Click auditing firm Click Forensics reports that the percentage of fraudulent clicks industry-wide jumped another point in Q2, to 16%, after remaining largely stable in 2006. More alarmingly, Click Forensics says that fraud on affiliate networks like Google AdSense and Yahoo Publisher Network jumped 4 points in a single quarter, from 22% in Q1 to 26% in Q2. This trend has big implications for the thousands of new companies and bloggers who generate revenue through such networks.
Much of the fraud increase, Click Forensics says, comes from “botnets,” which click ads automatically and are designed to appear to be humans. Unlike the search engines, which continue to downplay click-fraud, Click Forensics can analyse end-to-end traffic logs (what a “user” does after clicking through to a site), and the firms consistently conclude that fraud is a bigger problem than Google and Yahoo say. Google estimates that fraudulent clicks account for less than 10% of the total. Yahoo pegs the figure at somewhere between 12% and 15%. Although these figures aren’t too far off Click Forensics’ numbers, Google and Yahoo do not release breakdowns on their affiliate networks.
The affiliate networks are not major profit drivers for these companies (they contribute a big percentage of revenue, at Google, especially, but not profit). But they are critical revenue drivers for the gigantic ecosystem of small content providers that has sprung up around them.
Most advertisers currently regard click fraud as a cost of doing business. (And they don’t currently have much choice: Yahoo and Google do not provide enough click-level detail about which to complain). As estimates of click fraud on the affiliate networks increase, however, advertisers will (or should) put increasing pressure on Google and Yahoo to control the problem, provide more detail, and/or provide larger refunds for bad clicks. Any of these measures could reduce the revenue passed through to affiliate content providers.
Andy Greenberg of Forbes.com originally reported the Click Forensics data.