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Summary:

From scraper sites, to click fraud to trojan horses, looks like the most profitable money making mechanism, aka AdSense might be facing some tough times. Paul Kedrosky predicts that the situation will come to a head in 2006 sometime. With some estimating that in certain categories […]

From scraper sites, to click fraud to trojan horses, looks like the most profitable money making mechanism, aka AdSense might be facing some tough times. Paul Kedrosky predicts that the situation will come to a head in 2006 sometime.

With some estimating that in certain categories click-fraud accounts for as much as 20% of fees, this is a stock-schwacking issue, one that threatens the core of Google’s advertising business.

He might be lowballing.Wired Magazine just released an article, which estimates that in some cases the fraud runs as high as 30%.

In a widely cited recent study, MarketingExperiments.com, an online marketing research outfit, reported that “as much as 29.5 percent”

But the problems won’t stop here! TechShout reports

a new, deceptive Trojan Horse program has surfaced. The program is engineered to produce fake Google ads that are formatted to look like legitimate ones.

TechShout folks say that Google AdSense team confirmed the existence of these problems. The bottom line is that like Microsoft (in OS), Google is going to have to the bear the cross of being a dominant player in the “text ads” space.

  1. There were several comments here the other day, now they are all gone. Just a note to let you know in case it is a server error.

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  2. what were the comments about? On another note, has anyone heard of technorati?

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  3. sid, we have had some issues, but hopefully we will have the comments restored soon enough. sorry about that problems.

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  4. As the Wired magazine duly notes, one reason why click fraud is so popular is the cost per click is almost nil but the impact can be significant. To really deal with this problem we need a way to instrument the actual purchases so that only the expensive kinds of clicks (those resulting in sales are used). However, as also noted in the Wired article, it is very hard to see how such a system might work (since not all sites are e-commerce shopping carts) but I hope some folks are looking at this!

    I agree with Paul that click fraud is only going to get FAR worse this year since the mainstream is starting to catch on. Like the early days of spam, there seems to be a potential for unchecked growth and the mechanisms to combat click fraud don’t seem as sophiticated as many of the click fraud schemes I have read about.

    Perhaps one way of increasing the cost per click and reducing this fraud would be to implement something like a challenge response system for all traffic that is referred to a site via Ad-Words. Perhaps more sites will force customers to register. I guess it all depends on how badly the system get skewed – will click fraud be a parasite living in balanced coexistence or will it be irrationally virulent and bring the system down on its own head.

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  5. Thanks for the always great info and insight, Om.

    The best way to greatly reduce and possibly elimiate click fraud? Junk the whole paid search system and replace it with a structured Internet environment; where competitors and other evil-doers would find it much more difficult, if not impossible, to locate especially suitable (ie high-cost/hi-value) ads to click on (as detailed at MatchTo.com).

    How long will advertisers continue to “manage” 100′s to 1000′s of words and phrases once they’re given the chance to bid on their targeted markets’ actual demo/psychographics?

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  6. I think that Bill Gross who started GoTo/Overture’s PPC program has the right idea with his Snap.com ( http://www.snap.com/about/overview.php?lastlinktype=adsys_overview ) Fixed-Cost-Per-Action (FCPA)

    While he sells PPC(CPC) too, only actions like online sales (no one can effectively track all offline sales unless the sale is made online and paid for at a physical location,IMO), registrations, forms, newsletter sign-ups, surveys completed, e-mail contacts, or “Live Help” contacts can avoid “large numbers” click fraud. Even small amounts of click fraud from only a few sources could be more easily detected with this “Pay Per Action” approach.

    There aren’t many web sites that don’t want you to take some sort of action even if they are not e-commerce enabled.

    Bill Kelm

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  7. I think this new pressure has been the reason in which my account was terminated for something i have never heard of or done in my life. That is why unless Google respond to my situation, i will have to take legal action against the company.

    I was accused of using programs to generate impressions and/or clicks on my site(s). Which i have never even heard of in my life. As a result my account (which has been active for almost 2-3 months), containing just over $100.00 USD was deleted and accused for the above. I demanded to see some evidence, or else legal (court) action will be taken against the company. I shouldnt be punished for something which i have never done or heard of, its pathetic!

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  8. Web Future And New Media Predictions: 2006 And Beyond…

    2005 is almost over, but looking ahead remains my passion. Here are a few more anticipations and predictions that should be added to my original Web Predictions for 2006 which I wrote over a week ago. Photo credit: Stefano Carboni…

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