Steve Rubel shares research about click fraud:
According to a new study, advertisers lost $800M last year to click fraud. On average 14.6 percent of all clicks are fraudulent, and 75 percent of advertisers say they have been victims of click fraud at one time or another.
Heres what Wikipedia has to say about click fraud.
Click fraud is often considered the chief weakness of the CPC model.
Here’s something I wonder: Given how inexpensive most CPC advertising is, the cost of fraudulent clicks can easily be absorbed in a well calculated ROI by a professional CPC advertiser. This might just be the cost of business when using a disruptive, imperfect technology.
That’s not to excuse click fraud. Any kind of cheating is reprehensible. I’m just looking at it from a purist business sense. Retailers calculate price of theft into their operational budgets. It’s just the cost of doing business. You hate it, but you do it. That attitude might exist among CPC advertisers, as well.
There are ways to avoid CPC, though: Confine your advertising to smaller networks, like Quigo. I have no idea if Quigo has any issue with click fraud, but given the nature of their network (who affiliates are), it’s probably less prevalent. It’s kind of like buying a Mac to avoid the viruses associated with Windows.
Also, look for low-cost advertising that is based on a fixed rate.
That’s one thing newspapers should be doing: Developing fixed-rate opportunities for small-budget advertisers. There are more businesses not advertising in newspapers than are, and much of it has to do with cost. Newspaper Web sites need to build programs for these advertisers, help them grow their businesses and turn them into loyal, bigger dollar advertisers.
Not only is click fraud a problem for Google and the like, AdWords also suffers from complexity. It takes more work than most small business owners are willing to invest. Don’t believe me? See how many small advertisers who are based in your community are advertising on Google. Outside of real estate, it ain’t many, I assure you. Newspapers have an opportunity to build better, easier, more effective programs for small advertisers. They should do it.
If newspaper sites don’t don’t do it, then the local TV stations will, or some guy working on a laptop in his living room.