Forum Moderators: martinibuster
Advertisers, who often pay for online ads only when someone clicks on them, have been crying foul and complaining to federal regulators. They've also sued the Internet's largest ad networks, Google Inc. and Yahoo Inc., which earlier this year settled class-action lawsuits by advertisers.A new lawsuit was filed last month in Pennsylvania seeking class-action status against Google. The FBI, the Securities and Exchange Commission and the U.S. Postal Inspection Service are investigating click fraud.
[washingtonpost.com...]
I suspect my account is under frozen status due to this reason :(.
Yet another lawsuit targeting the giant elephant in the room that no one wants to discuss.
Click fraud has been discussed extensively in the media (the WASHINGTON POST is late to the party), it's been discussed endlessly here at Webmaster World, and Google, Yahoo, and MSN have agreed to work together in an effort to improve detection and prevention of click fraud. So saying it's "the giant elephant in the room that no one wants to discuss" is simply flat-out wrong.
IMHO, one way to reduce click fraud would be to have far stricter standards for admission to networks like AdSense and YPN. But that isn't likely to happen, if only because no company wants to let its competitors grab market share at its expense.
The good news is that pay-per-click advertising, like direct mail, is a medium that allows results to be tracked. Advertisers can easily determine their return on investment, and if their ROI is better than for other media, they'll put up with a certain amount of click fraud in the same way that advertisers tolerate waste circulation elsewhere (such as junk mail that goes directly into the wastebasket or free weekly newspapers, classified-ad publications, etc. that sit in the racks until they're sent to the recycling center or landfill).
One possible weapon against click fraud might be a longer lead time for payments, a higher minimum payment, or escrowing of a percentage of monies during a publisher's first 6 to 12 months in a network. The threat of losing more than 30 days' worth of earnings upon termination of an account for click fraud might make prospective crooks think twice before cheating advertisers. On the other hand, such a policy would inconvenience the many to punish the sins of the few, and it probably wouldn't discourage the typical low-IQ small-time crook who thinks he's smarter than Google/YPN/MSN and won't get caught.
No one wants to sue an almost-broke weekly newspaper when they could just as easily sue cash-rich Web companies. Fact of life, folks.
Also, it's quite demonstrable that targeted CPC advertising works, especially the Google variety. Advertisers may complain but they're not likely to go back to sticking posters on utility poles.
If you effectively curtailed click fraud, hundreds of thousands of webmasters who have MFA sites and actively encourage members to click would be in world of hurt.
The currently industry reported 'detected' click fraud rate is hovering around 12% of all clicks. Thats a huge number. I wonder what the real 'undetected' rate is?
"Among high-priced search keywords--over $2 a click--the fraud rate rose from 20.2% in the second quarter to 20.9% in the third. Click Forensics says high-priced terms often make up the majority of an advertiser's budget."
[news.com.com...]
[edited by: martinibuster at 9:06 pm (utc) on Oct. 22, 2006]
[edit reason] See TOS #24 [webmasterworld.com] [/edit]
Example: In a perfect world, let's say that Joe Advertiser was willing to pay $1 per usable lead. If all the clicks are valid, then he'll get what he pays for. But what if 50% are fraud? So long as he pays no more than 50 cents per click, he comes out even.
AdSense clearly does detect some invalid clicks. For the rest, there is smartpricing.
So the system has a built-in solution. Yes, Google should try to stop click fraud, but if it doesn't, it gives discounts.
Why are those advertisers suing, then? Maybe they had unrealistic expectations. Maybe they are after the big wallet in the room. But I do believe that if they had set up their campaigns carefully, they wouldn't need to sue, because they would have gotten what they wanted.
I also find articles in the print media like that a bit disingenuous. They are in direct competition for that advertising money, and so it's very much in their interest to make click fraud sound like a bigger problem than it really is.
Click Forensics says high-priced terms often make up the majority of an advertiser's budget."
Click Forensics is hardly a disinterested observer. Relying on a third-party click-fraud security firm for objectivity is like relying on burglary statistics from a burglar-alarm firm. :-)
In any case, this topic has been covered exhaustively in several AdWords Forum and Pay Per Click Engines Forum threads:
[webmasterworld.com...]
[webmasterworld.com...]
[webmasterworld.com...]
