We’ve written quite a bit about online identity theft here at Freakonomics. But there’s another form of crime that’s been spreading through the Internet over the past few years: click fraud. As its name suggests, the crime involves clicking on a Web site’s ads repeatedly (or, in some cases, employing a software program to do it) in order to pad their per-click revenue
Services like Google Ads and Chitika, which serve as middleman between Web publishers and advertisers, have developed sophisticated means of detecting click fraud. But as with spammers, those determined to do it tend to find a way. And, according to MediaPost, the percentage of ad clicks that are fraudulent is rising every year:
The overall industry average click fraud rate rose to 16.6% in fourth-quarter [2007], up from the 14.2% click fraud rate for the same quarter in 2006 and 16.2% for third-quarter 2007.
The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.3% in fourth-quarter 2007 — up from the 19.2% average click fraud rate for the same quarter in 2006 and 28.1% for third-quarter 2007.
If nearly seventeen percent of the billions of total ad-clicks on the Internet are fraudulent, it’s likely that a pretty hefty number of Web publishers, or their accomplices, are committing fraud. These figures are particularly surprising given that the total number of spammers worldwide is estimated to be in the hundreds. Granted, the barriers to committing click fraud are extremely low — all it takes is a few (or a few hundred) clicks of the mouse every day — and the monetary incentives, while small (profits-per-click usually only amount to a few cents) are always present. Add that to the very small likelihood of getting prosecuted, and you’ve got millions of Internet users committing the crime. If anything, more detailed stats on click fraud could provide an interesting data set for behavioral economists: if a criminal act is profitable, widely-practiced, seldom prosecuted and unusually easy to carry out, how many people will commit it?
[This post has been appended.]
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just clicking on the Amazon ad should have no effect.
I am pretty sure that once on the Amazon.com site from that click, you have “x” amount of time to select some items and then purchase them before any form of compensation is seen.
You use the words “fraud” and “criminal” quite a lot in this post. I know the term “click fraud” is certainly a common descriptor within the online ad industry, but I would caution your tendency to equate “click fraud” with criminal fraud.
There certainly are potential civil contract breach claims that Google and other online ad sellers can bring against those conducting “click fraud”, but it is not a criminal act as this post suggests.
Especially in the context of claims of criminality, terms of art and language choice are very important. I hope this blog will be more careful with such descriptions in the future.
And just to be clear, your citation of the BusinessWeek article on the likelihood of criminal prosecution was not about someone charged with “click fraud”, but rather someone charged with extortion for threatening a “click fraud” attack if Google didn’t pay them money.
The irony is delicious. The business model of music labels today is horribly outdated and everyone knows it and despises them for going after the little man instead of adapting with the times. Google establishes a faulty business model that cannot hope to remain stable, given the broken nature of web technologies, but goes after the people who break their model anyway. Sigh. Everything that has happened before will happen again.
I’m a criminal, click this for proofiness. Just kidding, click this.
My point is this, in an endlessly clickable space, why the hell not give a click or two to see what’s worthwhile and what’s not. Yes, a script to keep on clicking a link is poor form, and likely criminal, but the very idea of “click fraud” when you break it down to its essence is strange at best and meaningless at worst. Sure, click click click for profit is inane, and if it’s criminalized, so be it. The fact of the matter is, the technology is behind the times here. PPC was good for a while, now there needs to be a new generation of sharing and/or generating advertising revenue. If it’s PPC in a new incarnation, fine. But for sure the technology needs to be trackable for both the publisher and the advertiser. It needs to accurate as well, and it requires a simple platform that can not be abused — so what’s next?
CPA (Cost Per Action) is a much better model for advertisers. The action an advertiser migh seek is a purchase, a registration to an email newsletter, or something else concrete and measurable.
Affiliate programs are based on a revenue split between the ad promoting a product or web site, and the producer of the goods or services. It’s pure commission-based compensation.
Having a lot of web traffic (or pretending to) is no longer a guarantee that you can monetize that traffic. Your site must be able to move a more demanding needle to make it in today’s advertising market.
“[I]f a criminal act is profitable, widely-practiced, seldom prosecuted and unusually easy to carry out, how many people will commit it?”
Well, let’s look as a crime with similar characteristics: Speeding. Widely practiced, check. Seldom prosecuted (compared to the number of instances involved), check. Unusually easy to carry out: check. It’s of minor profitability (time is valuable). You can’t drive on a road in any major city without seeing it (unless, of course, traffic isn’t moving at all). It’s actually more rare to see someone not committing this crime.
Whilst the increased rate of ‘click fraud’ quoted in the MediaPost article sounds excitingly apocalyptic, I would be interested to find out whether this increase may be the result of changing techniques in fraud detection.
That is, perhaps as the authorities become more adept at identifying click fraud, the incidence of it appears to increase.
Perhaps, also there are changes in the definition of what clicks are to be classed as illegitimate.
Unfortunately, the generalised definitions and mysterious operation of the “proprietary click fraud detection technology” as set out in the googiewoogie article leave me apprehensive about the data.