Click fraud is currently a major topic in online advertising. Many argue that it presents a threat to the stability and viability of pay-per-click (PPC) advertising, the key revenue generator for both Google and Overture. In actuality, click fraud is not a significant issue at all.
Click fraud occurs when ads are clicked for reasons other than a genuine interest in learning more about the product or service advertised. Click fraud occurs in two forms. In one instance, fraud arises from competitors trying to sabotage each other. One competitor clicks on the ads of another just to drain the budget of that company. The other instance occurs when webmasters (or people associated with the webmaster) repeatedly click Google AdSense ads (which are syndications of others' ads) on their own web pages in order to generate more revenue. While both Overture and Google have developed sophisticated technologies to detect click fraud, their systems are, and may never be, foolproof.
The real question is how much does click fraud actually damage the PPC industry? Gross fraud, i.e., when one person or technology consistently and repeatedly clicks on an ad, aside, which Overture and Google can easily detect, we believe that click fraud has no real impact on the industry. The following explains why.
Efficient market theory says that it is impossible to "beat a market" because prices already incorporate and reflect all relevant information. As the PPC industry has matured, efficiency has begun to take root. That is, the price of each keyword has been driven up to the point where it reflects the highest price an advertiser is willing to pay for a click.
For instance, a book retailer may pay $1.00 per click based on internal metrics. These metrics dictate, for example, that on average 30% of clickers purchase a book and the average profit per sale is $4.00. So, for every 100 clicks ($100 cost), they make 30 sales ($120 revenue) and generate a $20.00 (20%) profit. Note that years ago, the same retailer may have been able to pay only $0.50 per click, but as the market matured and more retailers began advertising, competitive bidding forced the price up to $1.00 where the highest return the most advertisers can make is 20%.
The key point is that click fraud is already taken into effect when advertisers select the highest amount they will bid. For instance, there is no difference whether an advertiser pays $0.83/click for 121 clicks with 21 being fraudulent, or $1.00/click for 100 clicks when there is absolutely no fraud. In either case, the advertiser pays $100 and generates a profit of $20, and Overture and/or Google make $100. What changes is the advertiser's yield (e.g., the percent of clickers who purchased the book) which in turn effects their highest bid price. That is, with fraud, 30 out of 121 clickers (24.8%) purchased the book, and without fraud 30 out of 100 clickers (30%) purchased it. Without fraud, the bid price in an efficient market will rise from $0.83 to $1.00.
In summary, online advertisers must focus on analyzing and improving their internal metrics (e.g., conversions) and not worry about click fraud as it is already incorporated into keyword bid prices. Hopefully, the frivolous lawsuits and refund requests spawned by apparent click fraud will end as those in the industry recognize this undeniable fact.
About The Author:
Tommy Maric is the manager of TopPayingKeywords.com. TopPayingKeywords.com is designed to help webmasters maximize their profits using Google's Adsense? program. Through extensive research, TopPayingKeywords.com develops up-to-date databases of the most popular keywords and their accompanying bid prices. For more information, please visit http://www.toppayingkeywords.com.
Contact:
877-TOP-WORD
(877-867-9673)
http://www.toppayingkeywords.com
What is Average Customer Lifetime Value?Traditional business philosophy is that... Read More
A well-oiled pay-per-click search engine campaign can land hundreds of... Read More
Determining keywords is a critical step in web design. If... Read More
How much revenue do you generate from Google Adsense?Recently there... Read More
When running ads on the AdWords network, one of the... Read More
Webmasters have a revolutionary new method of collecting income from... Read More
1: The ideal Google AdSense page should have great content... Read More
A large part of Google's multi-billion dollar annual turnover comes... Read More
Running a pay per click campaign can be a valuable,... Read More
On June 24, 2005, a lawsuit was filed against Google... Read More
Click fraud has become a major problem for online marketers.... Read More
If you've started using Adsense as a way to increase... Read More
There are many forms of advertising nowadays. There's popups and... Read More
The fairy tale existance of Google is starting to experience... Read More
Click fraud is currently a major topic in online advertising.... Read More
The cycle of affiliate programs and money making ventures goes... Read More
Google AdSense is a great way for webmasters to monetize... Read More
Watch out for a shift in the pay-per-click (PPC) industry,... Read More
A lot of affiliates are selling other people's products with... Read More
Are Small PPC Search Engines Really Worth The Effort? The... Read More
We constantly receive phone calls from clients, prospective clients and... Read More
If you haven't yet got a Google AdSense account for... Read More
Running a pay-per-click advertising campaign can be very expensive if... Read More
Have you ever imagined what it would be like to... Read More
As you probably already know, AdSense is revolutionizing the way... Read More
Dowagiac cheap limo service ..How?Dead easy.I implemented this tactic myself yesterday on one of... Read More
We read about how to develop a Google AdWord campaign,... Read More
Advertising on the Internet has always been a bit of... Read More
In private consultations with some Search Engine Optimizers I am... Read More
As you probably know, Google Adwords is a pay-per-click solution... Read More
As anyone who uses Pay Per Click (PPC) advertising in... Read More
My first real foray into Internet Marketing was a Pay... Read More
One of the best kept secrets in today's affiliate marketing... Read More
Numerous bloggers these days are looking to earn extra cash... Read More
Never mind the irritating, but effective, pop-up window. There is... Read More
Why do some companies bid on keywords for products they... Read More
Who Else Wants To Maximize Their Google Adwords... Read More
By using this tutorial you will learn how to increase... Read More
What was once such a good thing is now a... Read More
One of the hottest ways to sell affiliate products is... Read More
Pay-Per click fraud dates back even from the time when... Read More
Web marketing has taken on many different shapes during the... Read More
Faced with a mediocre or worse performing paid search campaign... Read More
Did you know that there are actually pay per click... Read More
If you want to make money online with a work... Read More
Hi, my name is Darryl Power and I have been... Read More
The biggest stumbling block for most home business owners is... Read More
Have you ever imagined what it would be like to... Read More
Google Adwords is a very good place to promote your... Read More
Paid Search Advertising (also Pay-Per-Click, PPC) has gained a significant... Read More
Pay-Per-Click Advertising |