"Remember this: the search engines can't see my data, and I can't see theirs," Harrison said. "This is where the process can be cumbersome, because we're not looking at the same things. I think a better system needs to be created that allows advertisers to know whether they have been charged for a click that is fraudulent."

Leading search engines have discussed the possibility of turning to third party organizations for help in advancing a wider dialogue, confirmed Doug Leeds, Yahoo!'s associate general counsel.

Alchemist Media President Jessie Stricchiola, one of the more outspoken experts on click fraud, said the rest of the search community is eager to take part in a more cooperative discussion.

"Obviously we have a problem the CPC engines can not solve on their own, or they would have done it by now," said Stricchiola. "If we can work together, we can do better addressing this problem as an industry."

But not all players in the search community take the same aggressive stand. The Search Engine Marketing Professional Organization (SEMPO) recently released research that shows 43 percent of SEM agencies surveyed haven't tracked click fraud much, but are worried about it. The research also showed that 30 percent of agencies have tracked the issue, but find it only a "moderate problem." Based upon that research, SEMPO feels there isn't enough momentum to support an industry-wide organization to address the issue, said Greg Jarboe, a SEMPO spokesperson.

"SEMPO recognized that click fraud was a hot issue, which is why we included questions about it in last fall's research," Jarboe said. "People said they were concerned about click fraud, but the next step proposed was to call on the search engines to increase their efforts to detect and stop it. It's not clear, based on recent discussions, whether a next step beyond that has to be taken."

By Rob McGann | March 10, 2005
http://www.clickz.com/news/article.php/3489021

Posted by Hans A. Koch at 06:03 PM | Comments (0)

Click Fraud: Problem and Paranoia

Last week, I served on the "Click Fraud: Problem or Paranoia" panel at the Search Engine Strategies conference in New York. At one point, Jessie Stricchiola, one of my fellow panelists, tried to gauge the extent of the problem by asking the 80 people in attendance to raise their hands if they had ever been victims of "click fraud."

About half of the audience members, most of them small businesses owners, raised their hands.

Then Stricchiola, founder of Alchemist Media, wanted to know how much each had lost. Most reported losses in the $5,000 to $10,000 range. A couple hit $20,000, and the biggest loser of all claimed his company had been fleeced for more than $300,000.

That's when I realized the panel might have more aptly been called "Click Fraud: Problem and Paranoia."

Click fraud -- the skewing of pay-per-click advertising data with illegitimate hits -- can be accomplished in a number of ways, ranging from manually clicking on the same ad link repeatedly to deploying automated bots. Whatever the method, the results are the same: Merchants pay for traffic from someone who has no intention of purchasing anything. Return on investment: bupkis.

It doesn't just affect online merchants. Google, Yahoo and other search engines may also be vulnerable. In the "How We Generate Revenue" section of its latest quarterly report (.pdf), Google stated, "We derive most of our revenues from fees we receive from our advertisers" and acknowledged it has "regularly refunded revenue" to click-fraud victims. (In fact, a full third of audience members reported that they had received refund letters from Google.)

"If fraudulent clicks are not detected," Google went on to say, "the affected advertisers may experience a reduced return on their investment (and) could lead the advertisers to become dissatisfied with our advertising programs, which could lead to loss of advertisers and revenue."

To paraphrase another panelist, Danny Sullivan, editor of SearchEngineWatch.com, if Google is concerned, that's good enough for me.

So who commits click fraud? It could be a scurrilous search engine ad affiliate who clicks for dollars. Auction Experts International, a Google AdSense partner located in Houston, allegedly reaped $50,000 in commissions by hammering away on ad links until Google sued in November. Its principals never showed up in court, and Google won by default. (The site dissolved into the ether.)

Or a company might do it to deplete or expand a rival's pay-per-click budget. Some businesses that pay Google or Yahoo's Overture $20 a click to appear as the No. 1 or 2 ad for a specific keyword estimate that as much as 35 percent of their traffic is fraudulent. Who do they blame? Competitors seeking to bankrupt them.

