Fair Isaac Prelim Report: 15% of Billed Clicks Could Be Bogus

Fair Isaac Corp., the company that detects credit fraud for financial institutions, announced Friday that preliminary findings from its study of click fraud in pay-per-click advertising suggest that bogus clicks can reach 10% to 15% of billed traffic.

Those rates are substantially higher than the 0.02% of clicks that Google says are “invalid” and get billed to advertisers. Google says less than 10% of total clicks on its network are bogus, and the great majority of them are detected and not charged to marketers’ AdWords accounts. Yahoo! says that it discards anywhere from 12% to 15% of its clicks without charge.

The company began studying PPC fraud in the summer of 2006 with support from the Search Engine Marketing Professional Organization (SEMPO).

In announcing its early findings at an annual company conference, Fair Isaac researchers stressed that the findings were only preliminary and did not take in the large sweep of advertisers running PPC campaigns. The researchers rely for their data on advertisers’ willingness to share information from their campaigns; Fair Isaac then applies a combination of profiling technology similar to that used to detect credit card fraud and an “anomaly detection engine” that identifies click patterns and devises an “pathology” score based on the threat of fraud.

Reports suggest that Fair Isaac has been having difficulty getting advertisers to volunteer clickstream data in sufficient volume and of sufficient quality to produce a large-scale picture of click fraud.

“There are early results based on a limited view of the market,” said Dr. Joseph Milana, chief scientist in Fair Isaac’s research and development group, in a release. “We’re looking for more advertisers to contribute to the study to help us arrive at a solid picture of the problem’s size and scope across the broader marketplace and different vertical markets.”