Click Fraud and the Rising Costs of Search Engine Marketing

8 Nov 2005
By Leah Woolford

Search Engine Pay-Per-Click advertising is estimated to be a $5.1 billion business this year. It is growing rapidly and certainly is a top strategy for the online travel industry. Keywords sell for prices ranging between $1 and $12 for the most often used key words. Industry leaders, however, are worried about Click Fraud. Click Fraud is defined as using technology, or web scripts, to fraudulently decrement the number of clicks that an advertiser has purchased on a search engine by sending the technology scripts to click instead of a real person doing the clicking. Click fraud has been a discussion topic for a couple of years, but nobody had any real solution to the problem. Then the first lawsuit was filed by an advertiser against Yahoo! Inc., Overture Services Inc., Time Warner Inc., America Online Inc., Netscape Communications Corp., Ask Jeeves Inc., Google Inc., Lycos Inc., Looksmart Ltd. and Findwhat.com Inc. The lawsuit alleges that the advertiser was overcharged for clicks that were not real. We await the outcome.

Click fraud is not a huge problem, but nobody knows for sure how big it really is. Some estimate that up to 30 percent of all clicks to major advertisers could be fraudulent. How would you know if you don't measure ROI or Cost per Acquisition, as we do for our clients and as you should in your business? The problem is big enough that some companies are devoting development dollars to build click fraud detection tracking and reporting systems. The search engines don't have a foolproof solution.

USDM.net's Three-pronged Approach to Click Fraud:

1. Implement Search Optimisation or "Organic Search Marketing" We put most of our Search Marketing energy, expertise, and dollars into organic search marketing. It is more labour intensive but less expensive; and best of all, it pays off day after day -- like an annuity that keeps giving you returns. Organic search and optimisation have to be properly developed (especially for the travel space), tracked, monitored, and continually fine-tuned, but it is the best safeguard for ongoing traffic generation day in and day out. The process is both a science and an art, constantly changing as the search engines alter their algorithms that rank listings.
   
2. Purchase Pay-Per-Click for Special Promotions or Specific Circumstances where you cannot get your rankings through any organic means. Pay-Per-Click should be used as an additional media, not as an everyday solution to search engine rankings. Even if you have the millions you will need to buy all of your traffic through Pay-Per-Click, it is just not necessary. If you are doing this, then somebody is pulling the wool over your eyes. In some cases we have clients that rank number one and number two organically in the engines where their competitors are paying up to $2.50 per click to rank. If our clients had to pay on a cost-per-click basis for all the clicks they get through our organic program they would pay around $9 million per year for their click traffic.
   
3. Look for Click Fraud Monitoring and a Crediting Policy When Buying. When you do purchase Pay-Per-Click, make sure that the search engine or network where you are buying has the technology to track and monitor all fraudulent clicks and a policy for crediting you the fraudulent click-thrus on your account. We have a very strict policy when we buy Pay-Per-Click and companies are very willing to work with us even though our policies defend our clients very strongly. It is not always easy to get an engine to credit you on "gut instinct," you have to have a good tracking and monitoring method and even a cost-per-acquisition tracking in place to prove your point.

Search Marketing will hit huge revenue numbers in 2006 as it gains even more prominence in online marketing budgets, primarily because consumers love using search, but also because search engines will be raising their prices. Search is a strong driver of business. More than 50% of online travelers start their travel planning in a search engine. Pay-Per-Click search is not the only or the best solution, but it is a necessary part of a comprehensive marketing program.

According to the Travel Industry Association of America 2005 edition of the report: Travelers' Use of The Internet, "the most common communications to which online travelers respond is clicking on (unsponsored) search engine results (36%), following up on email recommendations from friends/colleagues (34%) and clicking links on websites (26%)." These are not online media. These are online marketing tactics.

At USDM.net, search marketing is just one of about 65 online marketing strategies and tactics we implement, albeit a very important one. As 2006 nears, I advise everyone in the travel space to develop a solid plan for managing the rising cost of search, whether it is Pay-Per-Click or Organic optimisation.

The best strategy is to build a strong foundation for organic search optimisation. by beginning with the correct site plan or even site rebuild if you are not completely optimised to today's standards. Then you will have the foundation for a long and successful search marketing strategy that builds on your online brand. The process is just like building a house, you don't start by choosing designer wallpaper, you start with an qualified architect who develops your specific blueprint. Just make sure you choose the right architect.

Pay-Per-Click is not going away, nor should it. We strategically use Pay-Per-Click and get great results from it, while measuring ROI and Cost Per Acquisition to our whole online marketing program.



Leah Woolford is founder and CEO of USDM.net, an interactive marketing agency for the travel industry. USDM.net (www.usdm.net) provides comprehensive Internet strategy and planning and turnkey Internet marketing and technology services to more than 150 Destination Marketing Organizations (DMOs) and other tourism and hospitality organizations. She can be reached at lwoolford@usdm.net.