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February 23, 2005

Click Fraud, an Industry Crisis, or Blip on the Search Engine Marketing

New York, NY (PRWeb) February 23, 2005 -- The Search Engine Marketing Professional Organization (SEMPO) today weighed in on the subject of click fraud, a problem that potentially dilutes the value of search engine traffic. The non-profit professional association, which is working to increase awareness and promote the value of search engine marketing worldwide, presented additional findings about click fraud from its recent research paper, The State of Search Engine Marketing 2004. "Search engine traffic is among the most valuable traffic to a web marketer due to the state of mind of a searcher. Click fraud, charging marketers for poor quality non-converting clicks, could poison the well," said Kevin Lee, a member of the SEMPO Board of Directors and Chair of the association's Research Committee. "During our recent research project, we got some great data on what marketers and agencies think about click fraud."

Marketers felt that organic SEO abuse or "search spam" was a bigger problem than click fraud. This is interesting given the high level of attention given to click fraud by the media. One explanation for the disparity between what marketers think and the media's heavy focus on the issue could be its potential impact on revenue from paid placement campaigns at publicly traded companies, such as Google, Yahoo, AskJeeves, InfoSpace, and FindWhat, among others.

When large marketers, smaller marketers and agencies were asked about click fraud, the results were enlightening: 10% of small advertisers thought click fraud was a significant problem that they had tracked, while none of the large advertisers agreed and 4% of agencies thought click fraud was a significant problem.

On average, across advertisers, 19% of advertisers believe that click fraud is a moderate problem and agencies agreed with 30% weighing in.

The full data on the question is as follows:

Q19: In your experience, how much of a problem is "click fraud" with regard to Paid Placement?

Statement	All Advertisers	Advertisers of < 500 Employees	Advertisers of 500+ Employees	Agencies
This is a significant problem we have tracked	6%	10%	0%	4%
It is a moderate problem we have tracked	19%	21%	15%	30%
We have not tracked it much, but we are worried about it	45%	36%	58%	43%
It is not a significant concern	26%	28%	23%	23%
Never heard of it before	5%	5%	4%	0%

The issue will be discussed on Wednesday, March 2, 2005, at the ClickFraud: A Legal Look session at the Search Engine Strategies 2005 Conference & Expo. The event will be held from 11 a.m. to 12:30 p.m. at the Hilton New York. The moderator of the session is Jeffrey K. Rohrs, President, Optiem LLC, and the speakers include: Ben Edelman, Ph.D. candidate, Department of Economics at Harvard University; Jessie Stricchiola, Founder, Alchemist Media Inc.; Danny Sullivan, Editor, SearchEngineWatch.com; and Lori Weiman, Director, KeywordMax.

The research, conducted by Executive Summary Consulting, Inc., is based on an extensive survey of 288 search engine advertisers and marketing agencies, executed via IntelliSurvey, Inc., as well as in-depth interviews with 30 leading industry experts. A full copy of the research is publicly available on SEMPO's web site at http://www.sempo.org/research/sem-trends-2004.php.

About the Search Engine Marketing Professional Organization (SEMPO)

SEMPO is a non-profit professional association working to increase awareness and promote the value of search engine marketing worldwide. The organization represents the common interests of more than 315 companies and consultants worldwide and provides them with a voice in the marketplace. For more information, or to join the organization, please visit www.SEMPO.org.

For more information, contact:

Greg Jarboe
978-549-9537
pr@sempo.org

February 23, 2005

http://www.sempo.org/press/click-fraud.php

Posted by Hans A. Koch at 09:59 AM | Comments (0)

February 18, 2005

Click Fraud: What It Is, How to Fight It

There's a crisis brewing in this industry. Poor click quality has the potential to hit marketers hard and to negatively affect search engines. It manifests itself in many ways, including as network click fraud, competitive click fraud, and mislabeled traffic.

These problems drive down a clickstream's value, forcing marketers (if they act rationally) to lower bids or remove themselves from the market completely. Impression fraud falsely places certain listings higher in engines that count CTR (define) against impressions as part of a ranking algorithm (as with Google's AdWords).

Click fraud hurts everyone except the cheaters, who benefit unfairly. Recent SEMPO research finds 45 percent of surveyed marketers are concerned about click fraud but don't track it. Another 19 percent thinks it's a moderate problem and do track it, and 6 percent feel it's a significant problem and track it. Thirty-one percent either weren't concerned or had never heard of click fraud.

