advertiser, as a way of artificially inflating click-through stats. It can happen with any sponsored ad or link, but it’s most prevalent (and most damaging) in affiliate marketing.
What's an example of click fraud?
Click fraud may be surprisingly benign. A YouTuber, for example, may entice users to click ad links to “support the channel” and help finance future content. Viewers click on ads to other sites, even though they have no intention of making a purchase. They do the affiliate a favor… but do the advertisers a disservice.
Why do people commit click fraud?
The motivations can vary. In some cases, the fraudster may be a competing business who is repeatedly clicking your ads as a way to waste your advertising dollars. Or, it may be a dishonest affiliate using botnet or hit inflation tactics to collect unearned revenue from PPC advertisers.
How do I get rid of click fraud?
As with other forms of fraud, your best strategy is to pay attention. PPC advertising is an important part of a comprehensive online marketing strategy, so it’s wise to establish goals and keep a close eye on your campaigns. Track your metrics, keep tabs on affiliates, and seek outside help when necessary.
Is click fraud illegal?
Yes, click fraud is illegal. The practice of spoofing pay-per-click (PPC) advertisements to increase site revenue or to deplete a company's advertising budget is considered a violation of the Computer Fraud and Abuse Act. If caught, the fraudster can receive a prison sentence in the US of up to ten years.
