In Report: Advertisers Cut Spending, Blame Google and Yahoo for Click Fraud [1], a new report states that advertisers wasted over $800 million last year on phony clicks.
Some points of interest:
- “The Internet advertising market is expected to be worth about $15.6 billion in 2006, up from about $10 billion in 2005.”
- “Google is expected to capture about 25% of that market, compared to Yahoo’s expected 20%, according to research firm eMarketer.”
- PPC therefore is valued at around $7-8 billion this year.
- “15% is estimated as fraudulent”
- “37% of advertisers are reducing their PPC activity”
I predict that this fraud perception will fuel advertisers increasing reliance on natural search, where click fraud is not incentivized.
Will click fraud be the catalyst that finally causes retailers to more equally allocate their spending between PPC (pay per click) and NSO (natural search optimization)? So, for example, shift from $1MM/yr PPC and $150k on NSO, to more like $1MM/yr PPC and $1MM/yr NSO?
As PPC gets more expensive, the act of click fraud gets more costly, and that bad apple must begin to spoil the bucket at some point – not completely I’m sure, but probably enough to cause advertisers to rethink allocation and importance of NSO.