The risks click fraud poses to e-commerce businesses

e-commerce businesses
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Stewart Boutcher, founding CTO & data lead at Beacon, explores the risks that click fraud poses to e-commerce businesses and explains the steps that companies can take to prevent fraudulent clicks from disrupting their online marketing campaigns

The restrictions the coronavirus pandemic has placed on thousands of businesses and their ability to trade normally has forced many more companies than ever before to shift their products and services online.

However, this rapid digital acceleration has presented an opportunity for cyber criminals to double down on their efforts to cheat e-commerce firms out of millions of pounds via click fraud, with smaller businesses losing an average of £10,000 a year and enterprises up to £525,000, according to a new industry report.

Click fraud is defined as the practice of fraudulently clicking on search and display advertisements to give the false impression that large numbers of potential customers are clicking through an advertisers’ links, and is usually committed with the use of automated programs known as ‘click bots’.

With the threat that online fraudsters pose rising all the time, it is vital for e-commerce companies to understand the risks associated with click fraud, as well as the steps they can take to identify fraudulent clicks and prevent them from interfering with their marketing efforts.

High bounce rate

Among the key effects you are likely to experience as a result of click fraud are spikes or an unusually high bounce rate.

The term ‘bounce rate’ refers to the percentage of visitors who enter your website and then leave – or ‘bounce’ – rather than continuing to view other pages on the site, and is calculated by counting the number of single page visits and dividing that by the total visits.

For pay-per-click [PPC] ads, a fair bounce rate is around 40% to 60%, and if you detect bounce rates lower than this, that is positive and indicates that visitors are highly engaged with your website.

Between 60% and 70% is common for keywords that are broad and high volume, such as ‘TV sets’, ‘laptops’, etc. Anything above 70% could suggest that you will need to review your ad’s performance, but if there is no change once you have done this, you should start investigating how to prevent those invalid clicks, as it could well be down to click fraud from malicious sources and bots.

However, in some scenarios a high bounce rate is acceptable, as the landing page may have been designed to encourage conversion to take place on the page.

High traffic, low conversions

A common side effect of click fraud is a speeding up of your click-through rate, which is the ratio of users who click on a specific link to the number of total users who view a page, email, or ad.

While a strong click-through rate may seem positive at a glance, a lack of genuine customers making any sale or purchase will amount to a low conversion rate, meaning a large portion of your advertising spend will effectively go to waste.

If you regularly experience a high level of traffic but a low conversion rate from your campaigns, it may be necessary to investigate for the presence of click bots.

Distorted campaign data

The skewed campaign data that click fraud helps create can have a hugely detrimental impact on your campaign budget and strategy.

Businesses need accurate data to make informed decisions regarding sales, production, reached target audience, and more.

Fraudulent acts result in inconsistent and inadequate data that gives a false impression of how your campaign is performing and could lead you to make a string of poor decisions that have a negative impact on the entire company.

What can be done to combat click fraud?

Though it may appear that click fraud is too ubiquitous to prevent, this is no longer the case following the emergence of new technologies.

Firms can now utilise click fraud protection platforms that are capable not only of identifying the presence of click bots, but can also take steps to remove them from campaigns.

Being able to eliminate click fraud will mean your campaign will reach a larger number of genuine human users, and is therefore much more likely to deliver a stronger return on investment [ROI].

Additionally, having more accurate data will help you make better decisions about the direction of your marketing efforts and strategy, including which areas and advertising channels are most likely to garner the best results.

On top of this, there are a number of measures that you can take as a marketer to limit the capabilities of click fraudsters.

For example, you should closely monitor your metrics to see if there are any sudden spikes in your campaign activities and ad costs that could be attributable to click fraud.

Furthermore, it might be useful to limit your ad exposure by targeting your campaigns to limited and precise locations only that prevent fraudsters, who are often from unusual locations or developing countries, from harming you.

The bottom line

Even if you do not have any reason to believe click fraud is occurring in your ads, there is still a good chance that it is, and it is clear that the impact this can have on your marketing is potentially significant and very damaging.

That is why you owe it to yourself to find out what can be done to minimise the risk that click fraud poses to your business.

Click fraud protection platforms are arguably the best weapons at your disposal in the fight against the click bots, but it is also important to consider what you can do on the ground to limit the damage.

Taking steps to beat the bots makes the internet a much safer space for advertising your products, and is a sure-fire way of reaching more prospective customers who could benefit greatly from your services and generate the all-important sales that are vital to post-pandemic recovery.


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