Attention Marketers: Watch 'Click Fraud'

SAN FRANCISCO - Credit unions that have turned to e-media for marketing may be being overcharged for "clicks," according to a new survey.

Fair Isaac Corp. said preliminary results of its research study into click fraud in pay-per-click (PPC) advertising suggests that fraudulent clicks can amount to 10%-15% of advertisers' billed click traffic.

Click fraud occurs when advertisers pay for ad clicks that come from fraudulent sources instead of legitimate web traffic. A primary form of click fraud takes place when unscrupulous search engine affiliates/publishers in the ad networks arrange for repeated clicks on the site ads in order to increase revenue. Online robots or "botnets" as well as "click farms" of low-cost workers in remote countries are two mechanisms that perpetrate this type of fraud for profit. Another common form of fraud occurs when employees of companies' click on a competitor's ads to deplete advertising budgets and dilute results.

Credit unions that have placed advertisements on various engines or sites to have their ad appear every time "mortgage" or "auto loan" is searched, for example, could be victimized.

To reach its conclusion, Fair Isaac used its artificial intelligence and fraud-fighting technologies to assess the scope of the problem and test effective ways to expose fraudulent clicks. The study was launched in the summer of 2006 with support from the Search Engine Marketing Professional Organization (SEMPO). SEMPO members and non-member pay-per-click advertisers contributed anonymous click-stream data to the study in exchange for analysis of their search engine advertising and potential click fraud.

Fair Isaac said it is looking to expand the study and is seeking additional advertisers to contribute.

"These are early results based upon a limited view of the market," said Joseph Milana, chief scientist in Fair Isaac's Research and Development Group. "We're looking for more advertisers to contribute to the study to help us arrive at a solid picture of the problem's size and scope across the broader marketplace and different vertical markets."

According to Fair Isaac's study, fraudulent traffic as a result of malicious clicks by a competitor appears to be relatively contained and does not seem to have a significant impact on advertisers' bottom-line.

"Marketers have embraced pay-per-click advertising, but ways to defraud the system also have become more sophisticated," said SEMPO Chair Gord Hotchkiss.

For info: www.fairisaac.com.