BusinessWeek: Really Click It or Ticket
BusinessWeek is running a doom-and-gloom investigative report into click fraud, calling it “a dizzying collection of scams and deceptions that inflate advertising bills for thousands of companies of all sizes,” and warning “The spreading scourge poses the single biggest threat to the Internet’s advertising gold mine and is the most nettlesome question facing Google and Yahoo, whose digital empires depend on all that gold.”
The article profiles click fraud perps from a 23-year-old using a false name in Budapest to a Kentucky woman with a cat named Sassy who likes to garden and help elderly people. They claim to make $70,000 and $60 per month, respectively, from their click fraud outfits. BusinessWeek estimates the click fraud industry overall is bringing in $300 to $500 million a year, based on $1 billion in annual ad billings (approximately 10 to 15 percent of total pay-per-click income).
At Google’s Press Day this summer, we were surprised to hear Omid Kordestani, Google’s senior vice president of global sales, respond to an audience question on the topic “Click fraud is not a serious problem for us at all.” Since then, the company has been a bit less flippant, posting a public rebuttal and study, and arranging a $90 million settlement for a click fraud lawsuit.
BusinessWeek asserts that advertisers are turning away from pay-per-click, and large companies such as Expedia and LendingTree are joining forces to lobby Google and Yahoo and share information. Meanwhile, the FBI, the U.S. Postal Inspection Service, and the Senate Judiciary Committee are investigating. Our take? Google and Yahoo need to be much more transparent about the ins and outs of their ad businesses.
Writers Brian Grow and Ben Elgin antagonize domain parkers (others in the press have been much friendlier), who post ads on unused URLs, for operating as middlemen for click fraud. It would be interesting to see if such sites pass muster with investigators. There is an increasingly narrow line between user-generated content aggregators and domain speculators. If we were to encourage passerbys to contribute some free content around a popular topic (say VoIP, or maybe asbestos), plug in AdSense, and search engine optimize, would you consider it a fun new participatory social site or a scam?
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I loved this analysis and am glad to see you taking on this issue. I think that click fraud is the #1 threat to Google’s long term health.
Click fraud + abhorrent privacy policies could equal a sharp decline in how people use and think about Google.
Liz – do you think that the SEC would ever step in an make Goog restate any earnings? Their argument being that Goog knew about the fraud that inflated their Rev numbers.
Stay on this topic – I think this is something to be watched..
Best,
Brian
One of the easiest ways to set up a sites with ads that your “paid to read” gang clicks on is to establish a nest of splogs and automatically populate them with plagiarized content from other blogs. Companies like Google and Yahoo can benefit from better automatic splog detection. It might be possible to test this hypothesis by analyzing the frequency of splogs as a source of clicks for an advertiser. If anyone whould like to share their data we might be able to do such an analysis. Contact us if you are interested.
Gigaom used to be quite investigative and skeptical in tone and boy that used to be so refreshing considering the general suck-up game going on in the valley.
Why can’t people see a major scandal right on Google’s blogger site.
Open any blog site -
For example: http://celebdiary.blogspot.com/
and keep clicking on the top right link “next blog” and see what you get after 4-5 blogspot blogs. Randomized display of link farms !
This is Google site.
Liz,
Google provides examples of invalid clicks as manual clicks on an ad to purposefully increase the ad spend, deliberate clicks on an ad to increase profits by site owners hosting the ads, and automated clicking tools, bots, or other deceptive software.
Yet, Google continued to charge for “doubleclicks” even after they discovered the behavior added no value to their customers. Under pressure, Google finally changed their “doubleclick policy” and moved doubleclicks to the invalid click bucket.
Hmm, it seems all of those doubleclicks should have been refunded to advertisers, right?
Another question, when an advertiser requests a refund based on suspected click fraud and Google decides to grant the refund, does Google then do a search to determine if other customers were also affected by the same click fraud attack and automatically grant those refunds? What about Yahoo and Microsoft?
The real story is not the size of click fraud but what other invalid click behaviors are still considered “valid” by Google and yet add no value to advertisers (similar to doubleclicks)?
Here’s one to discuss: “Comparison shopping” click behavior where the user clicks on the same ad multiple times (for navigational purposes) over a period of a few minutes. Does that add value to the advertiser and should they be charged for those multiple clicks?
A plea to Google, Yahoo, and Microsoft, please don’t be evil to your customers, unless of course your legal agreement with them allows you to be.
I believe that this issue will only force Google and Yahoo to develop better solutions to prevent click fraud in future. Hopefull that the end result of it will be better service that wil satisfy both advertisers and publishers alike… Just my two cents.
Great article…Are there any cases of competitive click fraud? A hypthetical example would be company “A” hiring somebody to click on ads from company “B” to drain Company B’s resources…
The basic issue here is the lack of ability to establish the identity of the clicker. Not sure what can be done about this though?
I’ll bet a big percentage of the Page Views on GigaOm come from India, but your advertisers are paying for business influencers.
What will be interesting is when this type of click fraud moves over the video play fraud. The Mentos Coke Video guys have said they made $30,000 off of their video on Revver.
What happens if I upload videos to Revver and have the PTR (or now PTP) folks play my videos?
Om?
Liz,
This is Martin Fleischmann from MostChoice.com. Liked your review and just wanted to comment as we worked with BW for two months on the piece after suggesting it. There were points that did not make it in due to space that might have made some things more clear. For 3-4 years I worked on this behind the scenes — we saw crazy URLs sending non-converting clicks for a long time, complained about them to Yahoo and got some slow movement.
Want to be clear that we never do content ads due to obvious poor click quality; the issue has always been the integrity of the search network itself. Google allows an opt-out, but their network is mostly good (AOL, Earthlink, real properties). Zapmeta was a sudden spike that we saw quickly and to their credit Google took fast action (after our pushing. Yahoo is tougher since their search network has contained many fake search sites who only show expensive Yahoo listings as if their own. Of course they have huge incentive to send junk clicks, most only exist to push bad traffic to these listings.
The bad practices clearly should change; I told them years ago that this would end up costing them money long-term if it eroded the integrity of the network and diluted CPCs. That’s been happening, and it means that the thieves are siphoning off money that should be going to the real sites/clicks. These articles are the light & air that will accelerate the healing process, as Yahoo and Google will more quickly do what should already have been done to stop the bad schemes. Thanks.