This is what happened to Tammy Harrison, president of 2K Medical, which markets billing software to doctors. A year ago, she reviewed her log files and noticed a repeated pattern of clicks for keywords that were not normally searched. She realized a majority of the clicks originated from IP addresses located in the same state, and immediately suspected a former employee who had started a rival firm. Total cost to Harrison: $100,000 in sales, time spent determining the extent of the problem, and money wasted on useless ads.

You'd think that victims like Harrison and others who attended the panel discussion might consider confronting the search engines. But many are afraid to complain because of the fear they will get blacklisted by Google, Yahoo and the others, which provide most of their traffic.

"I am scared to death," Harrison said, "but I feel someone needs to speak up so this problem will be resolved. They are the search engines gods and I respect their powers." That said, she emphasized that she is interested in working with the search engines and not against them, and Google and Yahoo have provided refunds for fraudulent clicks, although not for the 200 hours she put in sifting through her logs.

If the Googles of the world are off-limits, perhaps merchants who suspect rivals of juicing up their search ad traffic should consider suing. But this also presents significant obstacles. First, to build a case, they'd need cooperation from the search engines, which are paid whether the clicks are fraudulent or legit. Says Ben Edelman, a panelist who made his name fighting adware companies: "Search engines don't have the incentive but have the data, while the advertisers have the incentive but not the data."

Besides, as Peter D. Raymond, an attorney at the international law firm Reed Smith, said during the panel discussion, "There are three certain things in life: death, taxes and legal fees." It simply might not make sense to spend money pursuing a lawsuit when the outcome is uncertain but the retainer fee isn't.

What can a victim of click fraud do? One solution bandied about at the conference seemed simple enough. Contest the charges on your credit card as fraudulent. If enough merchants did it, they could enlist powerful allies: American Express, Visa and MasterCard, who would likely pressure the other search engines to do something about it.

It sure beats trusting Google to mail you a refund check.

- - -

Adam L. Penenberg is an assistant professor at New York University and the assistant director of the business and economic reporting program in the department of journalism.

By Adam L. Penenberg
02:00 AM Mar. 10, 2005 PT

http://www.wired.com/news/culture/0,1284,66845-2,00.html?tw=wn_story_page_next1

Posted by Hans A. Koch at 02:00 AM | Comments (0)

March 08, 2005

News Analysis: Yahoo challenge to Google Adsense comes as click fraud threatens contextual pay per click advertising

he coming launch by Yahoo of YPN—a competitor to Google Adsense, is a bid to break off a chunk of Google's second largest business.

But the competitive battle could be tempered by click-fraud, a growing problem that threatens both companies.
(See SVW story: Confirmation: Yahoo is testing a Google Adsense competitor.)

At stake are hundreds of millions of dollars of Google’s Adsense revenues from publishing text ads on third party web sites, many of them blogs.

Yahoo has an opportunity to strike a strategic blow against Google. Instead of spending hundreds of millions of dollars marketing Yahoo Search and its other online businesses, Yahoo could choose to offer web site owners a larger share of YPN advertising revenues than Google.

This would win Yahoo prime positions on hundreds of thousands of web sites, and Google would be stuck with far fewer web pages on which to publish ads.

Declining conversion rates because of click-fraud will further exacerbate the competitive battle.

Click-fraud, if left unchecked, will lead to advertisers paying less for each click in response to fewer sales per click.

Advertising networks would then have to increase the number of text ads published to make up for less revenue per click. But there are a limited number of online pages on which to serve ads.

Google has greater exposure to click-fraud than others, because almost all of its revenue comes from advertising vulnerable to this exploit.

This is why Google is keen on publishing text ads on email messages, and when a PC user searches their computer. Google’s Gmail email service and Desktop Search service potentially offer a massive inventory of PC screen pages on which to publish text ads. Yahoo has similar services.

Web pages are open to anyone and it is easy to disguise visitor identities and their clicks. Email and desktop search are specific to an individual person, and an individual PC—making it considerably harder to conceal click-fraud exploits.

The best part: no revenue sharing required.

March 08, 2005

by Tom Foremski for SiliconValleyWatcher

http://www.siliconvalleywatcher.com/mt/archives/2005/03/yahoo_challenge_1.php

Posted by Hans A. Koch at 04:25 PM | Comments (0)

March 04, 2005

Experts: Policing Affiliates Big Challenge for PPC Search Players

Pay-per-click search companies difficulties' adequately policing their affiliate distribution partners is one of the bigger challenges facing the search marketing industry, experts said.

