Just when we thought, we had heard it all about "fraud on the internet", there are the "fishing" emails, enticing users into giving up their bank account (or PayPal) information. There are the "multi level marketing" schemes, the ID thefts, and the spyware. The SCAM-THRU-SPAM market is just huge and not necessarily limited to financial losses.

All these abuses are reducing our trust in the internet and e-commerce, which is a shame; given the efficiency and cost saving that this medium allows, especially in terms of targeted advertisement. One example of such advertisement is PPC, or Pay Per Click. This is a great improvement over the good old flashing banner ads that we all know.  The Pay Per Click ads are text based, with no slow loading flashy graphics detracting from the site. Best of all, they are context dependent. They get displayed only when a person searches for a certain "matching keyword". PPC is extremely popular for one reason with advertisers. It's simple to demonstrate that it brings traffic to their site. For the people searching for something it's sometimes a shortcut to click on PPC ads rather than sift through the clutter that search engines often display organically.

Unfortunately, if you advertise your site via Pay per Click Programs like Google Adwords & Overture, then it's exceedingly likely that you are a Click Fraud Victim. Click fraud takes place when a person or program visits a website with no intention of browsing the site, purchasing a product or performing any other type of conversion action. The intent is to make the advertiser suffer losses (or make extra income). This new type of cyber fraud is on the rise, and estimates on the loss to the advertiser through click fraud vary between 10-40% depending on the keyword and the industry. A simple calculation shows us that the advertisers are shelling out $500 Million to 2 Billion per year to click fraudsters. Google and Yahoo are among the leading providers of advertising links, usually targeted to the audience based on the contents of a page. The issue, to some extent, boils down to the difference between a genuine user (sometimes referred to as a "good faith" visitor) and a click fraud artist.

Who perpetrates the click fraud? A significant portion is performed by the competitors who aim to drive up the advertisement cost of their rivals, and hence drain their rivals' marketing budget. This is a form of digital industrial sabotage. There are the profiteers using ad-sense fraud and then there is the impression fraud guys who are the sneakiest. There's always the existence of the terminated employee getting his revenge by clicking on the PPC advertisement. The one that's probably the hardest to nail down is the equivalent of a drive by clicker; someone who enjoys random acts of click violence and other such mayhem.

To gauge the seriousness of the problem, who better to listen to than Google's chief financial officer, George Reyes. Click fraud is "the biggest threat to the Internet economy," Reyes said during a December investor’s conference. "Something has to be done about this really, really quickly, because potentially it threatens our business model." Ask Jeeves, similarly thinks of it as a serious enough risk to list it in its regulatory filings. They feel that their revenue might decline "if advertisers come to perceive click-fraud as a widespread and pervasive problem."

We have to agree with them. The advertiser pays a large premium for having focused, directed traffic to his website through the paid listing. If banks lose their credibility, then people will stop using them and hide their dollars in their mattresses. If the search engines lose their credibility due to click fraud, their customers will vote with their dollars and move back to more traditional forms of advertisement. Similarly, as the PPC customers see their advertising ROI drop, often due to such fraudulent activities they may start walking towards the exits.

The search engines cannot possibly know the overall trends and analytics of the advertiser's site. A good analytics package should be able to provide the statistics which show the optimal path to conversion, places where abandonment may happen, the average time taken reading the "top" pages etc. This is the "signature" may very well include time spent on the path, conversion, on site search etc. of a genuine client. Basically, the serious visitor has a certain pattern which a malicious user or a bot would not be able to simulate. Similarly, for a certain site, the fraudsters too have their own "signature"(i.e. statistical pattern). When making a decision whether a certain visitor is a likely fraudster or not, one of the techniques used is to match against the "genuine" signature and then against that of "fraudster". A dedicated click fraud detection effort, if based on rigorous analytics, website statistics and software pattern matching should have no problem nailing these guys.

Lastly, some efforts need to be done with customized reporting, when the pattern of abuse is more complicated. The search engines don't have the resources (or interest) to drill deep into the analytics data and audit individual advertisers’ website stats. However, they will consider refunds if presented with detailed and convincing data. If you are a regular PPC customer, you have the unfortunate task of defending what's rightfully yours from the click fraud artists. This can be done with the help of expertise for auditing and reporting click-fraud developed in-house or by outsourcing to an analytics based click fraud detection company.

The FTC has been cracking down on the consumer fraud and the fraudsters, by increasing resources to track down and prosecute the "fishers", the "investment schemes" and the "real estate opportunity" guys. However, Eileen Harrington, director of marketing opportunities has declined to deem "click fraud" as something that directly affects the consumer. Therefore, the FTC does not want to tackle the click fraud. The search engines too are unable to fully detect fraud, due to the reasons described above. One wonders who is there to look after the best interests of an advertiser trying to make it on the web and getting cheated by fraudsters. Given the PPC fraud rate, the advertiser has to really question her conversion numbers. Is that conversion ratio of 1% really natural, or could it be higher if the fraudsters are excluded from the traffic, and the money wasted on them refunded.

At Sofizar, we offer click fraud detection on a contingency basis. We track data and set click fraud alarms. When the fraud alarms are triggered we manually verify that our "click fraud case" is strong enough to warrant a reasonable refund. Our monitoring system ensures an early detection of all click fraud activities., one of the websites that is maintained by us quite effectively, helps customers with all kinds of hot events. Over the years, we have been able to track down the fraudsters and ensure a smooth flow of our PPC campaign.