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Online retailers are very familiar with pay per click advertising, i.e., an Internet advertising model that allows you to place ads on search engine ranking pages, advertising networks, blogs and so on and pay the hosting site only when the ad is clicked. In fact, a survey of online retailers conducted by Practical Ecommerce reported that e-entrepreneurs rate pay per click advertising as the hands down best way to advertise on the Internet, with seventy-nine percent labeling pay per click advertising as effective or very effective. Moreover, most Internet retailers are placing the majority of their advertising budgets into pay per click advertising. The flip side of the generally excellent success story that pay per click advertising has become is that, inevitably, wrong doers have found a way to subvert the system for fraudulent purposes. Pay per click advertising fraud or click fraud is a growing problem for online retailers. Click fraud occurs when a person, automated script, or computer program imitates a legitimate user of a web browser and clicks on an ad for the purpose of generating a charge per click without having actual interest in the target of the ads link. There are typically two reasons for engaging in click fraud. Boost host revenue Since the advertising host site benefits every time an ad is clicked, there is some concern that click fraud may actually be perpetrated by site hosts in order to fraudulently boost their sales. However, since the largest advertising sites are Google and Yahoo, which have a huge amount of business at stake if found to be acting fraudulently, this does not seem very likely for at least these two largest groups. In fact, both Google and Yahoo have aggressive anti-fraud programs in place. Interestingly, however, their claims of very low click fraud do not match well with third party groups that all monitor click fraud. For example, Google suggest that its click fraud rate is less than 1%. However, the security firm, Click Forensics, reported that click fraud reached its highest level ever at seventeen percent in the fourth quarter of 2008 and has declined somewhat to thirteen percent in the first quarter of 2009. Yahoo, on the other hand, has reported that its click fraud rate is around twelve percent. It is quite possible that smaller sites such as blogs might stoop to these tactics. That is not to say that every pay per click ad site should be suspected, but it is worthwhile to be cautious. Hurt Competitors The other, more likely cause of click fraud is to hurt the competition. For example, a competitor develops a program that seeks out your ads and clicks on them frequently throughout the day in order to run up your advertising bill for no legitimate possibility of a sale. Click fraud is considered a felony in many places such as California and the United Kingdom. If you are spending advertising dollars on pay per click ads, take the time to learn more about click fraud and how to detect it.
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