It is on these affiliate sites that 70 percent of click fraud activity takes place, according to Scott Boyenger, president and CEO of ClickDefense, one of a score of companies that has launched in the last 18 months to identify and stop click fraud. Affiliate publishers distribute pay-per-click ads and search players pay them a cut of what advertisers bid.

"About 15 to 20 percent of all click activity is erroneous. Seventy percent of that is not by real people," Boyenger said, referring to bots designed by fraudsters to click on PPC ads. "The advertiser is the loser and the companies offering PPC are winning, and so are the affiliates."

Other companies, like Fathom Online, also identify search players' affiliates as the most widespread source of fraudulent click activity.

"Without a doubt, the majority of click fraud is coming from affiliate sites," said Matt McMahon, EVP at Fathom Online. "But advertisers will vote with their pocketbooks with regard to the offending search engines, and go for the service that offers them the best ROI."

The percentage of click activity that falls under the umbrella of affiliate fraud was a subject of hot debate at a panel discussion on click fraud held at the Search Engine Strategies (SES) conference in New York this week. However, panelists generally agreed the percentage is higher on so-called tier two services like Kanoodle, Enhance Interactive, and FindWhat.com than on Google and Overture.

While all of the paid search players acknowledge that affiliate fraud is a problem, they maintain they have both human and technological defenses that are effective in keeping the problem in check.

"Anyone who says it's not a problem is kidding you, but we think it is a manageable one," said John Slade, senior director of global project management at Overture.

Overture says it employs three lines of defense against click fraud. First, every click must pass through a system of thousands of filters designed to screen out "unqualified" clicks of all kinds. Second, Overture employs a team of expert analysts whose job it is to screen out invalid clicks from genuine click traffic. Finally, Overture actively solicits input from its advertisers, forming what it refers to as a "neighborhood watch" helping to report suspicious activity, Slade said.

"If we see we have a node in our network generating unqualified traffic, we remove it immediately from our network," Slade said.

Though experts at SES said they thought affiliate fraud was a more serious problem at the smaller paid search companies, Enhance Interactive said it couldn't comment on the alleged disparity.

"We only have access to our own information," said Walter Korman, SVP of technology at Marchex, the parent company of Enhance Interactive. "Like the leaders in the space, we have a vigilant system in place to identify and prevent this type of click fraud from taking place. If there are variances between us, there are variances."

However, Korman acknowledged that the bots targeting Enhance's affiliate sites are growing in sophistication, and that filtering affiliate fraud traffic out of its network is a demanding process of identification and removal.

Kanoodle had a similar response to inquiries about the issue. "Kanoodle takes this very seriously and has processes and people dedicated to staying one step ahead of those who would try to game the system," said Lance Podell, Kanoodle's CEO. "It is the responsibility of the sponsored links providers to deliver quality leads to advertisers, which requires a constant and dedicated effort."

Neither FindWhat.com nor Google were available for comment.

Perhaps the thorniest side of the whole click fraud issue for advertisers is that search engines, while maintaining their commitment to protecting advertisers, nonetheless profit from those fraudulent clicks that are not identified.

"All companies offering CPC advertising are susceptible to some level of affiliate fraud," said Rich Kahn, COO of BlowSearch, which has its own pay-per-click offering. "Are we benefiting from it? Yes. Are we also looking to eliminate it? I also have to say yes. It we find it, we squash it immediately. Catching it all is the trick."

By Rob McGann | March 4, 2005

http://www.clickz.com/news/article.php/3487476

Posted by Hans A. Koch at 06:51 PM | Comments (0)

Click Fraud Riles Search Advertisers

NEW YORK—As search-based advertising grows, so too does the concern over fraudulent clicks running up advertisers' bills and shifting the rankings of paid search listings.

Measuring the extent of so-called "click fraud" has proven difficult, but the anecdotal evidence presented this week during a panel discussion at the Search Engine Strategies 2005 Conference & Expo here left little doubt that advertisers are worried about losing thousands, if not hundreds of thousands, of dollars a year to fake clicks.

