Getting to the bottom of Facebook Click Fraud

Getting to the Bottom of Facebook Click Fraud

by Lisa Bari | June 23, 2009

Facebook has been in the news recently due to allegations of click fraud from a large contingent of advertisers. Reportedly, the social networking behemoth (which is about to surpass MySpace according to industry sources) is charging advertisers for clicks that never actually make it to their sites.

As Actionable Insight blog’s own Matthias Blume explained, advertisers shouldn’t be worried about the “traditional” type of click fraud where competitors click on Google, Yahoo, or Bing search ads to waste budget – the effect of this is zeroed out by increasing the ad’s click-through rate and quality score, which bring down overall advertising costs.

However, the type of click fraud that Facebook advertisers are alleging is much more insidious – they are charging for clicks that cannot be verified by third-party tracking software. Advertisers are seeing more than 20% over-reporting on clicks.

Facebook’s advertising program has had a slow start, but this year they are targeting $550 million in ad sales up from $280 million in 2008. The ad platform allows advertisers to set up targeted ads to run alongside Facebook users’ profiles, and are charged on a CPC basis.

The Facebook advertising program received acclaim recently for their new ad targeting features such as language and radius – for example, you can target French speakers in Canada. It is also uniquely set up for event-based marketing due to the precise radius and demographic targeting available.

ACTIONABLE INSIGHT #1: Advertisers should not be overly concerned about click fraud on search engine results pages perpetuated by competitors or bots – the net effect is that more clicks increase click-through rate and quality score, neutralizing the impact on cost.

ACTIONABLE INSIGHT #2: Advertisers using Facebook as a part of their marketing mix should carefully monitor Facebook’s official response to the click fraud allegations – they have indicated that a fix is coming soon and that advertisers will be credited. Regular monitoring using third-party tracking software is necessary with newer, untested advertising platforms.