Thursday, September 27, 2007

Is Click Fraud Really a Problem?

by Tommy Maric

Click fraud is currently a major topic in online advertising. Many argue that it presents a threat to the stability and viability of pay-per-click (PPC) advertising, the key revenue generator for both Google and Overture. In actuality, click fraud is not a significant issue at all.

Click fraud occurs when ads are clicked for reasons other than a genuine interest in learning more about the product or service advertised. Click fraud occurs in two forms. In one instance, fraud arises from competitors trying to sabotage each other. One competitor clicks on the ads of another just to drain the budget of that company. The other instance occurs when webmasters (or people associated with the webmaster) repeatedly click Google AdSense ads (which are syndications of others’ ads) on their own web pages in order to generate more revenue. While both Overture and Google have developed sophisticated technologies to detect click fraud, their systems are, and may never be, foolproof.

The real question is how much does click fraud actually damage the PPC industry? Gross fraud, i.e., when one person or technology consistently and repeatedly clicks on an ad, aside, which Overture and Google can easily detect, we believe that click fraud has no real impact on the industry. The following explains why.

Efficient market theory says that it is impossible to “beat a market” because prices already incorporate and reflect all relevant information. As the PPC industry has matured, efficiency has begun to take root. That is, the price of each keyword has been driven up to the point where it reflects the highest price an advertiser is willing to pay for a click.

For instance, a book retailer may pay $1.00 per click based on internal metrics. These metrics dictate, for example, that on average 30% of clickers purchase a book and the average profit per sale is $4.00. So, for every 100 clicks ($100 cost), they make 30 sales ($120 revenue) and generate a $20.00 (20%) profit. Note that years ago, the same retailer may have been able to pay only $0.50 per click, but as the market matured and more retailers began advertising, competitive bidding forced the price up to $1.00 where the highest return the most advertisers can make is 20%.

The key point is that click fraud is already taken into effect when advertisers select the highest amount they will bid. For instance, there is no difference whether an advertiser pays $0.83/click for 121 clicks with 21 being fraudulent, or $1.00/click for 100 clicks when there is absolutely no fraud. In either case, the advertiser pays $100 and generates a profit of $20, and Overture and/or Google make $100. What changes is the advertiser’s yield (e.g., the percent of clickers who purchased the book) which in turn effects their highest bid price. That is, with fraud, 30 out of 121 clickers (24.8%) purchased the book, and without fraud 30 out of 100 clickers (30%) purchased it. Without fraud, the bid price in an efficient market will rise from $0.83 to $1.00.

In summary, online advertisers must focus on analyzing and improving their internal metrics (e.g., conversions) and not worry about click fraud as it is already incorporated into keyword bid prices. Hopefully, the frivolous lawsuits and refund requests spawned by apparent click fraud will end as those in the industry recognize this undeniable fact.

About The Author:
Tommy Maric is the manager of is designed to help webmasters maximize their profits using Google’s Adsense™ program. Through extensive research, develops up-to-date databases of the most popular keywords and their accompanying bid prices. For more information, please visit


No comments:

Your Ad Here Tips For Easy Earn Money: With Adbrite We Get Earn Money From Your Website Or Blog, 24 Hour work, No Cost it's 100% FREE. Your blog is a money maker, You can be a millionaire just with your own blog!

Can you still make money with Adsense?

Google Adsense is an advertising program created by Google, and which is beginning to be explored by other search engines, such as Yahoo and MSN – that allows you to put targeted ads on your website. If you run AdSense on your site you know that some words pay more than others, much more in fact.

5 Genuine Adsense Opportunities

Over the last few days. we’ve categorized over 20 great opportunities that represent a genuinely potential good return on investment. Most sources online today only show the highest bid estimate for a particular keyword or keyword phrase. This is a completely ill-informed methodology in evaluating adsense keywords and their potential value.

9 Adsense Case Studies

Here are 9 more Adsense Case Studies worth further consideration. They include keywords from the categories; Legal, Medical, Publishing, Real Estate, Rentals, Telephony, Travel, Vehicles and Web.Some are ok. Some are really good. Create quality content in areas that interest you and that is a great 1st step to developing a site that is successfully monetized with Google Adsense. I don’t focus on the the highest bid keywords, just the best in my opinion based on the various other attributes of the keyword.

Adsense Keywords - Can you trust only the highest bid estimate?

The short answer is no. There are tons of sites online displaying lists of hundreds or even thousands of keywords and there highest bid. Well guess what? There almost totally useless. The reason lies in the fact that (a) you have no idea of what the advertiser is bidding and it is the 2nd advertiser that dictates the 1st bidders cost per click. But even worse, you have absolutely no clue of what the Top 10 advertisers are paying. Bids may dramatically drop so by advertiser 7 or 8, it’s down to a few cents.

Adsense Traffic and Project Black Mask

After the hype over Project Black Mask recently, created by the same team that brought us Affiliate Project X and Day Job Killer, I decided to buy it and see whether it really was worthy of all the buzz it created. What I found surprised me.

Allows you to dramatically improve earnings from Google's Adsence Program

The TopPayingKeywords database presents the keyword prices of the 360,000+ keywords that have search engine bid prices of $1 or more. By identifying the highest paying keywords on the Internet, the database allows website owners to dramatically improve earnings in Google’s AdSense™ program.

Maximizing AdSense Revenues via Up-Selling

If you go into any Blockbuster Video store, you quickly notice the company’s use of a classic marketing technique – up-selling correlated products. This technique is highly effective at maximizing Blockbuster’s revenue and profit per customer. Moreover, this same technique can be applied to websites using Google’s AdSense program.

How to Profit from Knowing the Most Expensive Keywords

By knowing the most expensive keywords on the internet, you can create websites and web pages based on these keywords. On these sites and pages, you can serve expensive ads and/or promote affiliate offers that reap high bounties when clicked or completed.

Google's AdSense a bonanza for some Web sites

LOS ANGELES — Canadian software developer and part-time humorist Eric Giguère made fun of the avalanche of Internet arthritis drug offers on his Web site last year. For his efforts, he received a $350 check from Internet search giant Google.