Online Advertising Fraud - Coursework Example

There is a crisis looming in the online industry. Poor quality clicks have the possibility to tremendously affect marketers and can harmfully and negatively affect search engines. It takes many forms and apparent through many ways such as online advertising or click fraud, competitive click fraud, and mislabeled traffic. Click fraud is a form of internet crime that happens in a pay-per-click online advertising. It transpires when a person, computerized script, or computer program imitates a rightful user of a web browser clicking on an ad for the purpose of generating a charge per click without having actual interest to purchase anything. Click fraud is the subject of argument and mounting litigation due to the advertising networks being a venue of fraud. It can be as simple as taking one person who starts a small website, becomes a publisher of ads, and clicks on those ads to generate income. The number of clicks and their values is so small that the scam initially goes undetected. However, large-scale fraud also occurs. Those engaged in these massive acts of fraud will often run scripts which initiate a human clicking on ads in web pages. Normally, these are conducted not just by one computer, or a small number of computers, or even a single geographic location, since it would appear too suspicious to advertising network and advertisers and soon the chance to be caught is highly possible. Organized crime can handle to have many computers and even their own internet connections in various geographic areas. They further use the so called robots to double or triple the clicking speed of humans. A number of lawsuits have been made to address the disputes on the click fraud issue. Although proving click fraud can be challenging but there are steps to detect fraudulent clicks and usually sophisticated means are used. ONLINE ADVERTISING FRAUD “CLICK FRAUD” “Click fraud” transpires when, for whatever reason, an ad gets clicked by someone or something without any intention of ever buying anything from the advertiser. The rise of the web-based online advertising industry has resulted to a continuum of new opportunities for brand awareness, generation of leads, and electronic or online commerce for advertisers. In the online marketplace, page views, submission of forms, clicks, downloads, and purchases frequently result in money changing hands between ad networks, advertisers and web site publishers. Since these web-based activities have financial implications, criminals also found it to be a place of new opportunities to conduct fraud against the parties involved in the hopes of acquiring money out from it. Online advertising is fraudulent which contributes to economic crisis and creates a negative effect for marketers, publishers, and other businesses that provide web-based services. What are things that can address this issue? What are its economic implications? Nature of Online Advertising In the mid 1990’s, since the commercialization of the world-wide web (WWW), the marketplace has explored many substitutes to monetize online content and be able to find sales leads. During the early stages of commercialization, many companies made online promotional materials about their available products and services. Some early web pages supplied email addresses and phone numbers as contact information, and others allowed users to fill out online forms to gather data about client’s needs and contact information as a means of lead generation. These interactive product flyers were an early form of online advertising and still widespread among low-end web sites. A more common online advertising model is the so called pay-per-action, in which the advertiser pays a cost-per-action. The word “action” is referred to the time the user arrive at a particular “landing” page on the advertiser’s site, or simply the user engaging in a transaction mainly commercial in nature. Seemingly, online transactions offer ease and facility to customers world-wide, unfortunately these same forms of transactions also resulted to click fraud. Click fraud can take various different forms. Nevertheless, there are some key technology and resource limitations on what directions a swindler will try. For instance, someone with less time and low determination will only instigate simple frauds from their home computer. On the other hand, a so called professional fraudster with more time may write malarkey, send off virus to infect machines worldwide, and control the infected machines to click on ads. The modes of attacks against the networks mainly fall into two categories: humans, where people are the ones actually clicking on the ads, and robotic, in which transfer is generated programmatically by software robots. It is noted that humans are more difficult to manage than automated software robots, and basically limited by the rapidity at which they think and act. However, hiring humans to click on ads is a feasible avenue by which to attack an ad network in places in which human labor cost is very cheap. That also hold true for developed countries since humans can be coerced to click on ads. From the economic standpoint, using people for purposes of doing click frauds on ads is possible as long as the cost of hiring them is lower than the returns on clicking the ad. On the contrary to human clicking, fraudsters often give up any deceit of legitimacy in their massive clicking efforts, and resort to automated traffic produced by software robots. These robots carry one significant advantage over human users – they do what they are told repeatedly and they do it with absolutely no cost at all. Running a robot can require less coordination and avoids the tedious requirement of looking for people and interacting with them. Preventive Measures to counter Click Fraud Although it might truly be improbable to stop someone from manually clicking on a single ad, it is however likely to take actions that can prevent larger-scale, and more systematic click fraud from occurring. In the case of click fraud suitable to publisher click inflation; such scam can be prevented by exerting care with regards to which publishers might be permitted to participate in AdSense-like syndicated program. Furthermore, these publishers that are terminated for low-quality or scammed ad clicks sometimes try to apply again to be included in such programs. In effect, it is vital for an ad network to specifically and uniquely identify publishers, and prevent these terminated ones from ever re-joining. A lot would intend to sigh up posing on a different and fraudulent names, addresses, and