PPC Fraud: What It Is, And How It’s Costing You Money

The Rise of Pay-Per-Click Marketing

In order to understand why anyone in their right mind would undertake PPC fraud, we have to understand the rise of pay-per-click marketing.

And it’s a big rise.

PPC marketing has been around since 1996, except no-one really knew or understood that it was there. Even Google considered it a “test project”. PPC campaigns (or anything online, really) were a non-existent or very small part of marketer’s advertising mix.

Fast forward to 1997; marketers began taking notice of this advertising tool and paid ads began to surface among Google, and Yahoo.

Fun fact: Yahoo turned down the offer to buy Google for $1 million this year. Big mistake is kind of an understatement, we think.

1997-2000 represented a few years of technical confusion and ultimatley, the crash of 2000. Google however, still proceeded to lanch Google Ad Words, even in the midst of the fear of online activity by both advertisers and businesses alike.

By 2002, Google Ad Words was in full swing. The platform looked very, very simple to how it does today; but, advertisers and businesses viewed it as a profitable, easy way to gain additional marketing exposure and ROI. Google reached mammoth status by 2005, gaining 84.7% of ad share across all search engines and revenue of over $185 million. It was also in 2005 that click fraud was first detected- note, we use the word detected. It wasn’t until recently that marketers finally realized how much money they were losing to click fraud every minute.

So, without going through the many years between 2005- 2019, we can tell you that Google surpassed $50 billion in revenue last year and that 95% of that came from advertising. Revenue that landed back to the businesses being advertised was over triple that.

The point of our little history lesson here is that online advertising is the thing. It’s the largest advertising platform out there, and it shows no sign of slowing down. Well designed and managed online campaigns can bring in revenue that’s unheard of, and unmatched, by traditional marketing methods. And with everything good, comes the bad.

The ying and yang, as we say .

What is PPC fraud?

PPC fraud, or click fraud, costs advertisers upwards of 7 billion a year on search engine networks. There are several elements to click fraud (which of course, we will go over in nice and simple terms for you!)

Basically, click fraud is the intentional act of draining an advertisers budget through racking up clicks that are not from a legitimate source, and will bring no revenue to the business advertised. By paying for each click, rather than a set monthly budget, PPC marketing can be highly profitable and generate unlimited leads and sales. Since you are paying for each click though, where and who those clicks are coming from – and their purchase intent- is crucial to understand and monitor. It also presents a great way for competitors, scrapers and malicious proxy networks to repeatedly click on your ads and use up your entire daily budget in a matter of seconds.

Why Click Fraud Is a “Thing”

Why would anyone undertake click fraud?

Easy. If your budget is gone for the day, your ads aren’t being shown or clicked. That means no chance of business for you, and all the chances of business for your competitors. If your ad isn’t being shown, theirs are.

Where Click Fraud and PPC Fraud Comes From

There are four serious offenders to Click Fraud and PPC Fraud- and they are all equally as threatening to your PPC profitability as each other. With no further a due, we present to you: your competitors, scrapers, disgruntled customers & fraud rings.

Competitors and PPC Fraud

There are a whole list of reasons competitiors will go and manually click on your ads until your budget runs out. Perhaps the most obvious offender, competitors commit PPC fraud to:

1) Ensure your ads aren’t seen, so that theirs are.
2) Screw with the analytics of your keyword optimization and ad optimization (repeated clicks with no action and a high bounce rate = lower quality score). Then, it boosts theirs because they are grabbing all the relevant clicks.
3) Gain cheaper traffic for themselves. By kicking your ads out of the running, they can bid and optimize for a lower place on the search engine, but grab the top spots simpy because your (beautifully optimized) ads aren’t there.

