Click Fraud Case Study

SPENDonLIFE.com is a Dallas based internet company that is a heavy user of PPC advertising on a wide array of both expensive and cheaply priced keywords. The company employees a PPC Campaign Manager and uses a popular bid management tool to maximize their ROI and manage their monthly PPC budget of $20,000 to $50,000.

During the last quarter of 2003 and the first quarter of 2004 the company began to notice a rise in click expenses with no resulting increase in revenue or conversions. The initial rise in click expense was traced back to one of the major PPC companies (one that is publicly traded).

The first logical course of action was for our client to contact the PPC Company and ask for more information. Why was there an increase in clicks with no increase in revenue? Where were the clicks coming from? Was there an increase in popularity of certain keywords or was the PPC company just providing more traffic? Exactly none of these questions were answered to the satisfaction of our client and it was at this point that they knew they needed help.

Case StudyA log file analysis revealed would make any Marketing Manager sick.

During the month of October 2003 SPENDonLIFE.com experienced a huge increase in click activity. On average, clicks for all keywords increased by approximately 300% with no increase in revenue and a substantial drop in conversion rates. No matter what changes were made to the bidding strategy, the website landing pages or keyword selection, SPENDonLIFE.com could not bring the campaign back in line.

After a few months a decision at SPENDonLIFE.com was made to pull the campaign temporarily but the PPC company continued to send traffic and continued to charge our client. Efforts to communicate with the PPC company’s customer service department or account manager were made in vain.

It soon became clear that SPENDonLIFE.com was due a refund. Following are a few examples of our findings.

  • Many of the referring URL’s no longer existed at the time of our analysis
  • Many of the referring URL’s were owned by the same company
  • The referring URL’s in question were sending more traffic than any other similar PPC company could substantiate
  • Some referring URL’s were sending the same visitor repeatedly in a short period of time
  • Many visitors to the landing pages spent a second or less on the landing page
  • Many clicks were from anonymous proxy servers and did not contain referring URL information
  • Some of the referring URL’s were sending foreign traffic which had no chance of converting into a sale
  • Suspicious click activity was distributed among several of the major PPC companies

Armed with a comprehensive report that detailed the above findings as well as other proprietary information, SPENDonLIFE.com began the process of securing a refund. Not only was it bad enough that SPENDonLIFE.com was being charged for something they never received, the PPC Company denied their claims. After repeated attempts to contact the PPC Company, an account manager agreed to look at the documented proof of click fraud that had been compiled. The PPC Company admitted that the traffic was probably fraud and made a small offer for a refund of approximately $13,000.

Insulted by the small offer, SPENDonLIFE.com made numerous attempts to contact the PPC company and was offered the following response from an account manager:

“The offer I communicated to you was our FINAL offer and is NOT up for negotiation. We have a binding contract that you signed which intends to enforce. If you wish to cancel your campaign, I expect a 30 day notice, as provided in our agreement.”
After negotiations took place the customer was able to recover approximately $180,000 from the PPC company. This represented 95% of the detected or suspected click fraud.