The Economist on Click Fraud

The 11.25 - 12.1 edition of The Economist has a brief piece on click fraud. Here is a summary:

• 
  Internet advertising is a $27 billion business today and it should be $61 billion by 2010. In 2001, it was just $9 billion.
• 
  Click fraud comes up from two areas. First, advertising affiliates (read: the Google content network) create bogus clicks. Second, competitors click on your ads to exhaust your budget.
  
• What percentages of clicks are fraudulent? 10-50%, with an emphasis on the 10% range.
  
• Google and Yahoo are now taking the problem more seriously and both expect to have an independent auditing system by the middle of next year.
  
• One alternative to pay per click is pay per action. The advertiser only pays on conversion. This idea doesn’t have a lot of traction yet and, in fact, may be a non starter since it would link search engine compensation to factors outside of their control.

So Many Hits, So Few Sales

The Wall Street Journal has an article titled So Many Hits, So Few Sales, where the issue of click fraud is discussed. Google and Yahoo are mentioned.

With feature articles in BusinessWeek and The Wall Street Journal in recent weeks, the spotlight is on click fraud.

Dump CPC for CPA?

Despite all the changes recently in the web2.0 age, one thing that hasn't changed is the model advertisers use - pay-per-click.

Google has been successful in pay-per-click for it's sponsored listings Adwords product sucessfully and I wouldn't imagine that will change, but for your average price comparison website which is supposed to deliver much more qualified users, it appears that it may be time for them to move to a cost-per-acquisition model.

Moving to a CPA model will complement the work these sites are doing to integrate content into their offerings, they're trying to increase the quality of the visitors they send through to advertisers and so should increase the conversion rates. Running on a CPA model could then prove to be in their interests as they may drive less clicks ultimately but with greater conversion. Staying on a PPC model would mean they will lose revenue rather than gain from all their hard work to optimise the listings. With cookie tracking so easy to implement and fairly accurate, keeping a track of the sales isn't a problem and most people do this anyway.

Google Settlement Story on CNBC

Google Click Fraud Settlement on CNBC

Yahoo Closes Door on Click Fraud

Checkmate Strategic Group, Inc. sued Yahoo for click fraud. Yahoo appears to actually be in a position to benefit from this.

The terms of the settlement absolve Yahoo of liability for fraudulent and unwanted clicks over the past 8 years. In return, the advertisers get the opportunity to ask for credits (to buy more advertising).

The total appears to be around $5 million and, in effect, a very cost effective insurance policy for Yahoo.

Should You Worry About Click Fraud or View Fraud?

Thomas Wetzel of Wisco led a discussion recently where he told the audience that they should not worry about click fraud, rather they should be interested in what he calls "view fraud". View Fraud is when spikes in views of ads appear on particular days on Google.

IM Worm - "Botnet" Advancing Click Fraud

A computer worm that spreads via instant messaging is being used to build an extensive “botnet” of remote-controlled PCs, a US security firm has warned.

Security experts at US company FaceTime identified the worm as “W32.pipeline” and warned that it spreads via AOL’s instant messenger program.

Botnets can also be used to commit “click fraud”, which involves ordering the zombie machines to repeatedly click internet advertisements, to generate money for a company that is paid per click.

Google Moves to Dismiss PA Class Action Click Fraud Lawsuit

eWeek's Google Watch blog announced that Google has moved to dismiss a class action click fraud lawsuit filed in Pennsylvania in August, saying the plaintiff is required by his AdWords contract to file suit in California.
Samuel Lassoff, a personal injury attorney and amateur Web site operator, filed suit against the search engine for breach of contract, negligence, unjust enrichment and unfair business practices.

Lassoff's class action complaint was the third against Google this year, following the Arkansas lawsuit in May, since settled for $90 million, and the lawsuit brought by Click Defense in California in June.

Google Switching from Cost Per Click to Cost Per Action Ads?

In an attempt to protect its advertising partners from click fraud, Google is testing a new type of online ad that would only charge the advertiser when a user performs a certain action. This would assure advertisers that they are getting a return on their investment, while weeding out false clicks.

Google has been testing out the new system with a small group of advertisers, which has been expanded as the test continues. The new program is apparently not intended to replace the pay-per-click system; rather, it would be offered as a separate option.

Its likely that the new ad type would sell at a higher price than the traditional ads, as it would take more impressions to create a chargeable click. However, it also poses the risk that as more companies transition to the new system, ad revenues at Google could fall as a result.

http://www.betanews.com/

New Data on Search Marketing Click Fraud: Three Action Items

According to MarketingSherpa research, click fraud is the new email filtering.

From the article: "This August, we conducted the largest study of search marketers ever -- with 3,944 search marketers submitting their data. This was our third annual study. Last year I was surprised to see how few marketers were highly concerned about click fraud."

"At 55%, the vast majority of responders said, "Like email spam, click fraud will continue to cost time and money." In other words, it's here, it's not getting much worse, it's not getting much better … get used to it. Which, as I noted above, is pretty much the way a lot of marketers feel about email filters. You know a portion of your email will be filtered, you do your best to get permission mail through, but you're also resigned to the fact that this will perhaps always be a problem."

