Facebook’s mobile struggles awaken industry to growing click fraud problem
By Chantal Tode
September 19, 2012
While click fraud is often a given in mobile marketing, the full extent of the problem and its implications became a lot clearer following Facebook’s revelations about the issues it faces monetizing mobile via advertising.
There are no hard numbers for click fraud but studies suggest up to 40 percent of mobile clicks are accidental or the result of fraudulent activity. The problem is much bigger on mobile than desktop because of how many mobile devices are in circulation and because the means to track mobile traffic is not at the same level as it is for desktop.
“Until the issue of mobile click fraud became obvious with a company like Facebook, it just wasn’t being talked about,” said James Lamberti, vice president and general manager at Adtruth, Scottsdale, AZ.
“There is such great potential for mobile in a property like Facebook and in social media, but click fraud is clearly an issue,” he said.
“The problem of click fraud is now so big that places that should drive quality have to have this issue managed and dealt with so marketers can consistently derive value – to me that is the awakening that is happening due to a channel like Facebook.”
Click fraud encompasses the activities of fake publishers established purely for making money from clicks. However, in mobile, it also typically refers to the not insignificant number of mistaken clicks that are a result of the small screens on mobile devices.
The consequence of click fraud for mobile marketers it that that because there are clicks that are never going to add value, this drives down the cost per click.
However, click fraud is also one of the reasons why mobile advertising is posing a problem for companies such as Facebook as they are not able to monetize on mobile at the same level they can on desktop. The issue is compounded by the fact that mobile use of Facebook and other sites is growing quickly.
“Click fraud is one of the reasons why the cost in mobile is lower than on desktop and why the economics are so different in mobile,” Mr. Lamberti said.
“The massive inventory in mobile is different but this may be connected to fraud – we may have this incredible supply because of fraud,” he said.
Time to step up
Many marketers do not feel compelled to address mobile click fraud because there is no economic incentive for them to do, per Mr. Lamberti. They simply accept the lower cost per clicks and adjust accordingly.
“This isn’t a deal breaker for marketers,” Mr. Lamberti said. “The consequence is you get a lower ROI because you have clicks that are never going to add value.”
Marketers also feel there is no short-term damage to their brand from click fraud. However, this reflects a certain shortsightedness in mobile.
The fact is that mobile is here to stay and brands need to start thinking in terms of delivering quality experiences on mobile and measuring the activity so they can determine key metrics such as lifetime value to help them better optimize their campaigns.
“Publishers and networks have to figure this out if they want to attract more spending,” Mr. Lamberti said. “Even though marketers might pay more per click, the long-term value is worth is.
“Marketers have to commit to quality,” he said.
“We haven’t seen the desire from the market to really fix the problem. However, this is beginning to change.”
Addressing the problem
The steps that marketers can take to deal with mobile click fraud include asking their vendors what they are doing to address and prevent the problem.
Marketers also need to be willing to pay for better quality inventory and pick their partners based on this issue.
“If you have 40 percent of clicks that are fraudulent, marketers are really paying for all those clicks that are not legitimate,” said Dean Nicolls, vice president of marketing at Telesign, Marina del Rey, CA.
“This is wrongheaded thinking from a marketing perspective,” he said. “The real question should be how many legitimate leads are coming in and what are you paying for those clicks.”
Marketers should be looking at each channel in terms of what kind of return they are getting on the number of qualified leads each is generating, not purely on the number of the clicks.
Companies like Telesign help marketers determine the cost per acquisition in mobile by qualifying leads. For example, Telesign takes the information from lead forms where users input a name and telephone number to validate if the two pieces of information correspond.
Marketers can also use tools like Google Analytics to see how much click fraud is happening. For example, when marketers start to see a lot of impressions but very few clicks or leads, this could be a sign that they are a victim of click fraud.
Another indication of click fraud is when a lot of clicks are coming from a single geographic area.
When working with ad networks, Mr. Nicolls recommends reviewing clicks at the publisher level because there may be a problem with just one publisher in the network.
“Marketers have to be diligent about looking at analytics to get a handle on how much click fraud is happening,” Mr. Nicolls said.
Chantal Tode is associate editor on Mobile Marketer, New York
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Comments on "Facebook’s mobile struggles awaken industry to growing click fraud problem"
David Sonkin says:
September 19, 2012 at 7:05pm