Click fraud is Internet advertising's new plague

August 15, 2005

Spam’s opportunity costs collectively represent the greatest cost to employers using the Internet as a business tool today.

While the Internet is capable of providing unparalleled visibility for your practice, it has always been plagued with problems. The endless mounds of spam that make it to our inboxes are just the tip of the iceberg. Nevertheless, for today's physician, the Internet is the most important place to advertise.

To demonstrate where your advertising dollars are best spent online, this article will discuss both spam and click fraud, an emerging and perhaps more ominous crisis in Internet advertising.

Spam and other illnesses

Spam's opportunity costs collectively represent the greatest cost to employers using the Internet as a business tool today. The band width (Internet load) that spam occupies-along with the equipment, software, and manpower to handle it-represents the second biggest cost. According to Einstein Medical's internal calculations, this accounts for about 11% of the total money allocated by companies to provide e-mail services to their employees.

As costly as spam is, a new breed of crooks that may be even more dangerous than the spammers has been growing steadily over the past 5 years. Click fraud is the game and pay-for-click advertising is their ballcourt. The players could be your competitors. To understand the what, how, and why of click fraud, we need to revisit the story of the Internet itself.

Internet advertising

Internet advertising has undergone some dramatic changes since the launch of the first major search engine, Yahoo! in 1995. The first form of online advertising, known as "general run advertising," came about in the mid-1990s. This early stage of Internet marketing was not very targeted; in fact, the banner ads that appeared at the top of search engine results pages had no correlation to the search terms that produced the results.

For example, if a person searched for "LASIK," a Visa ad might come up on the results page. Conversely, searching for "Visa" could just as easily produce a LASIK banner ad. These advertisements were sold on a cost-per-one-thousand impressions, which is very similar to how TV advertising is sold.

The next wave of Internet advertising began in the mid- to late-1990s and centered on "key word search," a method that proved much more effective for advertisers and consumers alike. Key word search made it possible for potential patients to find advertisements pertaining to the searches they were conducting. When consumers searched using the term "LASIK," an advertisement that dealt specifically with LASIK would appear. Key word search provided a greater return on investment for advertisers and a greater search engine user experience for consumers.

The main problem key word advertising posed for search engines was cost. Many factors, including the number of small advertisers wanting to buy key words, the complex artwork required to design key word advertising, and the management associated with these factors, made key word advertising a very labor-intensive approach.

A successful overture

In 1999, Overture came into the market with what seemed like the answer to the administrative headaches of key word advertising. Overture's auction-based, pay-per-click (PPC) advertising eliminated the ingredient causing most of the pain-human beings-and replaced it with automated software.

Along with the two other major strategies used to achieve visibility on the search engines (Internet directories and search engine optimization), pay-per-click advertising's software-driven bidding process has enabled advertisers to get more visibility on the search engines. Potential advertisers simply navigate to the advertiser section of the search engines to start the bidding process. The highest bidder gets a link at the top of the search results page. Advertisers with lower bids appear further down in the results (the lower the bid, the further down).