The Biggest Threat to Your SEM Profits

Click fraud continues to be a major threat to the PPC ad model; make no mistake about it. An Outsell survey conducted last year reports that click fraud amounts to an estimated $1.3 billion, causing approximately 27 percent of advertisers to cut back on PPC campaigns or eliminate them altogether. Some experts report that click […]

Click fraud continues to be a major threat to the PPC ad model; make no mistake about it. An Outsell survey conducted last year reports that click fraud amounts to an estimated $1.3 billion, causing approximately 27 percent of advertisers to cut back on PPC campaigns or eliminate them altogether.

Some experts report that click fraud accounts for as much as 20 percent of the PPC clicks, while others estimate the fraud rate at 14 percent. Google claims estimates are overblown and asserts that click-fraud auditing firms use methodologies that inflate click fraud rates. Regardless of who's right, publishers have reported a drop in AdSense revenues due to a mistrust of PPC advertising.

CPA Model Alternative: Google is testing a cost-per-action (CPA) ad model where marketers pay a fee only when users perform the desired action (sale, subscription, download, etc.). While Google does not have serious concerns over click fraud, it wants to give advertisers more options and provide its publisher network with an additional means to earn revenue through AdSense. The CPA ads will be displayed on a different network (Content Referral Network) than the PPC ads.

Bill Gross introduced the CPA model on SNAP because he believes it is the only way to eliminate click fraud. SNAP CEO Tom McGovern believes other engines will embrace this model eventually because advertisers pay only for results.

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Article, SEM, PPC, Online Advertising, Click Fraud, PPC, CPA