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Which methods do Google (and other PPC companies) use to prevent click fraud?
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Google's proprietary technology analyzes clicks and impressions to detect invalid traffic. Our system uses sophisticated filters to distinguish between activity generated through normal use by users and activity that may pose a risk to advertisers, and advertisers are not charged for this activity.
IP Address: As bots run similar scripts from the same server, any click fraud on mobile ads will indicate a high density of clicks coming from the same IP address or a range of similar IP addresses. Advertisers can also run check on IP addresses to verify their history with another fraud.
Clicks on ads that Google considers to be illegitimate, such as unintentional clicks or clicks resulting from malicious software. Each click on an ad is examined by our system, and Google has sophisticated systems to identify invalid clicks and impressions and remove them from your account data.
Here's What Google Does: http://googleblog.blogspot.com/2008/03/using-data-to-help-prevent-fraud.html
Google Adwords Official Answer: https://adwords.google.com/support/aw/bin/answer.py?hl=en-uk&topic=10625&answer=6114
Other Methods: There are many such as:
1) If there are multiple requests from the same IP.
2) Forensic analysis of advertisers' web server log files:
This analysis of the advertiser's web server data requires an in-depth look at the source and behavior of the traffic. As industry standard log files are used for the analysis, the data is verifiable by advertising networks. The problem with this approach is that it relies on the honesty of the middlemen in identifying fraud.
3) Third-party corroboration:
Third parties offer web-based solutions that might involve placement of single-pixel images or Javascript on the advertiser's web pages and suitable tagging of the ads. The visitor may be presented with a cookie. Visitor information is then collected in a third-party data store and made available for download. The better offerings make it easy to highlight suspicious clicks, and they show the reasons for such a conclusion. Since an advertiser's log files can be tampered with, their accompaniment with corroborating data from a third party forms a more convincing body of evidence to present to the advertising network. However, the problem with third-party solutions is that such solutions see only part of the traffic of the entire network. Hence, they can be less likely to identify patterns that span several advertisers. In addition, due to the limited amount of traffic they receive when compared to middlemen, they can be overly or less aggressive when judging traffic to be fraud.
4) Then, there are numerous Pay Per click fraud detection software: Some examples:
https://www.improvely.com
http://www.adwatcher.com
http://www.ppcsecure.com
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IP logging - Same click from your address
Cookies - Either from the link or your PPC company login
Threshold logging - 10x number of clicks than normal or abnormally high percentage vs. page loads
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