Are Sponsored Links Really Sponsoring Fraud?

AdWords Practices have been much improved since the article was written in 2004.

Imagine being able to affect your competitor’s advertising budget significantly enough to alter that business’ marketing decisions? Think about how would you feel if you found out the advertising dollars you were spending were being driven up by your competitors’ fraudulent practices! If you have considered sponsored listings for search engine placement with search engines, you need to learn about and consider some of the pitfalls of this newest advertising strategy.

Sponsored listings often appear as highlighted links at the top or along the side of search engine results. Generally, these are clearly labeled to show potential visitors that a business has paid for that particular advertising position for the product or service searched. Sponsored links have become a core piece of the search engine revenue stream. Unfortunately, some advertisers may be investing significant amounts into sponsored links that yield little return on investment.

The Value of Placement Position

So, where is the concern with purchasing search position on sponsored listings? If your competitor wants to drive you out of that sponsored placement, they can click on your link enough times to either deplete your budget–thus removing your site from the sponsored placement–or drive advertising costs so high that you are forced to abandon the marketing plan. Industry analysts suggest that fifty percent of sponsored link clicks are fraudulent. Worse, there is no way to reliably differentiate between solid leads or fraudulent clicks. Google‘s concern of fraudulent clicks appeared in their well publicized stock IPO pre-offering documents:

With 95% of their revenue tied to the AdWords campaigns, Google‘s control of sponsored listing fraud is a priority.

From a web developer standpoint, our team at Thunder Data Systems first recognized the potential abuse in 2003 when we learned that one of our clients was spending thousands of dollars per month in advertising. Their dollars yielded sales at significantly lower amounts than the amount spent on the ad words campaigns. For their business, a consistent plan of search engine optimization by our team has them in the black with significant numbers of visitors without the high associated costs.

Now, sponsored ad campaigns are not without merit for many competitive businesses. If you are still interested in testing the waters of a sponsored link program, make sure you adhere to a budget for those first months. Alternatively, consider website search engine optimization for your Internet advertising or marketing plan. Talk to us about your goals, and we will share our ideas on what works and what doesn’t in the website marketing arena.