Click fraud is an issue that just about every company using PPC advertising like Google AdWords must address at some point. While generally manageable, if you're not aware of it and you're not paying attention, click fraud can be the source of a costly lesson.
Much of the click fraud in the search PPC world comes from rogue publishers, who have an obvious incentive to inflate clicks to boost earnings.
There's a natural rationale for believing that click fraud isn't likely to be as much of a problem in the social networking world, at least for now. The most popular and prominent ad offering, Facebook's, currently doesn't have an AdSense-like component, so there are no third party publishers to worry about. And it's hard to fathom Facebook itself committing click fraud.
But that doesn't mean that Facebook advertisers shouldn't be as vigilant about their Facebook campaigns. According to one Facebook advertiser, an odd form of click fraud may actually be a huge problem.
Limited Run, which provides a store platform for recording labels, musicians and artists, has decided to delete its Facebook Page. In a post on Facebook, the company explained:
A couple months ago, when we were preparing to launch the new Limited Run, we started to experiment with Facebook ads. Unfortunately, while testing their ad system, we noticed some very strange things. Facebook was charging us for clicks, yet we could only verify about 20% of them actually showing up on our site.
At first, we thought it was our analytics service. We tried signing up for a handful of other big name companies, and still, we couldn't verify more than 15-20% of clicks. So we did what any good developers would do. We built our own analytic software.
So we did what any good developers would do. We built a page logger. Any time a page was loaded, we'd keep track of it. You know what we found? The 80% of clicks we were paying for were from bots. That's correct. Bots were loading pages and driving up our advertising costs.
So we tried contacting Facebook about this. Unfortunately, they wouldn't reply. Do we know who the bots belong too? No. Are we accusing Facebook of using bots to drive up advertising revenue. No. Is it strange? Yes.
Obviously, Limited Run's claims will be disturbing to any company advertising on Facebook that isn't looking closely at the quality of the traffic being received, but there are many important technical details that would be needed to determine if Limited Run's claims are accurate.
This said, the topic of Facebook click fraud isn't new. TechCrunch published a series of posts on the subject back in 2009 which suggested that the problem was real and that advertisers were behind the activity. The motivation: drive up costs for their competition.
Since then, others have suggested that something isn't right with Facebook's ad offering, and the company has even battled lawsuits over click fraud claims. So Limited Run, which also claims Facebook basically tried to shake it down to the tune of $2,000 per month for the ability to change the name of its Facebook Page, is simply the latest in a line of individuals and companies that have raised questions about Facebook ads.
The timing, of course, couldn't have been worse for Facebook. The world's largest social network is now a publicly-traded company, so it's under a lot more scrutiny and pressure to realize its perceived revenue potential. Standing in the way of the latter: skyrocketing mobile use, ROI that is often MIA (at least for a year), and perhaps, the specter of widespread click fraud claims.
Whether click fraud becomes the next big threat to Facebook's prosperity (and stock price) remains to be seen, but Limited Run's experience serves as a good reminder to companies using Facebook ads: nobody is going to manage your campaigns for you.