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Click Fraud and the Perils of Display Advertising

The advent of online advertising brought with it a heap of illegal online practices aimed at making bank.  And they haven’t gone away.  In fact, as online advertising evolves, cybercriminals inevitably find ways to fraudulently capitalize on the influx of money that online ads bring.

Click Forensics, a company that strives to provide insight into online traffic quality, recently released data on advertising audience quality for the fourth quarter of 2010, and the results shed light on the current status of online advertising crime.

According to the data release, click fraud continues to be a significant force in corrupting online advertising.  Click fraud occurs in pay-per-click online advertising when a person, script, or computer program generates money by pretending to be an actual consumer clicking on an ad out of a genuine interest in the advertised product or service.  The higher the number of clicks, the more money is made.

Click Forensics found that the overall industry click fraud rate in Q4 of 2010 was 19.1 percent.  These figures reflect a drop in the click fraud rate from the 22.3 percent reported for Q3 of 2010.  But the rate was still higher in Q4 of 2010 than it was in the first two quarters of the year, and it was significantly higher than it was in Q4 of 2009, when the click fraud rate was calculated to be 15.3%.

In addition to the click fraud figures, Click Forensics reported a new malware scheme that targets display banner ads and results in impression inflation.  The malicious program increases the number of display ad impressions by generating pop-ups or pop-unders that rotate banner ads every 10 to 15 minutes.  The malware scheme makes money for the criminals behind it by falsely boosting impression figures.

The new impression inflation scheme is, of course, a cause for concern, and it’s also somewhat unsurprising given that all signs seem to point towards a rise in display advertising.  Even Google has predicted an increase in display ads.  And Google’s recent actions back its predictions as the Internet giant just started testing display ads in Gmail.  Now, Google will have to figure out how to protect against fraudsters who try to take advantage of the emerging display ad business.

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