Jessie Stricchiola, president of Alchemist Media Inc., a search-engine optimization company that also offers click-fraud auditing services, described a common scenario for pay-per-click advertisers. She read through an e-mail sent from Google Inc. to an advertiser, which explained that the search company was refunding the advertiser's account for fraudulent clicks.

While some advertisers welcome the refunds, others become skeptical when they receive such notices, Stricchiola said. They wonder exactly how Google determined the amount of the refund and why the fraud was not prevented.

"This is often where the [click fraud] paranoia comes from, and it's coming from the facts," Stricchiola said.

Click fraud is putting a spotlight on the practices within the pay-per-click advertising field. In the ad model, advertisers bid on keywords for triggering the listing of sponsored links on search and content pages. They then pay a per-click rate to ad programs such as Google's AdWords and Yahoo Inc.'s Overture Services.

For search engines, the ads are the main way they make money. Google alone relies on advertising for about 98 percent of its revenues.

Panelists laid out four typical types of click fraud. Among the more common is an advertiser attempting to improve its paid-search ranking by purposefully inflating a competitor's clicks to force the competitor out of the auction, said Lori Weiman, director of KeywordMax, a division of Direct Response Technologies Inc., which provides click-fraud auditing services.

"We're not talking about a competitor clicking on an ad out of curiosity but about successive behavior over time to get you to stop bidding on keywords," Weiman said.

Another approach involves publishers clicking links on contextual ads, most commonly those from Google's AdSense program where pay-per-click ads are distributed across content sites. More clicks mean a larger revenue-sharing check for the publisher.

Late last year, Google sued an AdSense participant, accusing ad partner Auctions Expert International LLC of purposefully and fraudulently inflating clicks.

Click fraud also could be used as a tool of revenge and for blackmail, panelists said.

In all of the approaches, fraudsters can use a combination of automated software robots, called clickbots, to initiate clicks and people who physically hit clicks.

While Google and Overture do proactively inform advertisers of the click fraud they detect, the majority of the burden for finding and proving click fraud has fallen to advertisers, panelists said.

"Search engines are profiting and have not published rules that speak to an investigation or give those harmed the information to get to the bottom of problem," said Ben Edelman, an Internet privacy research and Harvard University student.

Advertisers can analyze click patterns, visitor logs and other information, but Edelman said the search engines themselves should be able to access more detailed information that could help advertisers track down click fraud and even prove it in court.

So far, click fraud has yet to be tested in court, but panelists and attendees largely agreed that they expect cases to emerge both against alleged fraudsters and possibly against the search engines.

"While we know this is happening, there are no reported cases on this yet," said Peter Raymond, a partner at law firm Reed Smith LLP, in New York. "Obviously there's a real problem in gathering this proof to bring this kind of case."

By Matt Hicks
March 4, 2005

http://www.eweek.com/article2/0,1759,1772485,00.asp

Posted by Hans A. Koch at 06:16 PM | Comments (0)

Search Execs Blame Affiliates, Point to 2nd-Tier Engines for Click Fraud

A canvassing of search players indicated to ClickZ that the brunt of click fraud comes from affiliate programs.

A ClickDefense executive pegged the proportion at 70 percent of bad clicks. CEO Scott Boyenger said that 15 to 20 percent of all clicks are fraudulent. "The advertiser is the loser and the companies offering PPC are winning, and so are the affiliates." Fathom Online's Matt McMahon agreed that the offending parties were generally affiliates, but said that the problem would likely work itself out as advertisers left programs that had poor returns due to fraud." Panelists at the recent Search Engine Strategies conference tended to agree that second- and third-tier search engines - those other than Google or Overture - tended to have higher rates of click fraud.

4 Mar 2005

http://www.marketingvox.com/archives/2005/03/04/search_execs_blame_affiliates_point_to_2ndtier_engines_for_click_fraud/index.php

Posted by Hans A. Koch at 05:52 PM | Comments (0)

Click fraud roils search advertisers

NEW YORK--Tammy Harrison, president of a medical billing software company, says she's a victim of click fraud and needs support.

