What is click fraud?

Click fraud is the practice of artificially inflating the number of clicks on pay-per-click advertising (PPC) or cost-per-click (CPC) ads. It’s usually done on a large scale and can severely impact a company. Fraudulent clicks don’t result in positive outcomes like creating leads or generating sales. Instead, they serve only to enrich fraudsters and drain the resources of legitimate businesses.

Many businesses fail to recognize when they have been the victims of online ad fraud. With the right tools, you can detect click fraud and prevent cybercriminals from taking advantage of your business.

Key Takeaways

• Click fraud occurs when cybercriminals generate large amounts of fake clicks on pay-per-click ads (PPC) or cost-per-click (CPC) ads.
• Fraudsters use specialized programs or bots to carry out automated click fraud attacks.
• Click fraud attacks are initiated either to earn revenue or to drain the finances and damage the reputation of a company.
• Costs related to digital advertising fraud are estimated to reach US $172 billion within five years.
• All industries are impacted by fraudulent clicks. SMEs and the legal, healthcare, education, and travel sectors are particularly vulnerable.
• Analyzing traffic and using specialized bot and fraud detection tools can help identify suspicious activity and prevent click fraud.

How does click fraud work?

Click fraud refers to any type of interaction with online content that doesn’t have a legitimate or genuine intent behind it. Fake clicks appear to be real interactions, but they never actually lead to positive outcomes, like sales or leads. Click fraud always has malicious intent. Fraudsters and scammers use fake clicks to generate revenue or to attack a targeted company.

Fraudulent clicks need to be generated on a large scale to have the desired effect. Although fake clicks can be generated manually, cybercriminals tend to use automated processes to click a link repeatedly. Sophisticated click fraud attacks interact with ads randomly and engage with other related content. In this way, the attacks mimic human behavior and are much harder for companies or Internet Service Providers (ISPs) to detect. To stay hidden, perpetrators mask their location and identities via proxies, VPNs, or IP spoofing.

The result? A business suffers damage to its reputation and can’t rely on data derived from digital advertising campaigns. Fraudulent clicks are a major cybersecurity issue for companies of all sizes across the globe. And the fraudsters aren’t going away any time soon.

How much damage does click fraud do?

• Worldwide, companies are predicted to spend US $190.5 billion on search advertising by the end of 2024.
• Costs relating to digital advertising fraud amounted to US $88 billion in 2023 and could reach US $172 billion within the next five years.
• Click fraud is projected to increase by 14% on an annual basis.
• Research has shown that almost 18% of ad impressions are fraudulent.
• The impact of online ad fraud and invalid traffic are considered to be major challenges by one-fifth of American marketing professionals. 42% of polled respondents cited inaccurate performance metrics as a significant concern.
• Invalid clicks accounted for 34% of global desktop web traffic in the last quarter of 2023.
• Experts predict that AI-powered algorithms will make click fraud more prevalent and harder to detect.

Flooding a site with invalid traffic and fake clicks distorts marketing data. This causes advertising budgets to be artificially inflated due to misleading click-through rate data. Businesses can experience a diminished return on investment (ROI) for their marketing efforts. Ad spend funds may be directed to underperforming channels while potentially more fruitful campaigns are neglected.

Lower conversion rates despite high levels of traffic can lead to sales and revenue targets being missed. Because business leaders are making choices based on false data from their own ads, effective decision-making is impaired. Long or short-term strategic planning may be misdirected, ultimately hindering the overall growth and success of the organization.

Click fraud reduces the ability of a business to effectively reach and engage with the desired target audience, giving an unfair advantage to competitors. Partners, investors, or advertisers may be reluctant to do business with a company that is vulnerable to fraudulent activity.

A company can suffer significant damage to its reputation and lose trust with existing and potential customers if its ads are associated with fraudulent activity. This is particularly concerning for publishers who are reliant on ad revenue.

There are also technical consequences of click fraud. Companies must expend extra funds and resources on managing IT and cybersecurity issues related to fraud prevention. High amounts of invalid bot traffic can overwhelm a server and cause a site to go down. Fake bot clicks are also used to detect vulnerabilities. Scammers are known to use click fraud attacks to probe websites for weak points and to map out security defenses.

Just as there are different reasons for instigating click fraud, there are different methods that cybercriminals use to carry out attacks.

What are the different types of click fraud?

Malicious actors use a variety of deceptive techniques to inflate the number of clicks on a site or an advertisement. Being aware of the different types of click fraud techniques can help you better protect your business against scammers and fraudsters.

