Study: Click fraud drops slightly in Q4

After hitting an all-time high in the third quarter of 2010, click fraud incidence dropped last quarter, although the practice still rendered almost one in five cost-per-click (CPC) ads useless for the marketers that paid for them.

After hitting a record rate of 22.3 percent in the third quarter, incidence fell to 19.1 percent in the fourth quarter, according to Click Forensics, a provider of click-fraud detection services and products that has conducted quarterly click-fraud studies since 2006. Still, year on year, the click fraud rate was higher than the 15.3 percent rate in 2009’s fourth quarter.

CPC is the most popular format of online ads, accounting usually for between 45 percent and 50 percent of all online ad spending, but click fraud dilutes the effectiveness of these ads.

CPC ads are typically short text ads that are matched to topically similar search-engine results and Web pages. Advertisers only pay for these ads when someone clicks on them.

Sellers and distributors of this type of ad share commissions with publishers that carry these ads on their sites. In the first half of 2010, U.S. marketers spent about US$5.7 billion on CPC ads, according to the Interactive Advertising Bureau. Google is the leading seller and distributor of CPC ads.

Click fraud occurs when someone clicks on a CPC ad by mistake. It also happens when these ads are clicked on maliciously, usually by rogue Web publishers seeking to drive up their commissions.

As has been the case for a while, most malicious click fraud in the fourth quarter was carried out through automated botnets, although fraudsters are starting to target display ads to inflate their impression volume and thus the commissions publishers receive, Click Forensics said.