Report: Click Fraud, The $1.3 Billion Problem

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Research firm Outsell has released a new report that estimates that click fraud forced PPC advertisers to pay for $800 million in fraudulent clicks, and reduce their spending by another $500 million. As a result, the PPC industry loses about $1.3 billion.

The study examined the online advertising habits of 407 advertisers in May, who control about $1 billion. 27% of them reduced their PPC spending because of click fraud, while another 10% planned to cut their PPC budgets. According to the advertisers, they had to pay approximately 14.6% of their budget for fake clicks.

The report also offers suggestions for addressing the problem of bad clicks, and examines some of the signs of click fraud so advertisers can know when they’re being hosed. It also examines how the major PPC players Google, Yahoo, and MSN, as well as third party services, are protecting advertisers against fraudulent clicks. But Outsell also admits that these media giants are not doing enough. “Google, Yahoo! and MSN are stonewalling on click fraud, to their own and others’ detriment,” said Chuck Richard, Outsell VP and the study’s lead researcher, in a statement.

1 COMMENT

  1. […] According to a study released by Outsell, pay-per-click advertisers are spending an extra 14.6% of their budget on fraudulent clicks. That’s a large chunk of change. If your online ad budget is $20,000, and you’re spending 100% of it on pay-per-click advertising, this in turn means $2,920 of your money is going absolutely nowhere. But if you diversify and spend only 30% of your $20,000 budget on pay-per-click ads, then you’re only spending $876 as the cost of doing business. If Outsell is right, and click fraud really does cost a full 14.6%, then it would be wise to find the proper balance between pay-per-click and non-pay-per-click advertising so your budget is operating as efficiently as possible. […]

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