American industry is finally recognizing that paid ad click fraud has become epidemic, and it now threatens to take-down some of the major web search engines.

In fact, the whole pay-per-click auction model that Google pioneered is fraught with flaws.  This study by ComScore notes that the types of people who click on ads are not the kind of people with the disposable income to buy your products and services.  Over half of an online advertising campaign being spent on “Internet Indigents”, lower-class, blue collar surfers who earn less than $40k/year, and click like mad on paid ad clicks:

“The study illustrates that heavy clickers represent just 6% of the online population yet account for 50% of all display ad clicks. .  .

In fact, heavy clickers skew towards Internet users between the ages of 25-44 and households with an income under $40,000.”

The problem of non-targeted paid ads

Now that the poor have access to the Internet, all of the major companies are feeling the heat.  Scams and adwords deception have become the norm, and anyone who is considering advertising with paid clicks needs to know that the Internet Indigents will eat-up more than half of their advertising budget.

Consultants who study online advertising estimate that 10% to 15% of ad clicks are fake (deliberate click fraud), running up a tab of over $1 billion each year.  However, when you consider the Internet Indigent, idiots mashing hyperlinks for fun and profit, the real figure is closer to five billion dollars a year.

At long last, we are seeing the market voting “No Confidence” in paid ad clicks.

Google stock fell 4.7%, amid concerns over the future viability of paid adwords hits the market and I believe that’s it’s largely due to the nasty “Internet Indigents”, poor, ignorant web surfers who clog forums with idiotic questions, stalk and harass people, and make themselves feel powerful by clicking paid adwords to cheat their business competitors.  Businessweek confirms my own statistics that the vast majority of the “Internet Indigent” are foreigners, often uneducated and poor, but they all share low moral values and greed to rip-off businesses with fake ad clicks:

“Over the past three years, he has noticed a growing number of puzzling clicks coming from such places as Botswana, Mongolia, and Syria.”

Internet indigents are the scourge of the web, one of the primary reasons that the web is becoming a dictatorship of idiots.  Today, any jackass can label themselves an “expert”, regardless of their qualifications. In the database arena, I’ve seen loads of “fake” experts, people who put-up a front as an expert, yet refuse to publish their resume, lest people know that they are not what they appear to be.

Targeting your online ad campaign

Using Google adwords to advertise upscale products and services is especially problematic because casual end-users may click the ads with free abandon, resulting in your missing your target customers.

For example, let's assume that you are selling upscale residential golf putting greens, targeting customers with a gross income of at least $300,000 per year.

As an MBA, I'm very aware of the perils of broadcasting ads for professional goods, and the waste involved when you cannot target your market.  In online advertising, up to 70% or ads are "false clicks", initiated by wannabees, business competitors and curious noobs.  This failure to target demographics can lead to significant waste of your marketing budget.

In today's world of segmented advertising, we have many other choices, most notable the ability to target advertising to areas surrounding a selected zip code:

My company spends thousands of dollars a month on targeted advertising, and the Google adwords is a great way to target ads to selected income demographics.

You can peruse selected zip code for income levels here, and the US Government has online tools to display income by zip code area.  You can also use services such as A. C. Nielsen to target other important demographics (profession, home value) by zip code.

By targeting your ads directly to those with a high propensity to buy your goods and services, you maximize your advertising dollar.