Click fraud is a term that refers to the illegal, fraudulent clicking on “pay per click” ads on websites. Pay per click advertising is the largest digital advertising model in which advertisers pay each time someone clicks on their ad. The name “pay per click” refers to the fact that businesses are only charged when a user clicks on their ad. This model allows for both advertisers and publishers to benefit equally as advertisers can set a budget and have the ability to adjust throughout the campaign, while the publishers benefit through the constant change in demand for various keywords that are more likely to show up on Google and other search engines.
Click fraud exists for two primary reasons. First, to exhaust advertising budgets causing advertisers to lose a lot of money. Second, to artificially generate advertisement revenue for publishers. In 2018, $35-billion was lost to advertising fraud, the leading cause of which is click fraud. In 2017, approximately 1 in 5 clicks were fraudulent. These cause unnecessary charges for advertisers where the fraudulent clicks never get converted into potential sales. In other words, the fraudulent clicks cause advertisers to exhaust their budgets ending the advertisement before real users are able to see the advertisement themselves that could lead to possible sales.
Blockchain technology at its core is decentralized, distributed, and transparent. These features allow advertisers and publishers to operate advertisements together and measure advertisements in a transparent and accountable setting in which pay per click ads are measured by real, viewable impressions. Since the transactions are measured on the blockchain, they can be accurately measured directly without any intermediaries involved. This eliminates any fraudulent clicks from causing any unwanted costs towards the advertiser.
Recently, many companies have started utilizing blockchain technology to fight ad fraud, including Toyota and Cathay Pacific Airways. Currently, there are also two main networks used to combat click fraud with blockchain technology: Adschain Consortium and Project Proton. Both Adschain Consortium and Project Proton utilize blockchain technology to standardize the online advertisement industry and solve many issues such as click fraud. Mindshare is a global media company that is a member of Project Proton whose clients include Unilever, PepsiCo, Dyson, and American Express among others.
I personally believe that blockchain technology has the power to solve many online issues, including click fraud. Right now, the major barrier to getting this technology implemented is that both advertisers and publishers will have to work together to implement this system by setting the rules in smart contracts. However, as we have seen with Adschain Consortium and Project Proton, as well as with Toyota and Cathay Pacific pushing blockchain technology in this space, we can expect many more advertisers and publishers to jump on board with using this technology to solve click fraud.