Competitor Click Fraud - A Definition

Monday, October 22nd, 2007

A question I am often asked is “What is competitor click fraud?” In this post I aim to create a definitive answer to that question.

Firstly I would like to paint a scenario for our definition, your company is advertising on a pay per click provider, for clarity of our scenario, I will say it is Google. You are bidding on one of the extremely aggressive keywords such as “home mortgage” and your company is prepared to pay 25 USD per click for a lead into this very lucrative market, and your daily advertising budget is 2000 USD.

With the above scenario in place we can see how attractive competitor click fraud is, but what is it?

In brief another company bidding on the same keywords as you will click on your ads in an effort to deplete your daily budget. Your company will pay for the click, but the click will never create a return on investment.

Competitor companies will do this for one of two reasons:

1) To stop your ad running on Google and place theirs with less competition. They do this by clicking on your ad until your daily budget is reached and Google stops displaying your ads as instructed.

2) To reduce their cost per click i.e. if they want to pay 23 USD per click, your ability to pay 25 USD will keep them off the top spot and possibly the all important first page. Geting rid of the competition lets them control the max cost per click

I mention that is is attractive to commit click fraud, why do I say this? It is a simple question of economics, if it costs 25 USD to tempt a user onto the site, eighty clicks would deplete our fictional budget and create a charge with no return on investment against a competitor company. It’s a ruthless world out there.

The mechanics of competitor click fraud are exactly the same as another type of click fraud, it will be manually via a person sitting and clicking on your ads, the next level up will be from a click farm where groups of people will be paid to click on your links and lastly via a clickbot or automated software program which will create the invalid clicks.

So now you know what competitor click fraud is, in the next article in our series I will tell you how to spot if you are a victim of competitor click fraud.

Tags: Competitor Click Fraud
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