New method to check pay-per-click advertising fraud

Indian-origin researchers have proposed a new method for detecting fraud from the payment-per-click model - a pricing model used for online advertising.

"If somebody likes something, they can click on the ad and go directly to the site. Hopefully, that translates to a sale. No matter whether it does or not, the advertiser pays for these clicks. In the pay-per-click model, if people or bots are clicking fraudulently, then the advertiser is losing money," said Suresh Radhakrishnan, professor at the University of Texas in the US.

The researchers have proposed a way to support technological improvements to check fraud which, they said, is affecting the advertising industry as a whole.

The study considers identifying click fraud as a three-stage process: the service provider -- for example, Google or Yahoo -- classifies clicks as fraudulent or not.

Then, the advertiser does the same, using his technology. If there is a disagreement, the service provider examines further and its conclusion is considered binding.

The problem with the new approach is intuitive. For a service provider, if he gets paid, it doesn't matter whether it's a valid click or a fraudulent.

But the advertiser would want to verify whether the click is fraudulent or not. Even if the click is valid, the advertiser may say that it's fraudulent because of the pay-per-click cost, the researchers explained.

To solve the problem, the researchers suggested that an independent third party investigate and flag fraudulent clicks when a conflict arises between the advertiser and the service provider.

"In the long term, for the pay-per-click model to survive, you will need to make sure both parties are happy, so technologies will have to get to a point where click fraud is minimized," Varghese Jacob, vice dean of the Naveen Jindal School of Management.

"People will have to invest in such improvements. Otherwise the pay-per-click model may not be sustainable," Jacob noted.

The findings appeared in the journal Information Systems Research.