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small business is facing a battering from click fraud

How SMEs are Facing a Battering From Click Fraud

Small businesses have been hit hard by COVID-19. McKinsey estimates that 30 million small-business jobs globally are vulnerable due to the pandemic.

7.5 million US small businesses will shut permanently due to distress caused by COVID-19.

43% of businesses were temporarily closed and employment has fallen by 40%.

Now small businesses face an even more unwelcome development as they seek to turn their taps on digital spend and bring customers back to their business. Their online campaigns are being targeted by click fraud.

What is click fraud?

Put very simply, click fraud is the act of clicking on a pay per click advert with no intention of buying or using the product or service. It is usually done with the objective to divert or negatively impact the advertiser’s budget.

There most common reasons to get fake clicks on your PPC ad campaign are:

  • Vindictive competitors or customers who want to negatively impact your ad spend
  • Organised criminals who have created a way to get paid for clicking your ads
  • Apps or software created to collect the payout from ads (often with some help from bots)

SMEs reliant on digital advertising

The threat of click fraud is particularly damaging for small businesses. Small businesses which represent more than 70% of the world’s workforce, are increasingly reliant on online advertising to secure new customers in the midst of a global pandemic.

These businesses are reliant on the revenue from digital advertising. Some 87% of US small businesses advertise online, with 32% of US small businesses citing the primary motivation of advertising is to create sales and revenue.

In turning the tide, small businesses from realtors to law firms or beauty specialists have sought to return to digital advertising to bring revenue back to pre-COVID levels.

Increase of 21% click fraud during COVID-19

However data from ClickCease across 78 countries and 1.8 billion clicks shows that the rate of invalid clicks on global paid search campaigns has risen by 21% during the period of COVID 19, for the small business sector.

Companies purchase Pay Per Click (PPC) ads through contracts with online advertising platforms, most notably Google, under which businesses pay a certain amount of money for a particular number of clicks on PPC ads per day.

The average small business using Google Ads spends between $9,000 and $10,000 per month on paid search campaigns, accounting for $100,000 to $120,000 per year.

Based on current levels of click fraud, the average small business is set to lose more than $15,000 a year in 2020. This is money that no business can afford in the wake of the COVID crisis.

Analysis of small business click fraud

According to our data between 2019-2020 industries hardest hit by click fraud are:

  • Photography 65%
  • Pest Control 62%
  • Locksmiths 53%
  • Plumbers 46%

The cost of competitor sabotage is particularly acute where they involve high-priced keywords such as “exterminator” ($39); “plumber” ($36), “electrician” ($19); “lawyers near me” ($15); and “locksmith” ($14). In each case, payment must be made for any click on the small business search ad.

In the United States, where there are 28.8 million small businesses, click fraud rates rose from 11% to 14 at the peak of COVID-19, with the most damaging click fraud occurring on locksmith ads, followed by pest control ads, and on-demand repair services. 

We found a rapid rise of invalid clicks during COVID 19 across industries, with law firm click fraud rates rising by 30% during the period of COVID 19 lockdown, and realtors seeing a jump in invalid clicks on their online ads by 42%.

For instance, in certain small businesses, such as plumbers or locksmiths, limit for ad spend tends to be around $500 a day, however because of the high cost keywords, at around $50 per click, this budget can be exhausted with 10 malicious or invalid clicks, causing thousands of dollars of lost ad spend for companies that can least afford it.

On average, US small businesses are seeing more than one in ten clicks (11%) on their paid search advertising campaigns rendered invalid as a result of deliberate competitor sabotage or bot traffic.

Google and Facebook focusing on small business spend

According to Vincent Letang of advertising forecaster Magna, small and local businesses represent up to 75% of search and social media spend on Google and Facebook.

Understanding the importance of SMEs both to their future prosperity and the wider global economic recovery, Google has deposited $340 million worth of account credits into SME Google Ads accounts. Accordingly, Facebook has offered a $100 million grant program, including ad credits to SMEs.

In turn, online businesses have taken up the call to advertise and interact online as a necessary measure: with 51% of businesses reporting increased online interactions with their clients.

However, as this new wave of growth arrives, protection of this spending and avoidance of any waste, is fundamental.

PPC spending will continue to provide a powerful and proven means for growth for small and medium sized enterprises. However, as we have seen, the need to tackle the problems of click fraud has become more pressing than ever, at this crucial juncture.

Protecting these vital ad budgets from rising click fraud has emerged as table stakes in a wider global mission to create resurgent SME growth into the next decade.

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