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Small Business Advertisers Will Lose $15K This Year To Fraud

By Yuval Haimov, CEO, ClickCease

In a nightmare year for small businesses, reliance on digital marketing grows

While 2020 is quickly turning out to be the worst economic year since the end of World War II, it would seem like the small business sector has taken one of the hardest hits. Restaurants, bars, hairdressers, real-estate agents, and other types of businesses have completely shut down as a result of the global COVID-19 pandemic. Many of the small businesses who have managed to stay afloat are those who rely more on digital channels than on physical, brick-and-mortar locations. These are businesses that sell online and promote themselves primarily through online advertising on paid search and paid social channels. Facebook, for example, recognizing the growing reliance on digital channels, started a $100 million relief fund for small businesses, including significant ad buying credit. Google itself announced $340 million worth of ad credit would be given to SMB advertisers to battle the effects of COVID-19.

But new data shows US small businesses will lose 11% of their ad spend to click fraud 

As small businesses divert more funds to digital marketing channels, their exposure to the risks of online advertising grows too. Small businesses in particular rely less on top-of-the-funnel brand awareness campaigns and tend to focus their limited funds on bottom-of-the-line performance marketing, typically on PPC (pay-per-click) buying channels. But a recent study by Professor Roberto Cavazos of the University of Baltimore showed that PPC channels are extremely susceptible to click fraud and fake bot traffic, costing the global ad economy almost $24 billion in wasted ad spend. Now ClickCease has released new data showing that US small businesses will lose an average 11% of their ad spend in 2020 to click fraud. That amounts to $15K worth of annual ad spend losses for a single US business. These are astronomic losses for SMBs to absorb, especially in this current economic climate.

What is click fraud and why is it hurting small business advertisers?

Click fraud is the generation of fraudulent ad clicks. These can be done by individuals, by click farms, or even by sophisticated networks of bots. Why do people generate fake clicks? For a multitude of reasons. These could be other small businesses who are trying to deplete their competitors’ paid search ad spend, so that they can win the bid and be the top result on Google. This could be an affiliate site which is paid to drive traffic to a small business and is paying a click farm to click on ads so that they get paid more. These could be malicious bot attacks intending to cause all sorts of harm because a person visited a small business site and then got retargeted with ads for months on end. These could be even crawler bots that are scraping sites and landing pages for data collection purposes. All of these accumulate and end up costing advertisers dearly.

Why does this affect small businesses in particular? One obvious reason is that in times of crisis, the competitive landscape becomes so cutthroat and ad spend becomes so scarce, that many people are compelled to click on their competitors’ ads to give themselves a competitive edge. Also, the fact small businesses are moving to more online channels, itself, attracts more fraudulent activity looking to take a bite out of that ad-spend. When Google and Facebook announce hundreds of millions of dollars of ad credit for small business, you can be sure that the fraudsters are looking to pounce.

Local service providers hit hardest and COVID-19 is making it worse

Small businesses in the US are seeing more than one in ten clicks (11%) on their paid search advertising campaigns rendered invalid as a result of deliberate competitor sabotage or bot traffic. The most cutthroat click fraud occurs across the local service provider sector, as locksmith ads (71% invalid clicks), pest control ads (53%), and on-demand repair ads (44%) are hit the hardest. The main reason for this, as the ClickCease study shows, is persistent competitor clicks on high-priced keywords, designed to capture real customers.

What can small businesses do about this?

Small business advertisers should first be aware of the click fraud phenomena and the extent to which it’s hurting their business. Second, they should be looking more closely at their campaign analytics to try and monitor for suspicious activity and anomalies in activity, engagement, and conversion rates. This, of course, can become quite a complex and dizzying task, since it requires monitoring IP addresses of the users who are clicking ads, analyzing those IPs to verify their sources, comparing conversion data from different campaigns to detect anomalies and suspicious spikes in traffic, and of course blocking those IPs via the ad’s account. Businesses who want this kind of complex service done automatically and professionally should consider adopting a Click Fraud Prevention solution for protection. However, when choosing such a solution, one should make sure to not select any random vendor, but rather to look for the solutions with the best track record and reviews.

Bio

Yuval Haimov is the CEO and co-founder of Clickcease and has a strong technological background from his years serving in the IDF and the Israeli ministry of defense. He has been fighting fraud and helping SMBs achieve fraud-free campaigns for the past decade. Before launching ClickCease in 2015, Yuval spent five years as a .NET developer and team leader for Matrix, and before that was a project manager and systems analyst for IT firm High Skills and More Ltd.