Harrison had detected a rival company repeatedly clicking on her sponsored listings in Google and Yahoo search results--a tactic meant to deflate her ad budget and boost the competitor's ranking on the page. After sending the corroborating data to the two search engines--which maintain policies against fraud--she managed to get some refunds and the rival bumped from one service.

"I've spent more than 200 hours tracking this person down, and I've lost at least $100,000 in sales. I've gotten my money back--not all, but most," Harrison of 2KMedicalBilling.com said during a panel on click fraud at the Search Engine Strategies conference here.

Another audience member chimed in that his company had lost nearly $300,000 to fraudulent clicks. "This fraud is part of doing business, because if you start suing these search engines, they'll cut off your traffic," he complained.

"Maybe we should start Advertisers Anonymous," joked Jeffrey Rohrs, president of Optiem and host of the panel.

Click fraud is a reality of the pay-for-performance search industry, an estimated $4 billion to $5 billion market this year. Search has turned online advertising into a cash cow for businesses such as Google and Yahoo because of its efficiency at bringing customers and products together at the point of interest. But where there's profit, there's often pilfering.

Fraudsters take advantage of the fact that marketers must pay a fee to the search engine with each click of a sponsored link. For example, it costs an advertiser an estimated $8 per click to appear in search resutls for the term "medical billing software." In some cases, those fees are shared with third-party Web publishers that play host to the ads. And in industries where the ads are more expensive--for example, medical, financial or legal--fake sites will crop up for the sole purpose of collecting a check from Google or another ad network.

It's anyone's guess as to the financial liability it holds over the search engines; Google, Yahoo and others do not break out numbers on the amount of fraud detected and refunded. But anecdotally, people estimate that it could comprise between 5 percent and 20 percent of industry sales.

"It's a billion-dollar problem," said Tom McGovern, president of Snap.com, a relatively new search engine backed by Idealab, founder of commercial search pioneer Overture Services.

For advertisers, click fraud is a particular headache because they must regularly scrutinize their Web traffic and ad campaigns to sniff out thieves, then request refunds from the search engines with which they advertise. The fraud is often perpetrated by online robots, or "bots," programmed to click on advertisers' links, so it can be difficult to detect. The clicks can also come from employees of rivals.

As a result, many companies attending SES are promoting solutions to the problem.

Snap.com, for example, rolled out a new advertising system this week that lets marketers pay for search-related advertising only when people take an action as a result of the promotion, or what's called "cost per action" advertising. The service will let marketers bid for placement in Snap.com's search results but pay only if a customer buys something, in one example.

Other analytics companies, including Clicklab and ClickDefense.com, have introduced specialized tools for monitoring fraud.

Panelists at the click fraud session suggested legal recourse for advertisers and search engines.

Google, for example, filed a lawsuit against an alleged fraudster last fall. The suit charges Auction Experts International with abusing its ad network for monetary benefit. The lawsuit is pending in a Santa Clara, Calif., court.

Jessie Stricchiola, founder of Alchemist Media and click fraud specialist, said that oftentimes, sending a cease-and-desist letter to the party responsible for the fraud will scare people off the practice. For 2KMedical's Harrison, such a letter could get the attention of the second search engine to have it ban her rival as well, panelists said.

"For advertisers, as search advertising gets saturated and more competitive, tactics for click fraud are getting more interesting and aggressive," Stricchiola said .

Published: March 4, 2005, 2:01 PM PST
By Stefanie Olsen
Staff Writer, CNET News.com

http://news.com.com/Click+fraud+roils+search+advertisers/2100-1024_3-5600300.html

Posted by Hans A. Koch at 02:01 AM | Comments (0)

Click fraud roils search advertisers

NEW YORK--Tammy Harrison, president of a medical billing software company, says she's a victim of click fraud and needs support.

Harrison had detected a rival company repeatedly clicking on her sponsored listings in Google and Yahoo search results--a tactic meant to deflate her ad budget and boost the competitor's ranking on the page. After sending the corroborating data to the two search engines--which maintain policies against fraud--she managed to get some refunds and the rival bumped from one service.

"I've spent more than 200 hours tracking this person down, and I've lost at least $100,000 in sales. I've gotten my money back--not all, but most," Harrison of 2KMedicalBilling.com said during a panel on click fraud at the Search Engine Strategies conference here.