The most common types of click fraud are:

• Click farms: In manual click farms, large groups of people are paid to manually click on ads or links. Automated click farms use networked devices running dedicated scripts to get around CAPTCHA security measures and generate fake clicks.
• Click fraud botnets: Devices infected by malware can be taken over and used to generate fake clicks as part of a botnet. They are massive networks of computers centrally controlled remotely by a cybercriminal. Often, users do not realize their machine is part of a botnet.
• Pixel stuffing: Sometimes called ‘ad stuffing’, this practice involves placing a tiny ad link in a 1×1 pixel on a website. The invisible ad is then hidden in a larger frame, so any click in the area counts as an interaction.
• Competitor clicks: A business may deliberately coordinate and launch a click fraud attack against a competitor. The aim is to exhaust the competitor’s ad budget, distort the click-through rate data, and decrease their search engine visibility.
• Geotargeting click fraud: Using proxy servers or VPNs, fraudsters can simulate clicks from specific geographic locations. This can make it seem as if ad campaigns are generating genuine interest from desirable markets. Location fraud can also be used to simulate interest in products not available in certain regions, further distorting data from display ads.

What sectors are most affected by click fraud?

The bad news is that click fraud affects all businesses, even tech giants like Microsoft. If your business relies on social media or online advertising to generate revenue, you are at risk. However, certain factors place some industries and sectors more at risk than others.

Any sector that has high amounts of online traffic is a prime target for click fraud. Higher traffic volumes help fraudsters generate large numbers of fake clicks and make it difficult for ad networks to distinguish legitimate clicks from fake ones. High traffic also equates to greater potential revenue loss, making these sectors particularly vulnerable to competitor click fraud attacks.

Keywords that are linked to high-value products or services have much more valuable CPCs. These keywords can be targeted by fraudsters who want to generate revenue via fake ads or damage competitors by driving up their digital advertising budgets.

Sectors that are especially vulnerable to click fraud include:

• Legal
• Healthcare
• Education
• Finance
• Real estate
• Software
• Gaming
• Travel
• Hospitality
• E-commerce

An Example of Click Fraud

LifeworQ is a major international online job board that helps thousands of people find their way to a better career path. Much of LifeworQ’s revenue is derived from hosting job advertising and directed traffic to other job sites. For LifeworQ, maximizing revenue streams means maintaining the highest amount of human-only traffic possible.

The company became concerned when they noticed that certain job ads were attracting hundreds of clicks in just a few milliseconds. The fact that the multitude of clicks often came from the same IP addresses was also a red flag.

LifeworQ initially tried to solve the issue by analyzing each individual click to determine if it was non-human traffic. This turned out to be far too time-consuming, so the company developed an internal process to detect and prevent click fraud. Unfortunately, the pricing of this process made it unworkable in the long term.

Eventually, LifeworQ turned to DataDome for an effective and affordable ad fraud solution. DataDome revealed that the company was also being targeted by hackers, DDoS attacks, and scraper bots. Thanks to DataDome, LifeworQ was able to resolve these issues, reassure their clients, and protect their ad revenue streams.

How to Prevent Click Fraud

The first step in preventing click fraud is knowing what red flags to look out for. If the below issues are constantly appearing in your analytics, click fraud may be occurring:

• Abnormal click patterns
• High traffic rates with low conversions
• High bounce rates
• Interactions from odd geographic locations
• Strange click timing patterns
• Increased clicks on irrelevant or low-value keywords

Preventing click fraud requires a dedicated effort and constant vigilance. Measures to combat click fraud include manually reviewing traffic quality, automatically blocking or filtering clicks from suspicious sources, blocking IP addresses, monitoring ad placements, or implementing CAPTCHA verification. However, these processes can divert resources away from core business activities.

How to Protect Yourself from Click Fraud

Protecting your advertising networks from click fraud or click spamming isn’t easy. Instead of devoting internal resources to fighting fraudsters, many companies choose to use dedicated click fraud detection tools. Using ad fraud protection software, like Ad Protect, from reputable providers can help you stop fraudulent and suspicious activity. Instead of diverting resources to defend your company against scammers, you can focus on core business operations.

DataDome uses sophisticated AI and machine learning technology to fight against bots and fraudsters. Our software continuously analyzes traffic in real-time and can process over five trillion data signals daily. DataDome has a false positive rate of less than 0.01% and can determine if an interaction is from a legitimate user in less than 2 milliseconds. Ad Protect focuses specifically on your ad traffic, identifying fraudulent clicks so you can focus on genuine user engagement.

Book a live demo of DataDome and start protecting your business from cybercriminals today.

FAQS

What is the cause of click fraud?

Cybercriminals mainly commit click fraud for commercial gain or to sabotage a competitor’s business.

How can I detect and protect my PPC campaigns from click fraud?

Protect PPC ads and advertising networks using click fraud detection software that provides real-time monitoring and identifies suspicious click patterns. DataDome is an ideal solution to defend your ad campaigns from fraudsters.

Does click fraud software work?

Click fraud software is highly effective in detecting and eliminating fraudulent and bot activity. DataDome is an award-winning PPC advertising protection solution used by major companies worldwide.

Are you wasting money on Google Ads?

When it comes to ad networks, Google Ads is still a worthwhile investment. Google Ads has implemented a range of processes to detect invalid clicks and fight scammers. In some cases, Google Ads does provide refunds.