How the Nature of PPC Actually Encourages Click Fraud Companies

Pay-per click (PPC) advertising has been a trusted way to generate new online business since the very first PPC model was introduced. But just as with anything else, PPC advertising is subject to fraud. Unfortunately, the very nature of PPC actually encourages click fraud companies to take advantage of it for financial gain.

To say click fraud is real is to state the obvious. Whether an advertiser chooses to pay for Google ads, run ads on Facebook, or work with third-party publishers, the risk for fraud is always present. The risk is there because of how the PPC model is structured.

How PPC Advertising Works

Source: quickbooks.intuit.com

PPC advertising is a unique marketing tool designed expressly for the internet. It is so named because advertisers only pay when internet users click on their ads. No clicks mean no marketing bill. Unfortunately, it also means ads are not generating traffic.

Bidding for Ads

Most PPC scenarios call for advertisers to bid on their ads. Because the internet is so heavily dependent on keyword searches, that is what advertisers are actually bidding on. They want their ads to pop up when visitors search certain keywords. So, they bid on them for their ads. The higher the winning bid, the more the advertiser pays for each click.

This model creates an organic incentive to perpetrate click fraud. Imagine a third-party ad publisher recruiting advertisers by promising strong search engine results. Those advertisers pay the publisher the same way they might pay Google or Facebook: a set rate for every hit. The publisher now has incentive to instigate an unlimited number of fake clicks in order to increase the amount they can bill for.

From the perpetrator’s standpoint, it doesn’t matter whether legitimate customers actually visit a customer’s website and buy something. Their services are not contracted based on conversion rates. As long as the ad gets clicked, that’s all that matters.

How Click Fraud Is Perpetrated

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The experts behind the Fraud Blocker software say that click fraud companies do what they do through a variety of means. One of their tactics is to set up click farms in overseas locations. They hire workers to visit websites and open ads all day. Such companies choose locations where the labor is cheap, and regulators don’t pay attention.

The beauty of the click farm concept is that such companies can earn a lot of money before their activities are detected. Once discovered, they simply close up shop and move on. They open up another company as quickly as they can find a suitable location to do so.

Click fraud companies have other strategies as well:

• Bots – Cleverly programmed bots can perpetrate automated click fraud while running in the background. Such companies distribute malware that plants bots on the computers and phones of unsuspecting internet users.

• Hidden Ads – Click fraud companies sometimes set up their own websites and fill them with tiny ads that cannot be seen. As users navigate the sites, they inadvertently click on the ads. Every hit represents a charge to the advertiser.

• Accidental Clicks – Another strategy is to place ads on mobile apps, programming them so they show up in locations phone users are likely to tap. How many times have you inadvertently tapped on an ad while attempting to do something else? That is the very sort of thing click fraud companies rely on when employing this strategy.

• Ad Stacking – Fraudsters have been known to populate both websites and mobile apps with stacked ads that are either difficult or impossible to see. The goal here is to register hits on multiple ads with just a single click or tap.

From the click fraud company’s perspective, it is all about the hits and taps. They get paid for each one. Every strategy they employ is designed to register as many clicks as possible. That being the case, there are more strategies than just the few listed here.

Other Reasons for Click Fraud

Source: h2o-creative.com

The very nature of PPC advertising encourages click fraud companies to rip off their customers. But said companies are not the only ones doing it. There are a couple of other groups of people who perpetrate click fraud for other reasons. The first group is comprised of a targeted company’s competitors.

Drain the PPC Budget

Once again, the nature of PPC advertising is such that advertisers only pay when visitors click. So, let’s say you run a successful business. Let us say one of your competitors launches a PPC ad that could pull customers away from your company. How could you bring that ad campaign to a swift conclusion? By instigating a massive number of fraudulent clicks that end up depleting your competitor’s budget – all without resulting in actual sales.

Unfortunately, this type of click fraud is fairly common. It doesn’t earn companies any money directly, but it does help the bottom line by harming the competition. If a company can deplete a chief rival’s PPC marketing, it can also harm that company’s ability to bring in new business.

Punish Companies for Bad Service

The second group of people who perpetrate click fraud without intending to financially profit from it are actual customers. These are savvy customers who understand how PPC advertising works. They get angry because they believe a company hasn’t given them the service they deserve. To exact revenge, they start tracking down the company’s ads and clicking on them.

This sort of click fraud is not nearly as prevalent simply because it’s motivated by revenge. After a while, the novelty of getting even wears off. Meanwhile, click fraud companies relying on farms and bots are trying to generate revenue. They have every incentive to continue their efforts for as long as they possibly can.

Unfortunately, the nature of PPC actually encourages click fraud companies to do what they do. Advertisers have but three choices: stay away from PPC, accept a certain amount of fraud, or look for ways to fight back.