Should Ad Networks Bother Fighting Click Fraud? (Yes, They Should.)

Abstract

Suppose an ad network decides that a given click-through is invalid (or ``fraudulent''). The implication is that the ad network will not bill the advertiser for that click-through. On the other hand, if the ad network decides that the click-through was valid, they could charge full price. Therefore, arguably, the ad network is ``leaving money on the table'' by marking click-throughs invalid. As such, should ad networks even bother fighting click fraud? We analyze a simple economic model of the online advertising market and conclude that the answer is, unequivocally, ``yes''.