Online Traction

Change is hard. Online advertising is new. And Business Week scares the daylights out of companies when they write about click-fraud.

The damage caused to some businesses from click-fraud is probably significant (though nobody can agree on even general figures or costs) but this advertising model is less than 10 years old and the fraudster’s incentive is short-lived and short term when when considered in the context of the resources of the giants on the supply side (Google profits almost $1 billion per quarter) and the fast growing market on the consumer side. Its worth considering briefly how much of a problem it really is and should it deter businesses from advertising online.

Yes, Google, Yahoo and others do share in the ad revenue even for fraudulent clicks but this must be offset by the damage to the core value proposition of this type of advertising: relevance. You can be certain that when you’re earning over $2.5 billion revenue per quarter from online ads (Google) that they are are going to fiercely protect that value proposition. Besides, there will always be some element of click-fraud in the same sense as ’shrinkage’ in the retail world is a factored cost.

So, I and a lot of people in the online marketing world spend a lot of time educating clients about the benefits of online advertising. Here I make the case for why internet (web, email, mobile etc.) is an excellent medium to reach the people who are looking for your products.

- Scalability > for most companies the only limit to the amount of potential traffic to their site is budget. Ad spend can be increased, decreased and paused within minutes

- The marketing cycle is short > place your ads, get your clicks, convert the traffic on your site, get invoiced at monthend for the cost of generating that traffic and measure in fine detail cost/benefits to your business

- Flexibility > ads are triggered by individual ‘keywords’ or ‘key-phrases’. Ad campaigns can contain multiple ‘keywords’ that can be configured (broad keywords, phrase, exact match), targeted (geography, demographic), and scheduled (day of week, time of day).

- Measurement > more than conventional marketing online advertising can be measured to a very fine degree. For example, number of ad impressions per keyword, number of ads clicks, cost per click, website entry point, website pages viewed, duration of site visit, depth of visit and a lot more. See where your site is failing, rectify the issue, and measure the performance improvement with key performance indicators (KPIs).

- Pay-per-performance > the advertiser pays only when customer clicks on their ad, and the advertiser still gains because of the potential branding opportunity derived from the customer seeing their ad

One other fact worth mentioning… as a publisher of websites, as an advertiser and as a Search Engine Marketer I can tell you that the number of pay-per-click campaigns that are wasteful (ie. not targeted) is just as much a concern as click-fraud. This effects both sides of the ad equation: the publisher and the consumer. On several occassions I have contacted advertisers when I see their ads appearing out of context on my sites. Such ads do double harm: wasteful for the advertiser and irrelevent to my site visitors.

The crux of the matter is that yes there is click fraud but:
- its rare
- your adwords can be configured to protect you, although not complete protection
- your site metrics is another tool that can be used to insulate you from click-fraud
- the ad publishing systems (Google, Yahoo, and MSN) are improving, most recently is accepting 1 click per I.P. address

Conclusion: Be aware of click-fraud but not deterred. Measure the costs and benefits of your campaign. Be on the look out for spikes in your traffic, ad clicks and costs.