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.]