Network Click Fraud

Network click fraud occurs when a syndication partner (a smaller publisher or search engine) that receives and displays paid placement or contextual results from a search network engages in the manufacture, creation, or misrepresentation of clicks delivered to its network partner.

When a network partner manufactures clicks, either through human or robotic means, that traffic is of much lower quality than pure traffic generated through user searches. Adding this useless traffic to the network initially seems to benefit the network owner (often a search engine itself). After all, the network owner shares click revenue with the publisher.

But the network owner must also worry about network quality. Most marketers measure their traffic quality and make campaign mix and bid changes based on empirical conversion or other quality measurement data (whether automatically, manually, or both). As the network's volume of subpar traffic increases for any specific market segment, click prices drop. The remaining publishers in the network are hurt.

To renew deals with quality publishers, a network can't accept members that dilute network click quality. Google CFO George Reyes was probably focused on network-type click fraud when he stated, "I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model."

Clearly, Google takes network fraud seriously. A pending lawsuit against Texas-based Auctions Expert International claims it "flagrantly abused [Google's service] by artificially and/or fraudulently generating ad clicks."

If you think a search engine's network has quality problems, regardless of whether it's due to fraud or a poor quality publisher, build a case and show the data to the engine's reps. Or, if you want, send it to me. I can't promise to examine every case, but I'm very interested in supplementing data I have from my clients with results from other marketers.

Competitive Click Fraud

Competitive click fraud is a big problem for smaller businesses, particularly when the service provided is of great value (or great lifetime value), resulting in high CPCs (define). Lawyers, doctors, accountants, IT consultants, and, of course, search engine marketing (SEM)/SEO (define) firms all bid in high CPC marketplaces. The higher the CPC, the greater the effect a competitor can have on a specific budget.

Terms such as "new york lawyer" exceed $10 CPC. If a listing gets a click a day from five people from a competitor in both Google and Overture, you'll pay an extra $1,500 a month each to those search engines. This is a serious additional cost -- with absolutely no benefit.

In our server logs, I've seen entries from competitors came through paid links and returned more than once. Click fraud or natural curiosity from a competitor considering working in our agency program? I'll never know for sure. SEO-related keyword clicks aren't cheap. The business's competitive nature can involve a certain level of personal animosity between players. Competitive click fraud can be tempting. Resist the temptation, and do unto others...

Can you catch competitive click fraud? Perhaps. It depends on the competitor's level of sophistication. IP address lookups are the most common method of identifying click fraud, combined with cookie and session tracking and normalized benchmarking. Yet smaller businesses are likely to use Internet connections that don't directly identify them.

Mislabeled Traffic

Mislabeled traffic is more a network issue. It isn't about malicious activity so much as crossed lines between search and contextual traffic. Visit a news sites and look for text links. Some of those links are reported as search when actually, they're contextual.

What's the difference? Some marketers want to provide a different message to active searchers than to visitors who happen on the ad. Some ads served against some content aren't even contextual. I see many "debt consolidation" and "bankruptcy" ads running on general news pages. Sure, the CPCs and CPM (define) are high for the publisher, but does the marketer get what he pays for?

Impression Fraud

Impression fraud is the newest threat. Google and other engines rely on an AdRank method of determining an ad's relevance. A competitor pauses his campaign while a sudden fraudulent surge in impressions on your keywords occurs. All these impressions occur with zero clicks. AdRanks for competing ads, including yours, drop through the floor. The competitor waits a bit, then swoops in with a normal ad with a high CTR. Your campaign is entrenched with keywords that are disabled or seriously crippled. So, Google makes an ad position decision based on fake data.

In the end, search traffic, and search engine marketers' success, search engines, and the industry as a whole rely on correctly labeled traffic coming from high-quality network partners (or inexpensive, lower-quality networks). All these players have a vested interest in SEM's success, except cheaters. Let's make sure the cheaters don't win in the long term.

Meet Kevin at Search Engine Strategies in New York City, February 28-March 3.

BY Kevin Lee | February 18, 2005

http://www.clickz.com/experts/search/strat/article.php/3483981

Posted by Hans A. Koch at 06:43 PM | Comments (0)

February 15, 2005

More lawsuits against publishers to come?

