This week Microsoft has decided to do something about click fraud and has filed a lawsuit claiming $750,000 in damages. The defendants are a Canadian family who are alleged to have run a scam which led to a large number of false clicks being placed across the Microsoft Pay Per Click advertising network.

The fraud used automated programs which entered search terms onto the Microsoft search engine (formerly Live Search, now Bing). These programs then clicked on the highest paying ads so that the daily budgets were run down and the adverts would soon stop showing. This allowed the lower paying adverts (used by the fraudsters) to rise up to the top.

Whilst $750,000 is petty cash for a company the size of Microsoft, the software firm hopes that the lawsuit will make a statement and show the price of click fraud, warning off other would-be scammers.

In an interview with the New York Times, Tim Cranton, associate general counsel for Microsoft, said “We have decided to become more active in the commercial fraud area on the enforcement side. The theory is you can change the economics around crime or fraud by making it more expensive.”

The investigation started after Microsoft received several complaints from car insurance advertisers saying that they had seen unusual increases in traffic from their Pay Per Click ads. Keywords such as "auto insurance quote" were being searched far more frequently and the adverts were receiving much higher click through rates.

Microsoft claims that Eric Lam, one of the three people named in the lawsuit, had his own Pay Per Click advertising in place for the insurance keywords, directing traffic through to his site where he would collect a visitors info in order to sell it on to insurance companies. Microsoft believes that Lam made around $250,000 from the scam, while it had to refund $1.5m to advertisers that received the false clicks.

Other search engines that offer Pay Per Click advertising have also noticed problems with click fraud, and have often fought back. In 2004, Google filed a successful suit that won the company $75,000 from a webmaster who was using fake traffic to increase his Adsense earnings.

We manage the pay per click advertising campaigns for a number of businesses and often see a problem with the way they have been set-up – no use of negative keywords.

Using negative match means choosing the keywords you DON’T want your ads to appear for. When running a pay per click campaign, such as Google AdWords, it is vital that you include negative keywords, especially if the keywords you are bidding on are broad or phrase matched.

Negative match will stop the advert being shown if the keyword is featured in the search query. By stopping your adverts from appearing for phrases that are not relevant, not only will you no longer be paying for clicks that you do not want, but as your overall click through rate will be higher, your advert quality score will improve. A higher quality score means you will start rising up the advert rankings without having to pay more for each click.

An example of how negative matching can help is for a business that sells DVDs. A look at the Google keyword tool shows these as the top search results for “DVD” last month:

dvd = 24900000
dvds = 5000000
dvd player = 1830000
dvd players = 1000000
dvd recorder = 823000
dvd drive = 450000
dvd for sale = 368000
dvd sale = 368000
dvd software = 301000

As you can see, a lot of the searches containing the phrase “DVD” are not made by people looking to make a purchase. Having an advert appear for the search “DVD recorder” would not be a good way for a DVD disk retailer to get the most out of their online advertising budget. By placing the keyword “recorder” as a negative, it will prevent the advert for ever appearing for this search term again.

Negative keyword match is put in place simply by placing a minus/dash symbol in front of the keywords. The initial list of negative keywords that would help this shop improve their pay per click advert performance would look like this:

-dvd player
-dvd players
-dvd recorder
-dvd drive
-dvd software

Use the Google keyword tool to find the searches that your adverts appear for and see if there are any you would rather they didn’t. Use negative match to exclude these keywords and you’ll soon start seeing an increase in click through rates and an improved return on investment.

If you want to improve your click through rate (the frequency with which people click on your Google Pay Per Click adverts) then you should consider Dynamic Keyword Insertion, using this syntax: {keyword: }

The idea behind Dynamic Keyword Insertion is simple. When keywords in a search term appear in the heading or body of an AdWords advert they appear in bold. Bold adverts attract more attention so people are more likely to click on them. As are adverts that contain the exact keywords that a person is searching for. Wouldn’t it be great then if every pay per click advert contained the exact keywords being searched for in bold? They can…

Instead of creating hundreds of separate adverts for every synonym and plural of a keyword, try using Dynamic Keyword Insertion. Group keywords up and place the syntax in the heading. This makes Google automatically use the searched keywords as the title of your advert, improving the likelihood of the searcher clicking on your advert and visiting your website.

Make sure you only use this for keywords grouped together and ones that share the same landing page on your site. Otherwise you run the risk of sending searchers to pages that aren’t relevant, which they’ll just click away from, wasting your budget.

Using Dynamic Keyword Insertion also improves your AdWords Quality Score. As one of the determining factors in calculating Quality Score is the click through rate (CTR) of an advert, the use of the Dynamic Keyword Insertion syntax will lead to better positioning of your ads without you increasing your spend on each click.

Advanced Dynamic Keyword Insertion techniques:

You’ll notice a gap in the syntax {keyword: }. This is for you to place a default heading, to be shown should the search term be longer than the 25 character limit. The full syntax should therefore look something like {keyword: Default Keyword Here}

Capitalising the K and the W will make all keywords displayed begin with a capital letter, another factor in high click through rates: {KeyWord: Default Keyword Here}

Try using the syntax within either lines of the advert body copy instead of, or as well as, the heading.

Before deciding to roll it out to the rest of your ads, or deciding to cancel the experiment, remember the golden rule – measure the results.