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The beginning of the end for Pay-Per-Click?

July 7th, 2006 Zeid Nasser (Admin)

It was heralded as the future of advertising on the Internet, and now pulls in billions of dollars annually for Google, Yahoo, MSN and others.

Yet, pay-per-click (PPC) advertising suffers from a major flaw….. anyone can click and advertisers must pay up.

The result, is hundreds of millions of dollars lost on click fraud every year - clicks not generated by interested customers, but by vandals who wish to drain an advertiser’s PPC campaign.

The undesirable effect is advertisers losing faith in PPC advertising, bringing this relatively new industry to a grinding halt before it even matures!

That’s what a study by Outsell reveals. The total impact to advertisers is $1.3 billion (the $800 million wasted on fraudulent clicks, plus $500 million no longer spent on PPC).

Big numbers. Big problem. Read more here at AdAge.

And here are the key findings of this study:

27% of advertisers have already slowed or stopped their pay-per-click advertising. The average spending reduction is 33% of total PPC spending. Another 10% of advertisers have plans to cut their PPC spending budgets.
On average, advertisers estimate that 14.6% of the clicks they’re billed for are fraudulent, representing about $800 million in spending for fraudulent clicks in 2005.

Technorati Tags: Click Fraud, PPC, Online Advertising

Entry Filed under: International, Online, Research

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