Another audience member chimed in that his company had lost nearly $300,000 to fraudulent clicks. "This fraud is part of doing business, because if you start suing these search engines, they'll cut off your traffic," he complained.

"Maybe we should start Advertisers Anonymous," joked Jeffrey Rohrs, president of Optiem and host of the panel.

Click fraud is a reality of the pay-for-performance search industry, an estimated $4 billion to $5 billion market this year. Search has turned online advertising into a cash cow for businesses such as Google and Yahoo because of its efficiency at bringing customers and products together at the point of interest. But where there's profit, there's often pilfering.

Fraudsters take advantage of the fact that marketers must pay a fee to the search engine with each click of a sponsored link. For example, it costs an advertiser an estimated $8 per click to appear in search resutls for the term "medical billing software." In some cases, those fees are shared with third-party Web publishers that play host to the ads. And in industries where the ads are more expensive--for example, medical, financial or legal--fake sites will crop up for the sole purpose of collecting a check from Google or another ad network.

It's anyone's guess as to the financial liability it holds over the search engines; Google, Yahoo and others do not break out numbers on the amount of fraud detected and refunded. But anecdotally, people estimate that it could comprise between 5 percent and 20 percent of industry sales.

"It's a billion-dollar problem," said Tom McGovern, president of Snap.com, a relatively new search engine backed by Idealab, founder of commercial search pioneer Overture Services.

For advertisers, click fraud is a particular headache because they must regularly scrutinize their Web traffic and ad campaigns to sniff out thieves, then request refunds from the search engines with which they advertise. The fraud is often perpetrated by online robots, or "bots," programmed to click on advertisers' links, so it can be difficult to detect. The clicks can also come from employees of rivals.

As a result, many companies attending SES are promoting solutions to the problem.

Snap.com, for example, rolled out a new advertising system this week that lets marketers pay for search-related advertising only when people take an action as a result of the promotion, or what's called "cost per action" advertising. The service will let marketers bid for placement in Snap.com's search results but pay only if a customer buys something, in one example.

Other analytics companies, including Clicklab and ClickDefense.com, have introduced specialized tools for monitoring fraud.

Panelists at the click fraud session suggested legal recourse for advertisers and search engines.

Google, for example, filed a lawsuit against an alleged fraudster last fall. The suit charges Auction Experts International with abusing its ad network for monetary benefit. The lawsuit is pending in a Santa Clara, Calif., court.

Jessie Stricchiola, founder of Alchemist Media and click fraud specialist, said that oftentimes, sending a cease-and-desist letter to the party responsible for the fraud will scare people off the practice. For 2KMedical's Harrison, such a letter could get the attention of the second search engine to have it ban her rival as well, panelists said.

"For advertisers, as search advertising gets saturated and more competitive, tactics for click fraud are getting more interesting and aggressive," Stricchiola said .

Published: March 4, 2005, 2:01 PM PST

By Stefanie Olsen
Staff Writer, CNET News.com

http://news.com.com/2100-1024_3-5600300.html

Posted by Hans A. Koch at 02:01 AM | Comments (0)

March 03, 2005

THE MEDIA BUSINESS: ADVERTISING; Web Marketers Fearful of Fraud In Pay-Per-Click

ABSTRACT - Businesses that pay billions to Google and Overture to steer potential customers to their Web sites are increasingly questioning how much fraud lurks in blossoming pay-per-click model of advertising; there is evidence that at least some scammers are clicking away at ads,

or having programs called hitbots or clickbots do it for them, with knowledge that each click costs advertiser money; some of troublemakers are disgruntled employees; some are companies trying to force competitors' ad spending up; some are even Web page operators who let search engines deliver ads to their sites and then collect cut when people click on those ads; ad buyers worry that 'click fraud' could become rampant, if unchecked--development that could undermine confidence in fastest-growing segment of Internet advertising; executives at Speedy Registration, British company that sells personalized license plates, says its pay-per-click ads were fraudulently hit last year; chart (M)

By NAT IVES (NYT) 919 words
Late Edition - Final , Section C , Page 1 , Column 5
BUSINESS/FINANCIAL DESK | March 3, 2005, Thursday

