Why Click Fraud Is The Biggest Hidden Cost For Startups
Getting a small business up and running is complex enough without having to worry about click fraud affecting your ad campaigns.
But the unfortunate reality is paid search, display, and video ads face malicious activity that wastes ad budget.
When you’re trying to get a foothold in your market, it can be extremely damaging to your brand. Especially if you don’t know what click fraud is, letting it run out of control for months or years.
To find out more about click fraud, in this feature we’ll take you through the key points of the fraudulent activity that can hit your ad campaigns.
What Is Click Fraud?
Click fraud is a fake click on any paid search, display, or video ads. And it’s usually a decision by someone who wants to purposely waste your ad budget.
But in addition to wasting your ad budget, it can also skew your analytics, making it difficult to understand and analyse your paid search campaigns.
At PPC Protect, we recently published our 2021 Global Click Fraud Report. Our statistics show the extent of the problem:
- 11% of search clicks are fraudulent
- 36% of display clicks are fraudulent
- 17% of all CTV impressions are fraudulent
- Only 13% of customers PPC Protect monitored had no click fraud
Just as alarming is the $35bn expected cost of click fraud for the advertising industry in 2021.
As effective as paid search, display, and video are for generating new customers, ad campaigns are also open to fraud and manipulation.
And there are several human, and non-human, sources responsible.
Who Are The Main Culprits?
While click fraud can be from accidental clicks by genuine customers, there are also several other individuals responsible.
This can come from major underground organisations. Including from:
- Fraud rings
- Angry customers
- Bot traffic
Bot traffic is by far the worst offender with ad fraud. Our Global Click Fraud Report found bot fraud is responsible for 38% of all malicious online activity.
Highlighting the extent of the problem this comes from many types of bots. Including web scrapers, spam bots, click fraud bots, and vulnerability scanners.
The Dangers Of Click Fraud
The bad news is click fraud can play havoc with your ad campaigns and post a serious threat to the success of your advertising efforts.
One of the major problems is the money it costs your brand.
For every fake click, you’ll lose precious ad budget. And over time, this can generate serious losses for startups.
Our research shows average yearly losses for SMEs is $14,900.
This can vary by industry, but when click fraud is at its worst the costs can be significant.
As ad fraud also skews your data, it’s also often unclear how well your campaigns are performing. This can waste a lot of time while you try to work out why your campaigns aren’t converting.
Which Businesses Are Affected The Most?
From our Global Click Fraud Report, we discovered the education and health sectors are the two industries hit the hardest by click fraud.
In fact, EdTech suffers from a click fraud rate of 31.14% across industry ads. While HeathTech has a rate of 16.39%.
But regardless of your type of business, if you’re running paid search, display, or video ads you’ll face ad fraud sooner rather than later.
Why Are EdTech And HealthTech Hit The Hardest?
We discovered EdTech and HealthTech had a considerable spike in click fraud during 2020. This is largely a direct result of the COVID-19 pandemic in 2020.
With many schools switching to home tutoring, ad spend increased across the industry to promote digital solutions. And this led to an increase in criminal gangs targeting companies in these industries.
The same is the case with HealthTech, with many people turning to digital solutions to alleviate health conditions. The industry increased its ad spend, but this had a downside of more fraudulent activity.
Another reason for the increase is the increase in ad spend leads to more competition.
The higher the competition, the higher CPC (cost-per-click) is. Unfortunately, that then leads to more money for fraudsters.
And the net result is they'll take advantage of sectors upping their ad budgets.
How To Protect Your Business From Click Fraud
Click fraud isn’t a new problem, but it’s one that’s getting worse every year.
With estimates of $35bn in advertising losses for 2021, it’s an issue startups should look to address if you want to maximise your ad campaigns from the moment they launch.
Ad networks offer ad fraud prevention solutions, but these can often be ineffective. For example, Google only lets you claim for fake clicks once every 60 days.
For many startups, the answer is in real-time protection from a click fraud provider. This’ll blacklist online fraudsters, allowing your campaigns to run unaffected.
This saves your brand money, time, and helps grow your business in your market without fraudsters ruining your hard work.