Click Fraud Less Than Expected, Monitoring Firm Says

Click fraud that inflates the cost of online advertising occurs at a rate that's lower that expected among advertisers, a monitoring firm said Monday.

The average click-fraud rate across search-advertising industries is 13.7 percent, which is substantially less than the industry-expected 20 percent to 35 percent, Click Forensics said in releasing its first Click Fraud Index, a service the company launched in March.

The firm also reported that click fraud was far less on tier one search providers, such as Yahoo and Google, than on tier two or tier three providers. The first category had a rate of 12.1 percent, while the remaining two were 21.3 percent and 29.8 percent, respectively.

"One of the most interesting discoveries from the first round of data reported by the Click Fraud Index is the lower-than-expected rate of overall industry click fraud," Tom Cuthbert, president and chief executive of Click Forensics, said in a statement. "People in the industry have previously pegged the click fraud rate at anywhere from 20-35 percent. However, we've found that the level is actually on the lower end of those estimates."

The click-fraud monitoring firm, which claims to have more than 400 advertisers using its service, said more than 90 percent of click fraud originated within the United States and Canada. Outside those two countries, China and France were the biggest originators of click fraud.The average cost per search term in the first quarter was $4.75 for the top key terms across the five biggest search-advertising industries: retail, financial services, health and fitness, technology and entertainment, Click Forensics said.

Click fraud comes in two major forms: competitive and network. The former is when a competitor clicks on a business's ad to drive up the cost of the advertisement, and the latter is when a third-party site hosting the ad manufactures phony clicks in order to get more money from the search engine.