In the recent AP click fraud article, it refers to the recent lawsuit Google filed against Auction Experts International, over the estimated $50,000 in "illegitimate commissions by clicking on the ad links that Google delivered to its Web pages."

AP writer Mike Liedtke also has quotes from attorney David Kramer, who represents Google.

The suit won't be Google's last to combat click fraud, said Palo Alto attorney David Kramer, who represents the company.

So what does this mean to the average AdSense publisher or advertiser?

It means Google is going to be pursuing those who are committing click fraud. And lawsuits can be quite a deterrent for those committing large-scale click fraud, such as the case with Auction Experts International.

As a publisher, I think this is great since not only does it protect the integrity of the AdSense publisher program, but it also means that sites committing click fraud can easily be taking ad inventory and clicks away from true publishers, meaning that honest publishers may end up showing ads with lower EPC. Once these click fraud sites are suspended from the program, it opens up more ad inventory availability.

As an advertiser, this means that less of my advertising budget will be going to pad the pockets of click fraud artists, and more will be going to true visitor clicks with the potential for conversions.

If filing lawsuits against those committing click fraud is a successful deterent against click fraud, I am all for it. It would be interesting to know if the number of suspected click fraud cases has gone down since last November, when the first lawsuit was filed. Or if it has just brought the issue of click fraud more mainstream where others want to try it too. From both an advertiser and a publisher point of view, I hope it is the former.

Posted by Jenstar at February 15, 2005 12:15 PM
http://www.jensense.com/archives/2005/02/more_lawsuits_a.html

Posted by Hans A. Koch at 12:15 PM | Comments (0)

February 14, 2005

Click Fraud Looms as Search-Engine Threat

February 14, 2005 -- Like thousands of other merchants, Tammy Harrison thought she had struck gold when hordes visited her Web site by clicking on the small Internet ads she purchased from the world's most popular online search engines, The New York Times reports.

It cost Harrison as much as $20 for each click, but the potential new business seemed to justify the expense. Harrison's delight dimmed, though, when she realized the people clicking on her ads weren't really interested in her products.

She was being victimized by “click fraud,” a scam that threatens to squelch the online advertising boom that has been enriching Google Inc., Yahoo Inc., and their many business partners, the Times says.

The ruse has different twists, but the end result is usually the same: Merchants are billed for fruitless traffic generated by someone who repeatedly clicks on an advertiser's Web link with no intention of ever buying anything, the Times reports.

Harrison figures she has spent about 200 hours documenting the mischief that drained her budget and diverted customers to a competitor, costing her an estimated $100,000 in sales, the Times says.

“Click fraud has gotten out of control,” Harrison, who sells computer software to doctors, told the Times. “It's stealing money from my pocket. It's just as bad as someone walking into a store and taking a television.”

Estimates vary widely on how much click fraud is going on in the $3.8 billion search engine advertising market, the Times says.

“Click fraud exists, but it's mostly a big paranoia,” Chris Churchill, chief executive of Fathom Online, a San Francisco firm that studies the spending patterns on search engine ads, told the Times. Others believe anywhere from 10 percent to 20 percent of the clicks are made under false pretenses.

“Click fraud is like a big elephant standing in the middle of the living room,” Lisa Wehr, president of Oneupweb, a search engine advertising consultant, told the Times. “Everyone sees it and knows it's there, but no one is quite sure what to do about it.”

Both Google and Yahoo acknowledge the perils of click fraud, but believe improved internal controls and the increased vigilance of advertisers will prevent the problem from escalating, the Times reports.

:We are always worried about it, but it hasn't been a material issue so far,” Google chief executive Eric Schmidt told the Times.

After recently expanding its staff to patrol click fraud, Google broke up a scheme that had generated several thousand bogus transactions, chief financial officer George Reyes told analysts earlier this week, the Times says.

Yahoo also has been shoring up click fraud protections, Patrick Giordiani, a senior manager for the company's advertising subsidiary, Overture Services, told the Times.

For the full New York Times article, click to http://www.nytimes.com/aponline/technology/AP-Click-Fraud.html

February 14, 2005
http://www.the-dma.org/cgi/dispnewsstand?article=3367

Posted by Hans A. Koch at 05:47 PM | Comments (0)