According to a report released on July 5th, advertisers spent a staggering $800 million last year on fraudulent clicks, with Google and Yahoo being held responsible for these issues.
The investigation, conducted by Outsell, a U.S.-based market research firm, analyzed the prevalence of fraudulent clicks that have been rampant on Google and Yahoo in recent years. Both Google and Yahoo have recently settled lawsuits related to fraudulent clicks, although challenges surrounding this phenomenon persist.
The report indicates that advertisers believe up to 14.6% of clicks are fraudulent, with 75% of advertisers reporting that they have fallen victim to this issue at least once. The financial losses attributed to these fraudulent clicks have compelled 27% of advertisers to reduce or cease their expenditure on click-based advertising.
Additionally, 10% of advertisers expressed intentions to cut back on their advertising budgets, meaning that 37% of advertisers are scaling back their spending on pay-per-click ads.
“If we have 37% of advertisers reducing or planning to reduce their spending on pay-per-click ads, we will see the total expenditure on click-based advertising decline by 12%“, stated Chuck Richard, Vice President of Outsell.
This 12% reduction in spending would correspond to a loss of $500 million in revenue for Yahoo and Google.
The online advertising market is expected to reach revenues of $15.6 billion in 2006, marking an increase of approximately $10 billion compared to 2005, with Google holding about 25% and Yahoo about 20% of the market share.
