Clickfraud cost an est. $800m last year

Clickfraud cost an estimated $800 million for advertisers in false hits last year, reports the Financial Times today, based on study by a media firm called Outsell. And "more than a quarter of them have reduced their spending as a result…" Google, Yahoo and MSN, "have avoided putting a…

Clickfraud cost an estimated $800 million for advertisers in false hits last year, reports the Financial Times today, based on study by a media firm called Outsell.

And “more than a quarter of them have reduced their spending as a result…” Google, Yahoo and MSN, “have avoided putting a number on the incidence of click fraud but Outsell said it averaged 14.6 per cent of all clicks billed to advertisers, even after Google and others had filtered out those ones they believed to be invalid. The 14.6 per cent equates to $800m of the $5.5bn US search engine market in 2005.”

However the number could be off by magnitudes in either direction, Danny Sullivan points out that “half the advertisers in the survey also reported they do nothing to audit whether they have click fraud happening or not. So Outsell asked them to estimate the percentage of clicks that are fraudulant, and half of them essentially guessed — and that’s making up this industry stat? It could be far less or far more than this guesswork is stating.”

Author: John Battelle

A founder of NewCo (current CEO), sovrn (Chair), Federated Media, Web 2 Summit, The Industry Standard, Wired. Author, investor, board member (Acxiom, Sovrn, NewCo), bike rider, yoga practitioner.

8 thoughts on “Clickfraud cost an est. $800m last year”

  1. Search Engine Marketers should also be programming and Server Admin savy to better help their clients.

    Advertisers are usually just business people without knowlege of the TECHNICALITES & Logistics.

    They can not understand WHY their “Well-Designed” Site is not on search engines or getting traffic. So they will outsource this to SEOs and SEMs, or (OMG)attempt it themselves.

    However, without understanding the COMPLETE PICTURE, many will only be limited to doing their jobs in a restained way.

    1)- Advertisers should get a seperate LANDING PAGE for EACH Search Engine — AND A SEPERATE traffic statistic tracker for each page.

    2)- A good tracker will track EACH referrer Detailed, EACH IP per session, Each Repeat Visit, Detailed Locations of each Visit, Proxy information, Time STAYED on each Page, AND NOW * Outclicks * (where they clicked on to LEAVE your page)….AT THE VERY LEAST!!!!

    Collectively, this info can be presented to any advertiser when confronting them with suspiscious clicks.

  2. A server admin shouldn’t have to pore through web stats to determine if your company is being charged for suspicious clicks. Search/advertising companies need to define what is an “invalid click” and should include in their monthly reports which visits were tagged as fraudulent as well as the resulting advertising discount.

    But answer me this, if I’ve got access to a large network of machines across the internet outfitted with an application which mimics the browsing/searching habits of a normal person, how can anyone determine from afar that those aren’t real humans. I wonder, is it illegal to use such a service to jack up a competitor’s costs of doing business?

  3. There’s an easy way to manage click-fraud: forget about it. In all media, some advertising spend is wasted. If your ROI is positive, that’s pretty much all you need to know. Alternatively, you could use convoluted practices and waste time aguing with the search engines, which will usually cost more than the level of fraud, if in fact that is what it is.

  4. Fred, indeed it is not possible to determine that the program that is
    mimicing a user’s actions is committing fraud. As an example of
    legality, according to Google’s ToS, it reserves the right to file
    criminal charges against anyone operating such a program.

    Peter, online advertising has its own slop, such as people who don’t
    pay attention to CPM ads, or click on CPC ads but don’t buy anything
    or otherwise convert. Click fraud is an additional cost borne by the

  5. Some how the advertiser is the one that seems to take it on the chin.

    Maybe since the time limits that is available, maybe the click fraud will be cut back

  6. Fraud links ban from Google definetely it is not fair to me. Of course I know there are thousands (more?) people who tries to earn more they really can, but it is Google that should prepare much better solution for ads. I just can’t believe they can’t prepare better script and I also can’t understand they hire thousands of people to spy clicks fraud…

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