contact numbers for the purpose of appearing distinct from the previous, infamous identity. A more tangible anticipatory technique includes setting up a trust boundary between publisher’s web page content and the ad slots on its page. Another could be for an ad to set up a maximum cost-per-click which can hinder a fraudster from making considerable amounts of money with just a couple of clicks. Scammers who then intend to try to make significant amounts of money are then required to generate enough click results in statistically large signals. Unfortunately, since these so called preventive measures have not been perfected yet, it is important to balance them with detection and repression countermeasures. The principle of click fraud detection is to mark invalid clicks after they happened, since much of the time they cannot be efficiently prevented altogether. Clicks can be marked as unacceptable both “online” and “offline”. When invalid clicks are identified online advertisers are not billed for them. This detection is preferred, as the daily budget of the advertiser is not charged for the invalid clicks, and the advertiser does not lose the chance to have its ads continue to join in ad auctions that may take place. On other hand, when they are detected offline; advertisers are billed for the clicks. When offline detection transpires, advertisers are credited for the clicks at a later time. Conversely, the advertiser may still incur the cost of not having its ads participate in the ad auction that time if the advertiser’s budget is limited commensurate to the amount of click fraud. The bottom line is that click fraud detection methods primarily seek to identify irregularities in streams of click data. Economic Implications of Click Fraud There are two common forms of click fraud these are competitor clicking and click inflation. Competitor clicking is penalizing and intended to exhaust the marketing budget of a rival. In comparison, click inflation is pro-profit and allows fake publishers to collect a share of the click revenue generated by an ad network. For both cases, ad networks have been censured as being unconcerned of fraud. This is because of the misapprehension that ad networks suffer no economic consequences from click fraud. On the contrary, ad networks have economic incentives to minimize and later on eliminate click fraud. These ad networks need the trust and confidence of advertisers, and have the motivation to provide them with better return of investment if they opt to have these advertisers increase spending with them in a long-term basis. Market competition is another key factor for ad networks to contest click fraud. There are various ad networks that actively compete for both advertisers and publishers. And these in turn will choose the ad network that offers the best ROI. Ad networks that offer lower click fraud rates will have the advantage in the market. The same holds true for click inflation. Fraudulent publishers generating spurious clicks on ads displays on their own sites will reduce the ROI of advertisers. In turn, advertisers will lessen their bid prices, and as a result, valid publishers will receive a smaller share of ad revenue for their valid clicks. These publishers will select the ad network that offers the best value for their legitimate clicks. Most of the time, ad networks are also one of the prevalent publishers on the entire network; for instance, an ad network may generate a keyboard search engine, and show ads next to the search results. Click inflation in other parts of the network will decrease the bid price that it would collect for clicks on their own properties. In a cutthroat environment, ad networks are faced with the pressure to lessen both competitor clicks and click inflation. By reducing click fraud, ad networks will improve the returns of publishers and advertisers, and consequently their own returns. More effectively delivering significant ads to valid users will benefit all parties in the system except the fraudsters. There is much skill and science still being developed encompassing various aspects of justifying online advertising fraud because the online advertising market is in a continuous state of expansion while working to support the needs of advertisers and online business providers. Successful fraud management will provide competitive advantage to ad networks, and enable them to provide the highest possible returns from their investments to advertisers. Conclusion It is therefore a fact that the sole intention of click fraud is simply exhaust an advertiser’s budget and leave them with no less than an empty wallet. We can simply define that “Pay-per-click, by far the most popular form of online advertising, recently came under fire as charges of rampant "click fraud" gather steam on the Web.” (Edwards) There have been various endeavors on how to address fraudulent online transactions which involved the intervention of internet giants such as YAHOO and GOOGLE, the government, and several services sprung up online to help advertisers spot and instantly analyze and compile needed data to effectively dispute fraudulent click charges. The old adage still applies in this case that an ounce of prevention is worth a pound of cure; with enough awareness and instant action to correct these illegal clicking will limit fraudulent online advertising. The pay-per-click industry is asserting for tighter laws on the issue. Many opt to have laws that will encompass those not bound by contracts. A number of companies are developing practical solutions for identifying click fraud and are developing liaisons between advertising networks. In the end, search traffic, and the success of search engine marketers, search engines, and the entire industry rely on legitimately labeled traffic originating from high-quality network partners or simply inexpensive, low-quality networks. Citation: (1) Edwards, Jim Advertising Click Fraud Rampang Online?. Pay-Per-Click Advertising Information Library, Retrieved February 17, 2009, from http://www.pcmedixwebs.com/ppc/53667.php References: (1) Internet Complete. 2nd Edition. (2000) California: Sybex Inc. (2) Kaye, Barbara. Medoff, Norman.(1999) The World Wide Web. California: Mayfield Publishing. (3) Daswani, Neil. Kern, Christopher. Kesava, Anita. (2007) Foundation of Security: What Every Programmer Needs to Know. Apress. (4) Reiter, Michael. Anupam, Vinod. Mayer, Alain. (1998) Detecting in Click-Through Payment Schemes. Proceedings of the 3rd USINEX Workshop on Electronic Commerce. (5) Jakobsson, Markus. Razman, Zulfikar. (2008) Crimeware. Symantec Press. Read More