Click Fraud Problems In Keywords Advertising

Under the background of the popularization of Internet, the number of Internetusers and web page grow rapidly, and search engine has become a very importantchannel for the users to search effective information. Keywords advertising using theplatform advantage has become one of the main profit-seeking means in search engineindustry, which also has gradually attracted the attention of the researchers.The pay-per-click(PPC) model which search engine widely used in the process ofkeywords advertising means that search advertisers are charged when their ads areclicked, regardless of who does the clicking.The PPC model generates the problem ofclick frauds, which resulting in an increase of the cost of advertisers but without anyvalid value. In recent years the issue of click frauds is getting worse and worse and hasbecome a big problem hindering the development of the keywords advertising industry.In this background, firstly, this study builds a two-stage bidding model and anadvertiser’s revenue model considering the factor of click frauds under the rules ofgeneralized second price auction which is widely used. Based on the modifiedmechanism the advertisers bidding strategy, the largest capacity setting and the changeof advertisers’ revenue are discussed. Next, considering the existence of rougeadvertising publishers and good-type advertising publishers, this thesis constructs adeferring compensation model based on how enterprises compensate good-typepublishers, and the recognition probability model based on how the advertisers identifythe rouge advertising publishers. This thesis studies whether the advertiser couldeffectively eliminate the rouge advertising publishers by the delaying payment withoutreducing the revenue of advertisers, and then discusses the relationship between thedeferred time and advertisers’ revenue, as well as examining whether there is an optimaldelay time in order to maximize the revenue of advertisers.Research shows that under the two-stage bidding rules without click frauds, biddingtrue value is the optimal strategy of advertisers. Considering the factor of click frauds,advertisers will lower their bids. As a result, advertiser revenue is unchanged when thekeywords auction is less competitive and an increase of advertiser revenue occurs whenthe auction is relatively competitive. The study also shows that the revenues of thegood-type publishers will increase with delaying payment and that under someconditions the delaying payment can effectively reject rouge advertising publishers and increase advertiser revenues. The results obtained by the numerical example are asfollows: the advertiser revenues increase firstly and decrease then with the extension ofthe delaying payment time, and the optimal delay time maximizing the revenue ofadvertisers exists. These conclusions mentioned above provide scientific reference andrevelation for advertisers to solve the problem of click fraud.