Looksmart's David Hills demonstrates how the cost of advertising increases from click fraud, just as cost per apple increases from bad crops.
It's Autumn. As you read this, the apple crop is hitting our stores and produce stands. This caused the neurons in my brain to fire in such a way as to connect the issue of click fraud with apples. What do apples have to do with the inane discussions I hear about click fraud, the things I read about it and my stand on it? Well, plenty.
Think about buying a bag of apples -- five pounds worth at 99 cents per pound. There are likely about 20 apples in that bag, so the cost is about a quarter an apple. Let's say one apple in each bag is a bit brown when you bite into it -- a sure sign of worms. You toss that apple and each remaining apple has increased in cost a bit, but not a lot. No biggie, right?
One day, you visit a new store and they are selling the same apples for half the price, 49 cents per pound. Not bad, right? You think about the price of gas and say, "Ya know, I could really use that couple of extra pennies in savings so I'll try these." The guy selling them says they are good. Same size bag as the first batch you bought. Same red color. But, in this bag, you find 15 apples that have worms. You toss them and realize your consumable apples just cost a dollar each.
You probably won't buy that guy's apples again, even if he tells you that they are usually good, he eats them, they rarely have worms, and on and on and on.
Do you understand the connection here? Folks, the bad apples represent invalid traffic, otherwise known as click fraud.
Click fraud is a hot topic in the industry. Yet it seems everyone is still scratching their head over it. At LookSmart, we decided on a philosophy of taking high quality traffic over lots of traffic. And, before you read on, I will tell you that there is zero pitch in this article on why you should do business with us. This article is about how you can eliminate the bad apples that represent click fraud.
At our company, we skipped the debate about whether click fraud is important or not. It seemed to miss the point, which is this: Click fraud is wrong, plain and simple. So we replaced the debate about click fraud with action, constantly improving our systems to detect invalid traffic. Our system is one of the best I've seen, and we reject traffic frequently when it seems suspicious. Guess what? Our CPCs are in good shape and our advertisers tend to renew their contracts.
There are four key points that bear airing before I write about what the industry's next steps should be.
I've heard people say that, like finding a lot of bad apples in that bag you purchased earlier, that low-converting traffic is priced into the CPC. Sort of, I guess, unless you are the advertiser that has $2,000 cleaned out of their account by getting hit at the head of the stream queries that the fraud guys love.
You've heard people say advertisers really don't mind click fraud. Oh, really? Find me someone who says that and I'll show you someone who is not listening to their client or boss. I've made my living dealing with advertisers for 25 years and never once have I heard any of them say that activities like this might be all right.
You've heard people say networks want fraud as a way to increase revenues. I don't think so. At least not ours. Fraud's impact depresses prices, creates the need to issue credits, causes advertising customers to leave and is generally a real "buzz kill" around the office. I can't imagine a credible operator having as part of their strategy the inclusion of things that kill the business.
Click fraud's big, no it's small, no, it's big, no it's small. To this I say, "Whatever!" Like I said above, click fraud's wrong and you have to take measures to avoid it. I can't imagine what the issue is in these companies. Do they sit around and say, "Gee, what is the acceptable amount of fraud?"
Ahh, so what's the point? I think there are many tangible solutions to minimize click fraud's presence in the industry and at all companies.
So, enjoy the apples this fall and enjoy the fruits that paid search and online media can provide your business. Know that all orchards have worms in them and farmers will always ship bad apples. Just remember, one bad apple won't spoil the whole bunch, but a lot can kill your Q4.
David B. Hills is CEO of LookSmart, Ltd., an online media and technology company specializing in vertical search. Hills joined LookSmart in 2004. He has nearly 25 years of experience in media sales and operations, with extensive interactive media experience in online advertising, search marketing, paid listings and subscriptions. Before joining LookSmart, Hills served as president of Media Solutions for 24/7 Real Media, overseeing all domestic media, search and technology businesses for the company. Prior to joining 24/7 Real Media, Hills was COO and president of sales for About, Inc., which owned About.com and Sprinks, the pay-per-click service.