Click fraud: Its effects and why they are long-reaching
Internet users commit click fraud when they click on ads to intentionally generate payment from a business for a viewed ad. Click fraud can be accomplished by humans physically clicking on ads or by using computer programs (bots) to generate false traffic. While some might think this is not a big deal, the problems caused by click fraud can be long-reaching.
Engaging in click fraud is considered to be unethical because of the artificial traffic sent to the website hosting the ads. It has also become a significant problem for businesses that spend large amounts of their budgeted money on web advertising.
One way click fraud is done is by individuals or groups looking to inflate ad share revenues on a web page for personal gain or to drive up competitor prices by using human or robotic clicks. There is also wide scale artificial click fraud occurring (in addition to businesses, some writers can likely attest to this one having fallen victim themselves). This kind is dangerous and costly for companies because it is very organized by big operations as it entails groups being hired to click on ads to generate tons of artificial web traffic.
While all click fraud costs businesses significant amounts of money, these structured mass clicks cost a business a pretty penny. Some companies have reported hundreds of thousands in excess ad spending due to fraudulent clicks. According to a Dec. 2014 New York Times piece, a study had projected click fraud would cost advertisers $6.3 billion in 2015. And it keeps rising at a fast rate, in 2016, losses were projected to be more than 7 billion. Fast-forward again - earlier this year it was projected click fraud would potentially cost businesses a whopping $16.4 billion in 2017.
Companies who buy ad space on websites do this with the hope of attracting customers and increasing their consumer base. Web advertising is an excellent way to try to reach a larger number of consumers, ones they might not be reached otherwise in this day and age. In order to determine whether or not a certain ad or web page is worth the investment, companies primarily rely on conversion ratios. This means they look at the number of times an ad has been clicked versus a number of sales made from those clicks; from this number, they can decide whether or not an ad is cost-effective.
If an ad has received hundreds of clicks but only made three sales, they may decide the ad is not worth the money spent and drop the ad. Click fraud gives the impression of a poorly constructed or placed ad, and a business may drop this ad because the payoff isn't high enough.
The second motivator is often done out of spite or with the intention of receiving personal gain. When a large amount of artificial traffic is generated, companies still have to pay per each ad click which means their marketing money is being wasted on clicks which will never result in any revenue from sales; this impacts budgets.
When a company thinks an ad isn't lucrative enough to waste money on, it often results in a company dumping their ad to focus on another avenue of marketing. Then the competitor sweeps in and gets the more prominent ad space which was abandoned because the original company thought it wasn't worth spending money on.
Click fraud not only harms a business but impacts everyone else too. As lawmakers try to pursue this issue and law enforcement performs investigations on click fraud, this will impact taxpayers of the nations who are investing resources in the click fraud problem. There is also a good chance businesses will increase the prices of their products in order to compensate for the lost revenues of click fraud and consumers will end up paying the price as well.
When click fraud is committed the perpetrators cause harm and the collateral damage of click fraud has potential to be far-reaching. As the rate of click fraud increases at a rapid rate, the big questions are how much will it continue to cost and what can be done to circumvent it?
Additional source: https://www.exchangewire.com/blog/2014/04/14/click-fraud-and-how-to-detect-it/
Engaging in click fraud is considered to be unethical because of the artificial traffic sent to the website hosting the ads. It has also become a significant problem for businesses that spend large amounts of their budgeted money on web advertising.
Artificial click fraud
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| Image credit: Pixabay |
While all click fraud costs businesses significant amounts of money, these structured mass clicks cost a business a pretty penny. Some companies have reported hundreds of thousands in excess ad spending due to fraudulent clicks. According to a Dec. 2014 New York Times piece, a study had projected click fraud would cost advertisers $6.3 billion in 2015. And it keeps rising at a fast rate, in 2016, losses were projected to be more than 7 billion. Fast-forward again - earlier this year it was projected click fraud would potentially cost businesses a whopping $16.4 billion in 2017.
How click fraud affects businesses
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| Image credit: Pixabay |
If an ad has received hundreds of clicks but only made three sales, they may decide the ad is not worth the money spent and drop the ad. Click fraud gives the impression of a poorly constructed or placed ad, and a business may drop this ad because the payoff isn't high enough.
Motivators for click fraud
The Internet is a fantastic way to try and reach consumers, but click fraud continues to be a consistent problem and one of the major drawbacks of web advertising. Two of the primary motivators to commit click fraud include:- Artificially generating ad revenue through falsified clicks
- Performing fraudulent clicking in order to force competitors to have more money spent on marketing
The second motivator is often done out of spite or with the intention of receiving personal gain. When a large amount of artificial traffic is generated, companies still have to pay per each ad click which means their marketing money is being wasted on clicks which will never result in any revenue from sales; this impacts budgets.
When a company thinks an ad isn't lucrative enough to waste money on, it often results in a company dumping their ad to focus on another avenue of marketing. Then the competitor sweeps in and gets the more prominent ad space which was abandoned because the original company thought it wasn't worth spending money on.
Why click fraud is a problem
Advertisers are concerned with click fraud because the ad space they are paying for really isn't generating interest in people viewing their product but simply gives the illusion the ads are being viewed. Since click fraud causes payments for ads in which a sale will never materialize, companies end up spending significant amounts of money which results in huge losses for the business. These losses negatively impact a budget and, if the above stats are any indicator, it's happening at a phenomenal cost. |
| Image credit: Pixabay |
Cost of click fraud
Click fraud has been an ongoing challenge businesses face. Companies will have to learn how to effectively deal with this and figure out how to avoid large losses. Additionally, the law will have to travel deeper into the murky waters to figure out what to do about it. Some do suggest solutions by making it illegal. However, governing of the Internet is tricky at best because laws will vary across the globe and, as with any online problem, jurisdiction is an issue.Problems caused by click fraud are long-reaching
When click fraud is committed the perpetrators cause harm and the collateral damage of click fraud has potential to be far-reaching. As the rate of click fraud increases at a rapid rate, the big questions are how much will it continue to cost and what can be done to circumvent it?
Additional source: https://www.exchangewire.com/blog/2014/04/14/click-fraud-and-how-to-detect-it/
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