Frauds From Clicks on Ads

Click Fraud There are a myriad of approaches companies use to perform click fraud, ranging from the heavily manual-based to the completely automated. The intent of this analysis is to explain what click fraud is and its impact on internet advertising. Click fraud began when the business models of websites and online advertising businesses charged advertisers for every click a potential customer had on an advertisement or promoted link (Midha, 2009).

Unethical online advertising businesses have been caught inflating the number of advertisements that have been clicked on to deliberately drive up what their advertiser customers owe them (Wilbur, Zhu, 2009). This has come so commonplace that there is a continual stream of litigation and lawsuits that allege various online advertising networks engage in this practice to gain greater profits from customers (Midha, 2009).

From the simple manually-based click-throughs of ads to the highly complex use of bots and automated scripting techniques, click fraud is pervasive and costs advertisers billions of dollars a year in inflated fees (Wilbur, Zhu, 2009). Click Fraud and Its Impact on Internet Advertising The immediate effects of click fraud on internet advertising is the driving up of advertising fees and costs for current customers of these advertising networks.

The long-term ramifications of click fraud include the undermining of the credibility of online advertising as one of many channels businesses rely on to promote their products and services. It is the lost credibility and trust in internet advertising that leads to literally billions of dollars in lost revenue (Midha, 2009).

Click fraud over the long-term erodes trust in advertising networks and the very nature of a business that that has many variations including the very successful Google AdWords model that generates over $300M in profit every year according to the company's latest financial statements. Click fraud's impact on advertising effectiveness are also pervasive, leading to a skewing of results over time and a focus on short-term gains over looking at advertising as an investment (Wilbur, Zhu, 2009).

This in turn stops the ability of online directories and advertising businesses to reinvest in new technologies that could also help better combat click fraud and provide greater insights into what ads work best or not. At their most fundamental level however, click fraud practices inflate the important of the internet as an advertising channel, further commoditizing its value as a selling medium over time.

Only by combating click fraud with advanced analytics including pattern matching and predictive scoring of click through rates by IP address and other advanced technologies can this be mitigated (Midha, 2009). It will be impossible to completely stop click fraud, yet there are many emerging technologies that can assist in slowing it down and better monitoring of companies engaging in it to for financial gain. Conclusion Click fraud is leading to the commoditization of internet advertising and will continually depress prices for these services, driving down the quality.