Fair Isaac Claims Pay-Per-Click Fraud Is 10% To 15%

At the InterACT Conference in San Francisco on Friday, Joseph Milana, chief scientist for research and development at Fair Isaac Corp., plans to report that 10% to 15% of clicks billed to pay-per-click advertisers represent "pathological" or fraudulent traffic.

This number is consistent with the 14.2% figure reported by click auditing firm Click Forensics in January.

Google disputes Click Forensics' figures and has consistently taken issue with the methodology and motives of those reporting significant levels of click fraud.

"On a basic level, these numbers are much higher than what we see at Google, and are not at all representative of the actual statistics of our network," said Shuman Ghosemajumder, Google's business product manager for trust and safety, in a January blog post.

The number of invalid clicks Google detects, according to Ghosemajumder, is a single-digit percentage and more than 98% of these are caught before the advertiser is billed.

"The search engines certainly have a lot of smart people," said Milana, "but I don't believe they alone can solve this problem. And the reason for that is they don't have a complete view of what happens to a click when it arrives at an advertiser's site."

Ads on search sites aren't the problem, said Milana. Rather, the issue arises with ad networks where publishers host ads on their sites supplied by the likes of Google or Yahoo.

Click fraud represents a potential emerging market for Fair Isaac, said Milana.

Fair Isaac made its name combating payment card fraud. In 1992, when the company introduced its Falcon product, payment card fraud ran about 18 basis points (0.18%) in terms of transaction value, according to Milana. Today, payment card fraud hovers around 5 basis points (0.05%) of transaction value, he said.

But if Fair Isaac aims to have a similar impact on click fraud, it will first need more complete data. Milana concedes his results are based on a small number of advertisers. "There's no way we could make a general statement about what's happening in the marketplace," he said.

A Google spokesperson declined to comment specifically on the report, having not seen it, but expressed skepticism about the validity of conclusions drawn from what appears to be a very small data set.

This story was amended May 18 to reflect corrected basis points for payment card fraud.