Click fraud is a touchy subject with many online businesses. Click fraud is the act of someone fraudulently clicking on a Pay Per Click ad with an intent to harm that business through depleting ad revenue, or decreasing ad ranking - or to illustrate a bit more clearly: click fraud is clicking on your competitors’ ads so they run out of funds.
Online ad networks such as Google Adwords have fought long and hard against click fraud, though at times this has been questioned by their customers. “Why would these networks fight to decrease the amount of fraudulent clicks when these clicks drive revenue into the networks’ coffers?” is a question online advertisers often ask.
Recently Stephen Weiss of Google, Bobji Mungamuru and Hector Garcia-Molina of Stanford University’s Infolab decided to do some serious academic research into the subject. Their findings on the click fraud question, released in early June and available for free online here. Creating a detailed economic model of the basic ad network, publisher, and advertiser relationship, these researchers delve into questions of game theory and economic modeling to determine the effect click fraud has on the market. Their conclusion is that ad networks such as Google’s have an economic incentive to battle click fraud as best as they can, because ad networks perceived as having higher quality (less fraudulent) traffic will gain more customers, and have higher levels of customer loyalty than competing networks.
So why would ad networks spend time fighting click fraud? The smart ones know that in the long term they’ll make more money being honest.
That research paper can be found online at the Stanford University Infolab here.
September 8, 2008
