Monday, August 31, 2009

Discussion Question 6

In the lectures for this course, we discussed the many opportunities that technology has made possible, especially in the world of Emarketing. In reading this article, I learned about a unique new challenge for marketers today: click fraud. The article starts out with some background on a karaoke company in Arizona that has seen a major increase in the number of clicks from paid search engine ads. This increase in clicks has been to the magnitude of four times their normal level of traffic. The twist to this company's situation, however, is that there has been no lift in sales and a loss of profit despite this skyrocket in traffic. Traditionally, they would convert 2000 dollars of expenses into 6000 of sales. In sharp contrast, the company has lost over 400,000 in 2.5 years, showing clicks are made with no intention to buy. They have traced this loss to their competitors who use strategies to force them to burn up their advertising dollars on viewers that never turn into sales. They have even used hitbot software that automatically generates clicks on their page, although some companies use small teams of workers. Although click fraud auditing tools can be used to fight this, it usually costs more to do so than just spend it on advertising. Furthermore, search engine companies are rarely willing to give up advertising activity records. These two challenges make it very difficult for any company to fight back and are forced to just factor this cost into their advertising budgets. I was very surprised that this actually happens in the real world of business and also could lead to the ineffectiveness of search engines- many engines may lose their accounts with companies if the online advertising gets too exensive due to worthless clicks and some, such as the company the article was about, actually lose money by advertising online. Hopefully some of the larger search engines can take some measures to combat these issues with search engine marketing and the auditing software and consulting becomes less expensive. In the end of the article, it said that an ex employee of the competitor emailed an anonymous tip with a video of automated fraud software making clicks on the site, burning through their advertising dollars.

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