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Apr. 24, 2007 at 10:12am Eastern by Danny Sullivan

Less Than 5% Click Fraud Makes You "Virtually Free"

When the search engines and auditing firms don't even agree on an overall industry rate of click fraud, I was bemused by a release I got today telling me that ABCSearch is now "validated as virtually free of click fraud" according to Click Defense. Virtually free to me means practically none. Like well below one percent, I would say.

Turns out, virtually free for this validation means "an average of less than 5 percent potential click fraud across its entire PPC search network."

In contrast, compared to the major search engines, "This represents a three-fold decrease in recent documented reports for tier one PPC networks."

Hmm -- three fold? That's got to be a reference to the Click Forensics Click Fraud Index stats. We just reported on the latest findings from those that gave an overall industry figure of around that range -- 14.8 percent.

Of course, those figures are hotly disputed by Google, since they don't cover refunds that are given. Indeed, Google says actual click fraud is around 0.02% of clicks. Google: Click Fraud Is 0.02% Of Clicks explains this more, and Yahoo Says 12 to 15 Percent Of Clicks Are Discounted covers a similar issue with Yahoo, where clicks are filtered out.

Now back to the ABCSearch release. Look again at what I quoted, and you'll see the rate is for "potential" click fraud, rather than actual click fraud. So the ABCSearch's actual click fraud rate might be much lower (or higher, if the screening technology isn't detecting click fraud correctly). And the major search engines could indeed have a higher "potential" rate of click fraud

Potential click fraud is important, because to my understanding, that's really what the Click Forensics Click Fraud Index provides -- a look at potential threats, not actual click fraud.

You could be forgiven for assuming that the Click Fraud Index is reporting actual click fraud, since the site makes it seem that way. From the most recent findings reported:

The overall industry average click fraud rate was 14.8 percent for Q1 2007 versus 13.7 percent for the same quarter in 2006 and 14.2 percent for Q4 of 2006, 13.8 percent for Q3 of 2006, 14.1 percent for Q2 of 2006, respectively.

There you have it. "Click fraud rate" for the "overall industry," as I've bolded. What surprises me is that these statements aren't given with better qualification.

When the Click Fraud Index was first launched back in 2006, I wrote:

The big caveat to keep in mind is that this rate only takes into account data from those who are part of the Click Fraud Network, which is backed by click fraud auditing company Click Forensics. The company does say this one the Click Fraud Index page, but despite this, some might assume the figures represent an industry-wide estimate.

That prompted Click Forensics CEO Tom Cuthbert to reply:

We make no claim that the data reflects an industry of over 400,000 advertisers. In fact, the text below the graph on the Click Fraud Index home page says, "Derived using average threat level across all industries and keywords monitored by the Click Fraud Network. Threat Level is identified as having a high attribute rating score as measured by the Click Forensics rating engine using data provided by members of the Click Fraud Network"....

I thought it might be helpful if I give you an overview of our approach. Click Forensics definition of click fraud is the combined scoring of three (3) sets of attributes; technical, behavioral and Market (economic). We add to that the collective intelligence provided by the Click Fraud Network member data. Each click is scored by our algorithm and flagged in a high, medium or low threat level. The total number of clicks falling into the high threat level is the number we report on the Click Fraud Index site....

One other key point so that the CFN aggregate number is not misleading. We are counting number of high threat clicks. Bear in mind that the average cost per click for a high threat level click is three to four times higher than low threat level clicks.

I agree with you, "...it's hard to take this figure alone as proof of the state of the entire industry." While that is clearly not what we are saying at this point, it is a goal. As I mentioned, the more the Network grows the more accurate the data will become. This is an industry problem and I invite you to join our efforts.

A year later, that index is most definitely positioned as providing overall industry figures, rather than just being reflective of the Click Fraud Network's 3,500 advertisers. In addition, references to "threat levels" no longer appear, removing any qualification that it is potential click fraud that's been reported on, rather than actual click fraud.

Potential figures can be useful -- but it's important that you really understand when potential is being discussed.

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