Please Note: Archive articles do not include photos, charts or graphics. Our photos are available for purchase, please click here for more information.

http://query.nytimes.com/gst/abstract.html?res=F60A11F738590C708CDDAA0894DD404482

Posted by Hans A. Koch at 07:01 PM | Comments (0)

Foiling the Click Fraudsters

I've been promising to address the issue of click fraud, and I'm spurred to
do so by an
article
in today's New York Times on the topic. I don't suppose this entry will be
the final word on the topic (meaning that you can expect more from me on it) but
I'd like to start with the following issues: What is click fraud? Who is harmed
by click fraud? What are the motivations behind click fraud? How easy is it to
commit click fraud? What is the current state of the art in click fraud
prevention and detection? How big a problem is click fraud? Note: I am limiting
this discussion to Google, but it applies equally well to all purveyors of
contextual pay-for-click ads.

1. What is click fraud?
Click fraud is intentionally following a pay-for-click link in order to gain financial benefit while having no real interest in the good or service advertised in the pay-for-click link. Specifically, Google AdSense policies forbid site owners from clicking AdSense ads on their own sites.

2. Who is harmed by click fraud?
The biggest losers are AdWords advertisers. If advertisers pay for fraudulent clicks, then they are overpaying for contextual ads. To the extent that click fraud is widespread, or perceived of as widespread, then it creates a problem for the entire pay-for-click contextual ad industry and content providers on the Internet that depend on this industry for their revenue stream.

3. What motivates click fraud?
I can think of three click-fraud motivations. I've already mentioned that it is a potential way for site owners to increase their revenues. Second, a malicious competitor might attempt to "stick it" to a competitor by engaging in fraudulently clicking the competitor's ads. The final motivation is the same as the motivation of the poor lost souls who write viruses: because it is there and a challenge and naughty.

4. How easy is it to commit click fraud?
Very easy on a small scale and almost impossible to do without detection on a large scale. If a site owner clicks a few times on the ads on their own pages from an IP that is different from the one used to register with AdSense, and deletes cookies from the browser following each pay-for-click click, it is impossible to detect. If the site owner's friends around the world each click an ad on the site once a day, no one will ever be the wiser. (Who knows? These people might end up buying something from the links they click through while they are at it.) There are also (unconfirmed) reports of distributed networks of users in India and China committing this kind click fraud campaign on behalf of clients.
However, any massive click fraud campaign -- say 100 clicks or more on the same ad -- whether automated or manual is certainly statistically detectable.

5. How is click fraud prevented and/or detected?
Click fraud prevention systems typically place their own cookies on a users system when the user clicks through, and then tracks the user, issuing discouraging messages to repeat clickers, and possibly denying access to the destination site. This approach has some drawbacks, however, as it may discourage legitimate prospects, and may be defeated by deleting cookies.

Detection of fraud is a statistical matter, and Google (and the other pay-for-click vendors) are close-mouthed about how they analyse the data (for obvious reasons). This link from SEO Website Marketing should give you an idea of the raw ingredients that go into a statistical hunt for click fraud.
While Google and the other major companies do put great effort into foiling click fraudsters, if you spend any kind of money using AdWords, you need to monitor for click fraud yourself. This link, also from SEO Web Marketing, gives you some idea of the kinds of things you should look for in your Web Server logs and analysis software. An industry has sprung up around helping AdWords customers detect click fraud; you can find many of the players by searching for "click fraud" in Google. One issue: a pay-for-click vendor like Google is the court of last resort if click fraud is alleged, and some advertisers have been less than overwhelmed by their responsiveness to allegations (e.g., they don't happily give refunds). Ultimately, to address this problem, the industry may need a click fraud referree.

6. How big a problem is click fraud?
A good question. One recent study by the Search Engine Marketing Professional Organization (SEMPO), a trade association showed only 6% of all segments of advertisers thought it was "a significant problem we are tracking." (In contrast, 31% either had not heard of it or were not worried.) As reported in the study, marketers felt that search spam is a much bigger problem, and I think this is right. I continue to believe that click fraud is an issue like retail "spoilage": it is a cost of doing business on a small scale (and some small scale perps are converted to customers), and detectable on a big scale.

