How much on-line advertising revenue is fraudulent ?

Today the Wall Street Journal broke an article describing how professionals are scamming on-line advertising revenue.  The scam is pretty simple.

  • First create a web site of some kind.
  • Second hijack personal computers all over the world, or contract with a third party that does this for you.
  • Third have those computers visit your site en mass to drive up the popularity
  • Fourth sell advertisement space on your Website based on the fake heavy traffic

The big loser in this game is the advertising sponsor.

Our Experience

I have been scratching my head for years about the patterns and hit ratios of our own pay-per-click advertisements that we have placed through third parties such as Google  . The Google advertising network for Content Ad placement is a black hole of blind faith.  No matter how hard you examine your results, you cannot figure out who is clicking our advertisements and why.  I do know that Google on one hand takes fraud seriously, but I also know in the past we have been scammed.

Early on in our business, before we had any Web presence, we were putting a large portion of our very limited advertising budget into on-line advertising. Initially we did see a very strong correlation of clicks to inquiries. It was on the order of 100 to 1. One hundred paid clicks per one follow through inquiry. And then one day, we jumped to 1500 clicks. A whopping 15 fold increase in clicks, but there was no increase in corresponding inquiries, not even a tiny blip.  What are the chances of that ?  As you can imagine we had very little re-course other than to pay our bill for the phony clicks. We then removed our content placement advertisements and switched over to search engine only . Search engine clicks  are not likely scammed as Google does not split this revenue with third parties.

I honestly have no idea how big the scamming business on content advertisement is, but I do suspect it is enormous.  In the wall street journal article , the companies that have investigated and prosecuted scammers are large companies with resources to detect and do something about the fraud, the average small business placing content advertisements is running blind.

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