ADOTAS EXCLUSIVE — We are in the midst of a transition in online advertising that may not be fully appreciated for another year. As financial fears and uncertainty pervade Wall Street, and once-high-flying Internet darlings struggle to stay relevant, there is an underground revolution among marketers that will permanently change how ad spend decisions get made.
More than ever, marketers around the country are taking a closer look at their advertising expenditures and asking, “What did I just get from this?!” They are facing reduced budgets and looking for the biggest bang for their advertising buck. They are increasingly intolerant of low-performing and hard-to-measure ad campaigns. They want answers today, and they want better answers tomorrow. And since CPC and CPA advertising provide more measurable ROIs than do other forms of brand advertising, marketers are expected to allocate a higher proportion of their reduced budgets to online advertising. The result is that online advertising is expected to be fairly resilient in the coming year. But that resiliency will be matched with intense scrutiny as marketers seek to maximize ROI to the fullest possible extent. As a result, marketers are expressing a renewed interest in the subject of click fraud (a.k.a. unwanted traffic) and how it is distorting their ad campaign’s performance.
Click fraud can be defined as clicks or impressions that have no economic value to the advertiser due to malicious intent on the part of the clicker. A click may be fraudulent when the clicker has no intention of converting, giving the advertiser no chance to reap a return on their investment in that click. Unfortunately, intent is difficult to determine and quantify leading to confusion in the industry as to what constitutes fraud. For instance, Seth Godin’s blog post on “thank you” clicks sparked weeks of online debates about the differences between “thank you” clicks, click fraud, and invalid clicks. Putting semantics aside, click fraud matters because fraudulent clicks reduce the ROI of an online advertising campaign, and when shrinking ad budgets become increasingly concentrated online, that sort of reduction in ROI is not acceptable.
Click fraud is already a concern among search marketers. In fact, 76% of advertisers believe that at least 5% of online advertising activity is fraudulent, according to June 2008 Canaccord Adam’s Online Ad Survey. Furthermore, according to cybersecurity researchers at the Shadowserver Foundation, more desktop machines are becoming infected with malicious software than ever before. Over the past year, the number of PCs ensnared in botnets – herds of users’ computers infected with malicious software that sends spam or performs click fraud – has more than quadrupled. Advertisers are right to be wary of click fraud.
Given that click fraud drives down advertiser ROI, marketers will become increasingly concerned with click fraud in 2009, and this could adversely affect online advertising growth much the way ID theft affected online commerce in the early days of the Internet.
As online advertising continues to account for a greater percentage of advertising spend and the economy continues to find its way, the issue of click fraud will shape how marketers choose advertising networks. However, ad networks are in a position to capitalize on this unique opportunity. By aggressively filtering out bad traffic and instilling a sense of confidence among advertisers during this time of economic uncertainty, secure ad networks are finding they can draw new advertising dollars their way. Networks looking to attract these ROI-focused marketers will recognize that third-party traffic quality solutions with the means to identify click fraud are not just helpful, but vital to their success. The revolution is underway, and it is incumbent upon all of us to ensure the online ad industry matures and reaches its potential of becoming the largest ad-spend medium in the world.