Advertising Age Releases Search Engine Fact Pack

Advertising Age has compiled a comprehensive Fact Pack devoted to Internet search marketing.

The downloadable guide, sponsored by search engines and related services, includes optimization strategy (SEO), local and mobile search, click fraud, cost of search words and top performing search engine agencies.

Wash Post: Click Fraud Threatens Foundation of Web Ads

The Sunday Washington Post for October 22, 2006 contains an interesting article about companies who employ people in the United States and overseas to click on certain pay-per-click advertisements.

"Operators of these fast-growing "pay to read" networks and similar "pay to click" rings say they provide a genuine audience for advertisers, but Internet fraud experts disagree. They say the [pay to click] networks fuel click fraud . . . which translated to a $500 million problem last year."

Interesting Fraud Stats from Korea

There had been over 134 million cases of so-called click fraud until the end of the third quarter this year, it has emerged. Click fraud makes use of the practice whereby online advertisers pay per click on their ads, by generating scores of “fake clicks” and then getting a commission from advertisers.

According to documents obtained by Uri Party Lawmaker Lee Seok-hyun as part of a national audit, Overture Korea, which handles 90 percent of Korea’s online ads market, said it was unable to collect revenues for 134 million click-throughs because they had been flagged as potential fraud.

http://www.first.org/newsroom/globalsecurity/60517.html

Marketers Demanding Better Count of the Clicks - NY Times

The October 30, 2006 edition of the New York Times contains an article titled "Marketers Demanding Better Count of the Clicks".

Essentially, whenever someone says that want an audit, good things rarely lie ahead. Several of the nation’s largest advertisers want the large internet sites to give a better accounting of their audiences and validity of users clicking on text ads.

And, why not? Click fraud has long been an issue on the internet. But, now companies like Kimberly-Clark and Ford want an army of auditors looking over the shoulders of the Googles and Yahoos of the world.

If there is a finger on the scales, they want to know about it. Of course, for old media, this is nothing new. Television audiences have been measures for decades. The Audit Bureau of Circulations has checked newspapers and magazines, and has sometimes found that publishers are cheating. If big newspapers can do it, why can’t large websites?

For a company like Google, where virtually all of the news is good, it is hard to imagine that something might come out of left field to undermine the revenue growth of the company’s hugely successful AdSense platform. But, bad news does have a habit of catching up with good.

Google Settlement Checks Sent

Google began sending settlement checks from their July court ruling. Many advertisers are suprised at how little the checks seem to cover. For example, one advertiser claimed to have spent $480,000 over three years on Google and the refund they received was only for $280.

The Dark Side of Online Advertising

BusinessWeek's cover story for the first week of October was titled "Click Fraud, The Dark Side of Online Advertising".

The article is designed to place fear into the hearts of all online advertisers, however there is an argument to be made to the contrary. Could it be that click fraud can actually help some advertisers? If advertisers stick with their campaigns while their competitors drop off for fear of fraud, they have less competition for those keywords and overall prices fall.

Click Fraud Concern Mounts

The latest eMarketer discusses the concerns that are mounting as click fraud grows along with the success of online advertising.

Search engine advertising has become too big a business for major search engines, such as Google and Yahoo!, to ignore the damage — real or imagined — click fraud is doing.

An article in The New York Times, "Marketers Demand Better Count of the Clicks," reports how a group of large companies that includes Kimberly-Clarke, Colgate-Palmolive and Ford Motors is demanding that online publishers hire auditors to check ad and viewer counts and that they do so no later than the middle of next year.

According to the "Search Marketing: Successfully Combating Click Fraud and Other Concerns" report from JupiterResearch, while click fraud worries only 17% of small marketers and 21% of mid-size marketers, 39% of large marketers view it as a problem.

Click Fraud Minimization Strategies

Richard Ball today in Search Engine Guide offers ideas for minimizing the negative effects of fraudulent clicks.

1. Isolate content network budget in separate campaigns
2. Don't bid for top position (for either search of content ads)
3. Work to increase ad rank through relevance not bids (for search ads)
4. Track content traffic and block bogus sites
5. Bid less for content ads

Google Downplays Click Fraud Problem

Google has claimed that estimates of click fraud in the online advertising industry have been exaggerated.

Shuman Ghosemajumder, business product manager for trust and safety at Google, accused some third-party analytics providers of playing up the problem of click fraud. “Some firms appear to make the problem larger than it is,” he said at a press briefing in Dublin last week.

Many industry insiders believe that as much as 20% of Tier 1 engine clicks are fraudulent.

PPC Audit Releases Fraud Combat Software

PPC Audit announced the release of a new software product designed to five users:

- The ability to analyze the total clicks per keyword by a Pay-Per-Click provider
- The ability to create detailed reports of PPC activity
- Full interactive graphical maps, including IP location identification

http://newsroom.eworldwire.com/view_release.php?id=15857