Friday, July 24

The case of the mysterious click fraud: featuring Vietnam and the world's largest ad market, USA

An industry friend today flagged an article on TechCrunch titled "Sure, The U.S. Has A Lot Of Click Fraud, But At Least We’re Not Vietnam". Clearly, this is like 'red rag to a bull' for anyone that knows this business.

To start with here's an excerpt:

This initial report spans the first 6 months of 2009. Clicks are broken down as “valid” or “invalid”, with “invalid” ones further broken down into “innocuous invalid” and “attempted click fraud”. That last classification is obviously the key one. Over those two quarters, Anchor Intelligence’s data indicates that click fraud has remained steady, increasing slightly in Q2 to 22.9%, up from 21.7% in Q1. Yes, it remains a problem.

But the real interesting data comes when you break down the click fraud rates by country, as the report does. While the U.S. is pretty bad with an attempted click fraud rate of just over 25%, that pales in comparison to Vietnam, which has an attempted click fraud rate approaching 50%. No other country is even close to them, as Canada is number 2 with a 27.7% attempted click fraud rate, and the U.S. is third.


Firstly, let's look at the major publishers and advertising networks (the ones that sell on cpc) that can benefit financially from click fraud:

1) Search Engines: Google, Yahoo, MSN
2) Affiliate networks - but these tend to be more CPA based
3) Ad networks: Google, Yahoo, Value Click, tribal, 24/7 Media...Double-click

And the largest digital ad market in the world is USA at $23.4 billion (from IAB 2008 report). Search revenues (cpc) were 45% of the total pie, reaching $10.1 billion.

So ignoring the Vietnam discussion for a moment, we're saying that from this study 25% of the cpc revenues in this market are fraudulent. It is surely high-time that Google, Yahoo and the major ad-networks work together, stamp this out, and become more transparent on the issue. It may line some peoples pockets, but it inflates the market prices for ads (especially in a SEM bidding situation).

Presumably most of the click fraud is happening in the high value categories such as banking, travel, consumer electronics...? If that's true, then these sectors may be paying >25% over the market-price for their acquistions.

Now to the Vietnam piece.

I live in HCM city and run an internet business in Vietnam. Firstly, I question the methodology of the research to make claims about countries like Vietnam:

1) The research is talking about the source of clickfraud for US publishers, right. It’s not about click fraud in Vietnam on Vietnamese ad networks or publishers. (I know this because there’s not a single publisher/ad network here that would share that detail of data…yet)

Adbrite and the other networks have no significant scale here, so their sample size would be small and horribly skewed to low-end publishers.

2) Could it be that US networks/publishers ‘outsource’ the click fraud production job to countries like Vietnam, China, Mexico. Much the same as spam email has long been outsourced to countries where the laws are less up to date for the digital world. This is where industry regulation could count, part of an advertising audit by the IAB/PWC could include checking contracted suppliers/outsourcers.

It is the US/UK/EU publishers/networks that can gain enormous revenue jumps from click-fraud. Cut the demand and the supply will fizzle out.

3) 99% of online advertising in Vietnam is based on fixed tenancy or cpm. There is almost no cpc/cpa market in Vietnam right now, so no-one would benefit locally from generating fraudulent clicks towards Vietnamese publishers.


No one can deny Vietnam’s hand in e-commerce fraud - and perhaps, that extends to generating click fraud for overseas publishers?? And the sooner this is cleaned up the better for Vietnam. But remember, there are probably a very small number of people causing this trouble for everyone else.

To anyone that doesn’t know. There are 25m regular internet users in Vietnam. There are big, credible publishers and local online services covering all sectors. And a lot of purchasing power. To cut Vietnam off or to cast it with a simple "Vietnam is the worst..." is to overlook one of the fastest growing internet, mobile and consumer markets in the world.

2 Comments:

Anonymous Alexandr said...

The problem is that ads networks and related services(like click fraud ;) ) didn't start yesterday.

So, as result fraud technologies isn't simple and protection cost $$$. And I think it is case why this discussion start right now(but hey, frauders already make a lot money).

24 July, 2009 19:47  
Blogger David Everitt-Carlson said...

Great story man!

This is a fraudulent blog comment. I was not written by David at all. In fact he outsources all his comments to Pooja in India and he found her by hacking Simon's email and using a sex site from Craig's list.

28 July, 2009 10:21  

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