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May. 18, 2007 at 9:08am Eastern by Barry Schwartz
Billable Click Fraud Is 10% to 15%, Says Fair Isaac
Fair Isaac Claims Pay-Per-Click Fraud Is 10% to 15% from InformationWeek says Fair Isaac is going to report today that it has found the click fraud rate of billed paid search and contextual advertising to be 10 to 15 percent, though the figures are based on what the Associated Press characterized as being a "handful" of web sites.
The rate is much higher than what Google has reported and closer to the 14.8 percent rate the Click Fraud Index recently found. However, the definition of "billed" could be crucial.
The InformationWeek article says this rate is for clicks that are actually billed to advertisers. The AP article makes no mention of billing but instead suggests this is simply a traffic analysis:
After reviewing a handful of Web sites since last August, Fair Isaac believes 10 to 15 percent of the advertising traffic is "pathological," indicating a likelihood of click fraud, said Joseph Milana, the company's chief scientist of research and development.
Less Than 5% Click Fraud Makes You "Virtually Free" and Google: Click Fraud Is 0.02% Of Clicks and Yahoo Says 12 to 15 Percent Of Clicks Are Discounted all explain in more depth the important of understanding that search engines already discount or automatically credit for many suspicious clicks.
Until we see the actual report, it's hard to compare. More to come later, when we have more information. In addition, Fair Issacs warned against using the figure as an industry-wide representation:
But if Fair Isaac aims to have a similar impact on click fraud, it will first more complete data. Milana concedes his results are based on small number of advertisers. "There's no way we could make a general statement about what's happening in the marketplace," he said.
Postscript: Google has given me a statement on this report:
As you noticed, FI is saying 10-15% of "billed" clicks. That means, if Google throws out something less that 10% and Yahoo throws out 12-15%, that their number would be another 10-15% on top of that . We've seen no data in our extensive research on this topic to indicate advertisers are impacted anywhere near this amount. In fact, undetected click fraud that is brought to our attention by advertisers amounts to less than .02% of clicks.Also, the FI estimate is not similar to Click Forensics. The ~14% quoted in the Click Fraud Index does not take into account clicks filtered or discounted by the engines. Chris Sherman notes this on his coverage of their last metric announcement: At first glance, these numbers may seem alarming, but they may not take into account the discounting of questionable clicks done by most search engines. The point is that FI is coming out with an estimate that is potentially twice as high.
Finally, as I'm sure you'd agree, you can't claim "4 out of 5 dentist prefer" and really only ask 5 dentists, which is what appears to be the case here. Shuman talked to FI and confirmed that their sample size is "less than 10" advertisers, none of whom were using auto-tagging. This means that their log-based analysis counts page reloads and back-button activity as "clicks".
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By Barry Schwartz
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Reader Comments
AP called it a handful of advertisers; does anyone know how many it was, or the selection criteria for the advertisers?
Just curious..
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Waiting to find all this information out...
"Until we see the actual report, it's hard to compare. More to come later, when we have more information."
One reason the effects of click fraud are masked is because of the great ROI some advertisers are getting when comparisons are made to media they formerly advertised on, such as print or broadcast. There are numerous examples of advertisers who don't bother to check for fraud because they don't have time, or aren't worried because they are getting good enough ROI. I think as time goes on, and comparisons are made to past Internet advertising spend, there will be more challenges that clicks are fraudulent.
As a thought experiment, consider what would happen if this technology was used for a critical vote (e.g. a US President) instead of advertising. How confident would we be that the amount of fraud is negligible?
Two things always strike me about studies of click fraud: (1) there's no common definition of what constitutes a fraudulent click, and (2) the studies are always conducted by someone with a vested interest in the results. With no standards for methodologies and no independent investigations, it's not surprising that there's so much acrimony and suspicion among advertisers.