Can click-fraud topple the entire pay per click system?
July 9, 2006 – 2:46 pmIf you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
More and more talk is being heard about click fraud this week. To me, it’s not news. I was an early advertiser in Google’s Adwords system and I watched a great deal of click fraud occur. Since many of the keywords I paid for were in the SEO/webmaster category, the automation was rampant. There have been estimates as high as $800 million for the industry being made this week. I have no idea how accurate that figure is, but I assure anyone that thinks click fraud isn’t a problem is deluding themselves.
The biggest problem, to me, for something like click-fraud is how erosive it can be to public sentiment. Advertisers don’t enjoy being screwed out of money, and like all customers, they’re will resent it, and harbor hostility if they experience it. The customers are not warned in any great detail that their money might be flushed. They have a reasonable expectation that they’re paying honest money into an honest system. Truth is, the PPC system is more rigged than Las Vegas Casinos. The Google Adwords advertising system is a complex one, and only sophisticated buyers have a shot at making real money using the system.
The users in Adwords aren’t generally that sophisticated. They end up paying for many clicks that are worthless to them. Add to that failure rate the fact that they may not even be tracking conversions, and you have people disastrously losing money on a system that they entered in the hopes of earning more income. Unless major steps are made to increase security, people will lose faith.
Once the faith has eroded, the system will erode around it. This is no different than the US government selling T-Bills. People need to believe in the currency, or it loses value. When advertisers become resigned to the fact they’re overpaying for clicks, they’ll want to keep paying less and less per click. Since so many websites on the internet now rely on programs like Adsense for most of their monetization, they have an inherent weakness which may become their Achille’s heel, if left untreated. The seeds of destructions for context ads are sewn when click fraud becomes rampant. I hope we’ll hear of some real solutions soon.
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