Knowledge is the Foundation To Success  

I recently spoke to a potential JumpFly client who inquired about click fraud. I explained that Google and Yahoo already use sophisticated techniques to detect and eliminate a great deal of fraudulent clicks. I further explained that various Google AdWords tools also prove very helpful in identifying and preventing invalid clicks.

What is Click Fraud & Why Does it Exist?

Click fraud is a scheme that takes advantage of PPC advertising programs like Google AdWords, Yahoo! Search Marketing and Microsoft adCenter. One of the more common scams involves a company developing a fraudulent website and then participating in programs like Google’s AdSense. Criminals often use software “hitbots” or employ boiler-rooms of low-wage employees from other countries to generate clicks on their own ads, and then collect commission from PPC advertising providers.

Click Forensics Research Indicates Ongoing Click Fraud

• The overall industry average click fraud rate was 16% for Q3 2008. However, the click fraud rate among top-tier search-sites like Google and Yahoo was lower.

• The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 27%.

• The greatest percentage of click fraud originating from countries outside North America came from Russia (5%), France (5%) and the U.K. (4%).

What is Google Doing about Click Fraud?

I frequently focus on Google AdWords, as they are the PPC leader and the main concern of most PPC advertisers. Google already has powerful prevention techniques in place to detect invalid clicks and they will not charge advertisers for these clicks. Click here to learn how Google detects invalid clicks.

In fact, Google AdWords advertisers can run a Campaign Performance or Account Performance report to see the number and percentage of clicks that have been classified as invalid and automatically filtered from their accounts. This information is fairly interesting. When viewing this data for our JumpFly Google AdWords Account, I can see that Google identified 13% of our overall traffic from last month as fraudulent. The majority of invalid clicks were detected from our exposure to image ads on the content network, where Google identified 46% of the traffic as invalid.

Click fraud represents a reasonable concern for PPC advertisers, but Google and Yahoo are already doing a great deal to prevent fraudulent activity and refund advertisers when applicable. Additionally, using free tools provided by Google AdWords or 3rd party software can greatly assist advertisers in further identifying and eliminating potentially invalid clicks, a topic that I will further explore next time.

View common click fraud related concerns addressed by Google.

Learn more about Brad

We have been working closely with Google’s keyword quality score for quite some time.  The Quality Score that Google assigns to each keyword in an account is an important component in PPC Management.

The way Quality Score worked in the past is that Google would take a combination of the keyword, the Ad Copy and Landing page and other “historical” information from the account and the industry and would assign a quality score to the keyword.   Just recently, they added landing page load time to the quality score calculation as well.

This quality score would impact the CPC (Cost Per Click), the position of the ad and the minimum bid required to show your ad on that keyword.  One of the biggest impacts of the quality score algorithm was that Google could make your keyword “Inactive for Search” by increasing the minimum bid based on this score.  If an advertiser does not look at their account often or does not have a PPC management firm overseeing their account, they could have very important terms inactivated with little notice (Google tells you about the keywords that are inactive only when you display Ad Group in a campaign).

The New Quality Score Changes
As with everything, Google’s goal is to improve the quality and relevance of advertisements displayed to their visitor.

In order to improve relevance, Google is moving to a real-time calculation of quality score.  The new per-query Quality Score will use more accurate performance information and will take into consideration the account location, the language and timing.

No More Inactive Keywords!
Google is getting rid of the minimum bid and the “Inactive for Search” status.  This will definitely have a positive impact on accounts that struggle with improving their quality score and getting their ads to show up for certain keywords.

More Data
They are replacing “minimum bid” with a “first page bid” which will tell us what we need to bid to appear on the first page.  This may help in managing our campaigns and predicting performance. However, there is also a chance it could create artificial bidding wars as inexperienced PPC users bid for position instead of bidding for ROI.  Of course, as with anything, we’ll need to see how accurate this new “tool” is among all of our accounts.

When? Where? Who?
Google’s announcement was vague as to how they plan to implement this change across all accounts.  For now, they are saying that “select” advertisers will have this feature enabled so that they can receive and process feedback.  The Google API and Google AdWords Editor will be updated “in the future”.

With all of our accounts here at JumpFly, we will certainly see this feature very soon and will report on our experience.

More From Google
To find out more on this new feature see their blog post on Quality Score Improvements.

Last week I talked about a couple of business models that have a hard time earning a return on investment for their PPC advertising dollars. Today I want to point out some business traits that I have watched succeed time and time again.

Having an Established Business

First of all, business online and offline is always business. Where there’s a market and profit to be made, there is or will soon be competition, and PPC is no exception. I always say, “We can bring the horse to water, but we can’t make ‘em drink.” A well-managed PPC campaign should be structured to drive as much relevant traffic possible for a desired cost and/or budget. From there, the advertiser is responsible for providing a website which will promote visitors to take a desired action. For the most part, the companies that do well are those that are already doing well for themselves prior to talking with us. They already understand how to take care of their end of the deal once a targeted person walks through their door, or in this case, visits their website. Established businesses usually earn higher conversion rates. Some conversion-driving traits include credibility, integrity, understanding of market, understanding of competition, established customer service, clear purchase and return policies, a professional and user-friendly website, clear and relevant pictures and information.

High Profit Per Sale

Business models with a high profit per sale do well with PPC advertising. Realistically, most advertisers see conversion rates of 0.5% to 5%. If on a good day, 5 out of 100 visitors take action, you are paying for 95 visitors that did not. If your business has a high profit per sale, you can afford to pay for many visitors that do not take action, and still earn a good return on those that do. Example of high profit per sale businesses include: realtors, fee for service physicians, software sellers, B2B products and services.

Earning Repeat Business

Again, paying for visitors that take no action drives the need for making money from those that do take action. Businesses that routinely earn repeat business do extremely well with PPC advertising. These models can hit “home-runs,” meaning, for the price of one click, a new relationship can be born, earning years and years of loyal business and revenue. If your model earns repeat business, odds are PPC is right for you.

The Bottom Line – If you are an established company with good margins, and you earn lots of repeat business through building lasting relationships you can’t go wrong with PPC advertising.