For what it's worth, a court-approved study of Google's attempts to deal with click fraud is available as a PDF file at:
The 47-page report, by Dr. Alexander Tuzhilin of New York University's Stern School of Business, concluded that Google's "efforts to combat click fraud are reasonable." That may not be enough to make everyone happy, but it does suggest that impartial observers might want to think twice before getting caught up in hysteria or hyperbole.
Click Forensics is hardly a disinterested observer. Relying on a third-party click-fraud security firm for objectivity is like relying on burglary statistics from a burglar-alarm firm.
I don't understand, are you saying that Click Forensics is lying? Many other organizations state the same percentage of fraud.
Examples:
The study, called "Click Fraud Reaches $1.3 billion, Dictates End of 'Don't Ask, Don't Tell' Era" and released by research and advisory firm Outsell, claims that "Google, Yahoo and MSN...are stonewalling on click fraud, to their own and others' detriment."
[news.com.com...]
In a widely cited recent study, MarketingExperiments.com, an online marketing research outfit, reported that "as much as 29.5 percent" of the clicks in three experimental PPC campaigns on Google were fraudulent.
[wired.com...]
Doesn't it seem strange that Google only has 36 people fighting click fraud when 95 percent of its revenue is derived from online advertising?
"Shuman Ghosemajumder, Google's product manager for trust and safety, said the firm employs about three dozen people to monitor click fraud, 20 of whom respond to advertisers who report anomalies on their sites."
My point is that if these companies are not aggressive enough in curtailing this stealing, it threatens to undermine the whole pay-per-click model as advertisers balk.
The survey of 407 advertisers also found that 27 percent said they had already slowed or stopped their pay-per-click advertising, including 16 percent who have curtailed such spending entirely.
Talking about impartial third party's, you realize the report you mentioned ....
The 47-page report, by Dr. Alexander Tuzhilin of New York University's Stern School of Business, concluded that Google's "efforts to combat click fraud are reasonable."
... was commissioned* by Google in response to a class action suit.
* Source: [businessweek.com...]
The additional point you made -- that 27% of advertisers in one survey have slowed or stopped their spending -- means two things. 73% of advertisers have NOT slowed or stopped their spending. 27% have found that it's not working out as they expected. Their reasons may vary widely.
In Google's 3rd quarrter, their gross revenues in both search and the content network went up. Now, we debate what share gets passed on to publishers, but if the gross went up, then that means only one thing: advertisers are spending more money, in spite of the publicity about click fraud.
I'll get worried about click fraud when Google's gross revenues start to decline.
You know the old expression, "lies, damn lies, and <insert press releases of company in Click Forensics' position>".
They may or may not be telling porkies. They may honestly believe every word they say and every statistic they opine, in their own interests.
But as has been said it is almost entirely irrelevant, and certainly NOT disinterested.
ROI can be measured in this business MUCH better than in many others, and if it remains positive and higher than through other advertising routes then G and the advertiser win.
How can CF *possibly* tell what fraction of the clicks I have paid for are fraudulent, for example? I'm in an uncontentious, low-profile and pro-bono area, and I think that I get good value by the standards I set. And I can tighten the standards and measure the change in performance if I want to. I don't want CF or anyone else sueing G and raising my charges, thanks.
Rgds
Damon
Talking about impartial third party's, you realize the report you mentioned .... was commissioned* by Google in response to a class action suit.
Just to set the record straight, the independent report was the result of an agreement between Google and the plaintiffs in a lawsuit against Google. So it's a bit disingenuous (or at least naive) to imply that the report is skewed to favor Google.
By the way, I recently learned of another problem that's an greater threat to the economy than click fraud is. It's called shoplifting. Believe it or not, people actually go into stores, steal things, and walk out! To matters worse, employees are stealing things, too!
The University of Florida estimates that shoplifting and employee theft are costing retailers $23.35 billion per year. Yet big retail companies seem to be looking the other way--according to THE NEW YORK TIMES, Wal-Mart now has a policy of not prosecuting shoplifters who are under 18, over 64, or caught stealing merchandise worth more than $25! If you ask me, the whole retail business model is headed for disaster. Pretty soon, investors will pull their money from retail, stores will have to close, and consumers will go hungry, freeze, and die of boredom because they have no places to buy food, clothes, and iPods. Why isn't the government stepping in and doing something about it?
