The Rise of Click Fraud: Is Everyone on the Internet a Criminal?

We’ve written quite a bit about online identity theft here at Freakonomics. But there’s another form of crime that’s been spreading through the Internet over the past few years: click fraud. As its name suggests, the crime involves clicking on a Web site’s ads repeatedly (or, in some cases, employing a software program to do it) in order to pad their per-click revenue

Services like Google Ads and Chitika, which serve as middleman between Web publishers and advertisers, have developed sophisticated means of detecting click fraud. But as with spammers, those determined to do it tend to find a way. And, according to MediaPost, the percentage of ad clicks that are fraudulent is rising every year:

The overall industry average click fraud rate rose to 16.6% in fourth-quarter [2007], up from the 14.2% click fraud rate for the same quarter in 2006 and 16.2% for third-quarter 2007.

The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.3% in fourth-quarter 2007 — up from the 19.2% average click fraud rate for the same quarter in 2006 and 28.1% for third-quarter 2007.

If nearly seventeen percent of the billions of total ad-clicks on the Internet are fraudulent, it’s likely that a pretty hefty number of Web publishers, or their accomplices, are committing fraud. These figures are particularly surprising given that the total number of spammers worldwide is estimated to be in the hundreds. Granted, the barriers to committing click fraud are extremely low — all it takes is a few (or a few hundred) clicks of the mouse every day — and the monetary incentives, while small (profits-per-click usually only amount to a few cents) are always present. Add that to the very small likelihood of getting prosecuted, and you’ve got millions of Internet users committing the crime. If anything, more detailed stats on click fraud could provide an interesting data set for behavioral economists: if a criminal act is profitable, widely-practiced, seldom prosecuted and unusually easy to carry out, how many people will commit it?

[This post has been appended.]

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  1. Lee says:

    Even a poli sci major like me recognizes the poor reasoning in this post: “. . . if you calculate 17 percent of all ad-clicks on the approximately 156 million total sites on the Internet, you’ve got around 26 million Web publishers potentially committing fraud.” Wrong. It’s 17% of *ad-clicks*, not 17% of web publishers. Some publishers have more ads than others (and therefore more opportunities/incentives to click defraud), while others (e.g., the NY Times) are so well established that the chances they are engaging in click fraud is low.

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  2. Kris says:

    I just clicked on your Amazon ad. You’re welcome

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  3. Colin Toal says:

    Thank you for publishing this story.

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  4. David G says:

    This article is funny because the six-word motto poll below accused me of voting twice on my first vote. You guys are really concerned with this topic!

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  5. Andrew says:

    The question I have is: how does this affect the prevailing wisdom that web ads work better than more traditional ones? Also, how does the cost to advertising providers (eg, Google) compare to the rates they charge advertisers?

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  6. Jared says:

    Also to be factored in is either drunken or just plain old sloppy surfing click throughs by unintentional users duped into the click. Impatience, for whatever reason, when coupled with “well” placed adds on web-pages (or even worse those adds that move or pop down just as you are about to click on the link of choice) often lead to a number of mistaken click throughs on my part, and I’m willing to bet I’m not alone.

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  7. J says:

    This ignores the fact that clickthroughs are not the only metric used in web advertising. It used to be the main thing advertisers focused on but as the Internet has evolved so has advertising, to where price per impression is paid more attention to than price per click. I’m sure someone more involved with advertising is able to discuss this further, but I just wanted to point out that clickthroughs aren’t the sole metric, and these findings may well reinforce the value of impressions, and thus branding, further.

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  8. Shan says:

    Just because 17% of ad-clicks lead to fraudulent sources doesn’t mean that 17% of all websites are fraudulent. I’d bet good money that 98% of those 156 million websites are responsible for about 1-2% of all Internet traffic, while the top 2% are responsible for the other 98-99%.

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