An ePublication from Ecommerce Partners

Clickfraud Shaking the Confidence of Online Advertisers

By | July 10, 2006 9:48 am

Many a newbie customer, fresh to the idea of buying something online, has to be reassured that their transaction is going to be safe and secure. The frenzy of anxiety about identity fraud has helped to maintain a certain level of public doubt and fear, even while online marketing has rocketed skyward in the last few years, and most people are confident these days about this once-new and uncertain buying-and-selling medium.

Now, though, even some more sophisticated presences on the web, seasoned online advertisers, are owning up to deep concern about an area of compromised security. Indeed, confidence among the internet advertising community has increasingly been shaken by the phenomenon of “clickfraud”. And worried advertisers can today point, in support of their complaints, to a survey by the market research company Outsell Inc of Burlingame, California.

The survey (published July 5th, 2006) claims that $800 million was spent by advertisers on bogus customer clicks. The claim will add to pressure already building among major advertisers who want websites, especially the big search sites Google and Yahoo, to do more to combat clickfraud and certainly to make a start by disclosing how serious a fraudulent practice it has become.

It takes two basic shape. One is a spoiling act, by which a scammer repeatedly clicks on an ad placed by a rival company so the rival ends up being overcharged (since they will often have a pay-per-click agreement with the search engine.) The other is more directly rewarding for fraudsters, as they can place ads for which they’ve bought Google or Yahoo space on their own sites, and then repeatedly click on them themselves to get an inflated share of the revenue.

Outsell’s report says that an estimated 14.6 percent of all clicks are turning out to be bogus. Three-quarters of the 400-plus advertisers surveyed told the researchers they had found themselves to be victims of such a scam at least once.

Google is staying very quiet on the issue, and Yahoo is simply reassuring advertisers that its automated filters already do a good policing job to ensure its clients don’t get overcharged. The Outsell survey suggests that some advertisers, at least, are not reassured, and are cutting back, or considering cutting back, on their search advertising because of the problem.

If the fraud is anything like as pervasive as the survey suggests, them the industry as a whole, with pay-per-click now amounting to a $5.5 billion business overall in the US, needs to take it very seriously, very soon.

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Founded in 1998, ECommerce Partners is a full-service, ecommerce and interactive agency headquartered in New York City. Best known for our unique process methodology, we combine Internet expertise, creative talent, and business know-how to help clients across a variety of industries achieve rapid, measurable online marketing results.

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