Scrapers and PPC Fraud

Webscrapers arent really malicious, intentional forms of draining budgets- but they do. Webscrapers are basically data extraction companies, who scan the web and advertisements to provide data on what’s really going on out there.
(This is certainly the most basic, vague definition of webscrapers that we could have come up with- but it’s a complex thing!)
Webscrapers play a part in PPC fraud by clicking on your ads and reporting where they go, what they do, the landing pages, the promotions attached to them etc. They aren’t trying to kick you out, but they don’t really care what their click does- they’re trying to gain data to sell, but by doing so, you’ve now got a bunch of clicks that mean nothing. Webscrapers don’t just scrape data off ads- they do it to your website, your homepage ads, anything online- but when you’re paying for each click, you’re essentially paying for them to click your ad and sell the data.

No thanks.

Disgruntled Customers and PPC Fraud

It happens! It truly does.
An unhappy customer happens here and there. An unhappy customer who wants to take it out on you personally also happens here and there. An unhappy customer who understands PPC enough to know to do do this?
Yeah- it happens here and there. But it’s rare, so we don’t have to worry too much about this. However, it does happen and if it happens even three times over a month, you’ve lost three chances for happy, converting customers.

Fraud Rings and PPC Fraud

The mammoth of PPC fraud. The biggest, most malicious and hardest to catch sources of PPC fraud.
Fraud rings are typically seen overseas. Fraud rings consist of millions of unique IP addresses that attack advertisers campaign every minute, of everyday. Fraud rings receive huge financial benefit by draining targeted campaigns and boosting the exposure of others. These rings can consist of a few people in a garden shed, or thousands of people within a swanky office overlooking the city.

Click farms are hired to (please, give a fun little drum roll) – sit there and click. All. Day. Check out what an illegal click farm actually looks like: 

illegal click farm in india

Why? They are hired to kick advertisers out of the running on behalf of agencies or companies who pay them to do so and for very little cost (hence, overseas). They then work to superficially boost the exposure and profitability of those same companies.

Yes, shady agencies hire click farms. Yes, likes on social media are often brought- they are not legitimate. And yes, click farming is done for less than a cent per click with the financial damage equating to over $7.2 billion a year globally.

Stopping PPC Fraud and Click Fraud

Sigh- unfortuantley you can’t. PPC fraud and click fraud will exist forever, and will continue to grow as long as online advertising exists and people get paid to do so.

What you can do is protect yourself from as much fraudulent activity as possible. What you can’t do is do it yourself.
The technical expertise and programming knowledge that goes into determining and blocking IP addresses is beyond most of the population’s comprehension. Not to mention, the amount of work that goes into it is insane.

PPC protection companies are no joke, and here at Infotel Multimedia, they are a lifesaver when it comes to keeping our PPC clients safe and profitable. Everyday, our PPC protection software not only blocks fraudulent clicks, it blocks fraudulent IP addresses and even entire networks, by looking at:

*Where the click came from (not where it claims to be, where it actually came from)
*The frequency of clicks to the same ad/campaign from the same IP
*The keywords used to arrive at those ads
*The timing of clicks to your ads (no real customer is going to click on your ad three times in one minute- a click farm will)
*Known “blackhat IP” addresses – (known click farms, shady webmasters etc.)
*Analyzing, determining and blocking fraudulent IP addresses on real time, as well as deciphering entire fraudulent networks

Do PPC Protection Programs Work?

Oh yes. They work. They do a crazy amount of work that we would need an entire department to do. Maybe two. At Infotel Multimedia, we use PPC protection software on every PPC account we manage.

Note: PPC protection programs never stop 100% of fraudulent activity. Nothing ever will. The persistency and tenancity of fraud rings etc. means that PPC fraud and click fraud will always exist and the most saavy fraud rings will find ways around almost anything.

But wow, do they stop a lot of it. The technical expertise of this software allows to confidently manage our clients exposure, ad dollars and ROI in the most legitimate way possible.

Infotel Multimedia and PPC Marketing

Interested in how many fraudulent clicks you’re receiving each month? Talk to us. A quick 5 minutes scan will tell you the percentage of clicks your ads are receiving per month that are plain fraud.

Bonus: we will even tell you where they’re coming from, as long as you promise not to egg their office.