Choose or Lose (Money): Why Power of Choice is the Ultimate Click Fraud-Fighting Tool

by Chad Little, President and CEO AdOn Network

From the recent BusinessWeek article to the daily Newsletter publications and Blog entries, the issue of click fraud continues to come to the forefront of the Internet Advertising industry. The issue has increased in significance to that point that fighting click fraud has become an industry unto itself with companies like Click Forensics and others that are dedicated to taking up the cause for the benefit of advertisers, agencies and search providers.

Depending on the research you read, click fraud can account for 10% to 15% of all clicks. That would seem to imply that 10% to 15% of all online ad budgets are being diverted to fraudulent traffic. However, as Alan Chapell, President of Chapell & Associates, pointed out in a recent article Re-Evaluating Click Fraud, that percentage does not take into account the amount of fraudulent clicks that are already detected by networks and search sites which the advertiser is not billed for.

Regardless of how you choose to interpret the numbers or how you define click fraud, the root of the issue is traffic that does not convert, be it click fraud or any other source of traffic that generates a poor return on investment (ROI).

If the source of the click fraud issue is found in individual traffic sources, then it would seem to reason that providing tools to evaluate the performance of each individual traffic source would provide advertisers with a powerful tool to fight click fraud.

In a follow-up to the BusinessWeek article on click fraud Martin Fleischmann, CEO of MostChoice.com, Fleishmann urges ad networks to "allow advertisers more control over where their ads appear." He addresses this issue by suggesting that ad networks create a three-tier system to help categorize traffic sources. In this proposed model, traffic sources would be grouped together into one of three categories: Big portal, small portal and search-only affiliate sites.

While the three-tier system he suggests would be a positive step, the advertiser is still limited to choosing between sub-sets of traffic sources, rather than individual traffic sources. This is analogous to an investor choosing to invest in mutual funds as opposed to individual stocks. For an investor they are placing their trust, and ultimately the control of their finances, in the fund manager to make wise decisions as to which stocks to purchase. For the advertiser, this approach still places the control largely in the hands of the ad network as they would be the ones defining which traffic sources would be assigned to each category.

Whether an advertiser has one group, or three to choose from, the inherent problem in either of these options is that the advertiser would be evaluating an entire group of traffic sources that contains both high-performing and low-performing sources. When making decisions to increase or decrease an advertising budget based on this data, an advertiser is not able to accurately assess the results of individual traffic sources which limits their ability to fully optimize their campaigns.

This leads to the most logical solution which is to completely open up the selection process. Give the advertisers the ability to track their ROI by individual traffic source and remove the poorest performing traffic sources. This type of open system allows advertisers to more effectively control the success of their campaigns while fighting click fraud and increasing their ROI.

While the risks may be too great for large networks like Google and Yahoo! to open up their ad placement process, the benefits are obvious for advertisers and it has been proven to be successful for smaller networks that are willing to step out and offer innovative solutions.

As in any open-market system, freedom of choice can be an extremely powerful tool. The question advertisers have to ask themselves is are they willing to trust the success of their campaigns to a mutual fund manager or do they want to have greater control over their advertising investment and select their own traffic sources?

Even as ad networks and click fraud detection organizations continue to develop new methods of detection, the click fraud perpetrators will make every effort to stay one step ahead of them. However, one of the simplest and most powerful tools in the click fraud prevention arsenal places the ultimate control in the hands of the advertiser as the last line of defense: Individual traffic source selection.