Posted by Harold Davis at March 3, 2005 12:44 PM

http://www.braintique.com/research/mt-archives/000096.shtml

Posted by Hans A. Koch at 12:44 PM | Comments (0)

Click Fraud Experts: Marketers Need More Info From Search Engines

FOR SMALL SEARCH MARKETERS, CLICK fraud can pose major problems by decreasing conversion rates and ratcheting up ad costs. But, while the challenge is well-known, finding a solution isn't so easy--and, in some instances, might actually be hampered by search engines themselves, said industry experts at a panel discussion Wednesday at the Search Engine Strategies Conference in New York. "People are losing money--money is, in effect, being stolen," said Reed Smith attorney Peter Raymond. Click fraud occurs when a competitor, affiliate, or disgruntled employee creates fake traffic to a site though pay-per-click ads.

The difficulty in stopping click fraud, Raymond said, lies in both proving that it's happened, and linking that proof to a particular person or company that can be sued. One of the biggest barriers for marketers is that they don't have access to that information, said Ben Edelman, a spyware consultant.

Raymond and Edelman were joined on the panel by Adam Penenberg, an author and columnist for Wired; Danny Sullivan, the editor of SearchEngineWatch; Lori Weiman of search engine optimizer KeywordMax; and Jessie Stricchiola of Alchemist Media, another search engine optimization company. Both KeywordMax and Alchemist Media offer click fraud detection service.

Weiman said that one of the major obstacles to a click fraud crackdown is that search engines are reluctant to share the data that documents such fraud. She spoke of one instance in which her client had been billed for traffic that had apparently been generated fraudulently, and the search engine involved hadn't done anything to prevent it. "The search engine clearly wasn't being proactive in detecting fraud," Weiman said. She declined to identify the search engine in question.

Some panelists suggested that search engines have an incentive to turn a blind eye to click fraud. "You'd like to look to the search engines because they have all the data," said Ben Edelman. "But the practical reality means leaving money on the table for them."

"[Search engines] have the ability but not the right incentives, and advertisers have the incentives but not the ability," said Edelman. "In a perfect world, you could trust the search engines to handle this problem."

Some search engine professionals, however, dispute the idea that top-tier search engines are sitting on their hands. "They have just as much incentive to eliminate click fraud as advertisers," said Matt McMahon, executive vice president at Fathom Online. He added that if click fraud gets out of hand, search engines will see their entire business models become devalued. "Direct marketers chase conversions, and fraudulent clicks don't convert," he said.

Chris Churchill, Fathom's founder and CEO, said that search engines were easy targets for people who aren't seeing the return on investment or conversion rates that they're looking for from pay-per-click ads--and that major search engines were working to address it. "It certainly is out there, but there are several top-flight companies out there that are working to solve the problem."

by Shankar Gupta, Thursday, Mar 3, 2005 8:00 AM EST
http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=27817

Posted by Hans A. Koch at 08:00 AM | Comments (0)

March 02, 2005

Other Shoe on Keyword Prices, Clickfraud

Last week there was buzz about how paid search is slowing, this week Fathom Online, which maintains a monthly keyword pricing index, reports that in fact prices dropped for paid search terms, by an average of two percent. Release is here.

I don't know how you all feel out there, but I sense a backlash of sorts building toward paid search. The story has been too rosy, for too long. Journalists and Wall St. analysts are starting to look hard for chinks in the armor.

One of the most interesting, from my point of view, is clickfraud. I've been talking at length to a fellow who is a significant advertiser on Google and other paid search networks, and he is literally exhausted from chasing down all the fraud that is plaguing his ad buys, and really angry with Google for not being responsive to his requests for relief. I'll be writing up that story and posting on it shortly, but if you have any information or insights on clickfraud, send em my way, or post em here.

Update" Charlene Li calls Google a "one trick pony" in this Bweek article, and SES show had a session on clickfraud, covered in this MediaPost piece. Why does every piece covering clickfraud end with a vague handwaving by someone saying "Smart companies are working on this, don't worry about it..."?

by John Battelle at March 2, 2005 05:33 PM
http://battellemedia.com/archives/001296.php

Posted by Hans A. Koch at 05:33 AM | Comments (0)