HALIFAX - In the back offices of the software firm Mailworkz, programmers are hard at work developing technology to battle the fraudsters that plague Internet advertising.
The invisible enemy is known as "click fraud," where a malicious competitor or a bogus website operator is clicking on "pay-per-click" advertisements and listings without any intention to buy or browse, costing the advertisers money without generating results.
Mailworkz, a small firm with five employees, wrote its first software for e-mail marketing campaigns over five years ago, but found its customers started to ask for monitoring of clicks of the website links they were buying from search engines like Google, Yahoo and MSN Sympatico.
"People realized they are spending all this money on pay-per-click advertisements and it looks like I'm getting suspicious activity, and how do I know that legitimate people are clicking on my ad," says sales manager Lesley Fegerty.
The next step at her company was a project to upgrade its Eztrackz software so that it could track the source of clicks and provide alerts on the possibility of click fraud. The latest edition of the software is being tested at the company's Dartmouth, N.S., offices.
Similar efforts to carefully monitor the use of Internet advertising are underway at companies across the country.
In Toronto, Dell Canada Corp. uses its propriety software, Landing Strip, to track the initial click on its banner ads on websites, through to a sale through its online stores.
"There are people at home who make a living on click fraud," warns Anwar Sumar, director of e-business for Dell Canada.
The software that Dell created goes well beyond watching for click fraud and measures how customers actually use the advertisements.
"Each campaign we have out on the Internet is individually and uniquely tracked for visits, clicks and then what actually goes to the store."
While a company like Mailworkz is known as a "watcher" in the field of "web analytics," there are also companies like Montreal-based IPerceptions Inc. that call themselves "listeners."
The Quebec firm has created ways to question visitors to advertisements to see how they're using them.
Sumar said that on Dell's websites IPerceptions' software asks six to eight per cent of customers questions about whether they're happy with the service or what's being offered.
Sumar, who sits on the board of the Internet Advertising Bureau of Canada, said most small Canadian companies still aren't taking even basic steps toward monitoring their advertising.
"My personal intuitive sense is that most advertisers don't track and measure the performance of their campaigns," he said.
Meanwhile, the scams grow ever more ingenious.
Ads are lured to a website set up by fraudsters; automated software pumps clicks through the ads, creating the impression the website is humming with activity; and then the website publisher claims cash from advertisers for the privilege of using such a busy location.
The search engine companies that currently are earning many of the Internet's ad dollars say they're taking their own steps to reassure customers and defeat the fraudsters.
Google and Overture both have stated publicly they have proprietary anti-click-fraud technology, which they refine on an ongoing basis.
Martin Byrne, the director of Yahoo search marketing in Canada, said his company has set up an entire department specifically to monitor the "quality of traffic."
"Internet villainy is an evolving and moving target," he said.
"There are ingenious individuals who are constantly trying to find ways to game the system."
His firm offers advertisers a feature called "continental opt-out," which allows them to block traffic coming from other continents where fraud is more prevalent.
"If we see too many clicks appearing from one Internet site or a narrow band of addresses, we then automatically launch an investigation," Byrne said.
"We won't charge an advertiser if there's an investigation on those clicks. We often eliminate dubious clicks before we send a bill to the client."
Still, he said it's also important clients commit their own time to keeping track of their campaign.
If there's a legal dispute over who's responsible for click fraud, advertisers may not always win their case without proof.
A Halifax small claims court released a ruling last week that RevQuest Technologies Inc., a Canadian firm that places sponsored links on search engine sites, must pay a $25,000 bill to search engine Findology, despite its claims the clicks on the ads were coming from "fraudulent and incentive-based fake and inflated traffic."
The adjudicator decided that RevQuest had failed to provide clear documentation to show fraud.
"To put it plainly, the company in the position of RevQuest should be able to provide some objective verification of its position that the traffic was fraudulent. It is not sufficient to merely say it is fraudulent traffic," wrote adjudicator Michael O'Hara in his decision.
