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May 20, 2005

Attorneys Seek Advertisers for Click Fraud Class Action

Lawyers engaged in a click fraud-related class action suit against the major search engines have employed a little online marketing of their own.

Dallas attorneys Joel Fineberg, Dean Gresham and Stephen Malouf this week launched a site at LostClicks.com to help them find potential click fraud victims.

The attorneys have a pending class action suit in the circuit court of Miller County, Arkansas. Plaintiffs in the case are Lane's Gifts and Collectibles and Caulfield Investigations, while the named defendants include Google, Yahoo!, Lycos, AskJeeves, FindWhat.com, Buena Vista Internet Group, LookSmart, America Online, Netscape and Time Warner. Two other plaintiffs that had originally been part of the case, U.S. Citizens for Fair Credit Card Terms and Savings 4 Merchants, have apparently dropped out.

The lawsuit accuses the defendants of overcharging advertisers for pay-per-click advertising and concealing the overcharges.

The LostClicks.com site exhorts visitors to help the firm with the case, urging them to e-mail "If you have information about click fraud, have not been given answers or your money back from the search engines for suspected click fraud or you suspect click fraud and need to investigate...."

"What we'd like is for LostClicks.com to become an electronic meeting place for advertisers and individuals who are concerned about pay-per-click fraud," said Fineberg in a statement.

A recent survey by the Search Engine Marketing Professionals Organization (SEMPO) found that 45 percent of advertisers were worried about click fraud, though they hadn't tracked it much. Meanwhile, 26 percent said it wasn't a significant concern. Only 6 percent labeled click fraud as a significant problem that they had tracked.

By Pamela Parker | May 20, 2005
http://www.clickz.com/news/article.php/3506721

Posted by Hans A. Koch at 09:56 AM | Comments (0)

May 18, 2005

Catching 'Click Fraud' Online

Until recently, online advertisers had no way of knowing whether they were being victimized by click fraud, experts said. Now, however, software and services from firms such as WhosclickingWho.com, PPCTrax.com, Clicklab.com and ClickFacts.com are helping to discern the real visitors on the Web from the imaginary ones.

An auto repair shop owner buys some online ads and thinks he snagged a bargain by negotiating a deal with the advertising agency to pay only when Web surfers click on the banners. It sounds like a good deal, until the owner receives the bill: His US$1 per click deal turns into a $1 million invoice, and he has no idea how many of the clicks came from legitimate prospects.

Welcome to the world of Internet Learn how the leader in Internet services can help you start and grow your business online. Network Solutions. Go Farther. click fraud -- crimes emerging from an increasingly popular practice of pricing online ads.

Until recently, online advertisers had no way of knowing whether they were being victimized by click fraud, experts told UPI's The Web. Now, however, software and services from firms such as WhosclickingWho.com, PPCTrax.com, Clicklab.com and ClickFacts.com are helping to discern the real visitors on the Web from the imaginary ones.

Different Kinds of Click Fraud

"There is a lot of click fraud on the Internet," said Danay Escanaverino, director of marketing at Global Resource Systems in Plantation, Fla., a pioneering firm in the Web marketing field.

Many kinds of click fraud occur online. Some of it is perpetrated by competitors of a business, who click on their rivals' ads repeatedly in order to drive up their costs and even try to push them into insolvency. Another malicious fraud occurs when hackers click on ads or search for key words they know have been purchased for keyword searches, such as "car dealer" and "Chicago."

Perhaps the most egregious click fraud comes from Web sites that bill their advertisers for an imaginary number of clicks, simply to boost their advertising revenue.

"The primary question for marketers is, 'How do you determine which of those clicks are from real customers?'" said John Enright, vice president of marketing at Affinity Internet in Ft. Lauderdale, Fla., a Web services provider for small businesses Latest News about small business.

The threat of fraudulent clicks is dominating the consciousness of the online ad industry today. The obsession is to "identify malicious versus legitimate traffic before it adversely affects the network," said Karen Regan, a spokeswoman for Mazu Networks in Cambridge, Mass., which makes software to track malicious behavior on networks.

The new software is helping contain the problem, experts said.

Various Protection Approaches

"You can monitor the visitors to a site or an ad and determine what search engine they used, whether it was Google or Yahoo or Ask Jeeves," said Pam Watkins, president of Fueled Communications in Dallas, an Internet marketing firm.

The tools also can help determine where a user entered a Web site -- an important fact, because many do not enter via the main page, but through links they may have seen elsewhere, or received in an e-mail from friends. The software can examine which parts of a Web site visitors trolled and how much time they spent there.

Controls can even prevent fraudulent clicks while they are happening. WhosClickingWho.com shows pop-ups to warn clickers if they are repeatedly clicking on the same ad.

Advertisers want these kinds of protections because the ad-click business has become a $4 billion-a-year industry. The biggest portion of Google's revenues comes from word-search clicks, so it, as well as Yahoo, have implemented in-house measures to ensure the integrity of the data. Google is also said to have refunded clients who were apparently overcharged for clicks.

Companies with a major online presence, like NYTimes.com, USAToday.com, Weather.com, iVillage.com and others use a service from Tacoda, a company in New York City, to segment, target and measure online ad campaigns, a Tacoda spokesman said.

Some related issues worry online advertisers in addition to click fraud. One of the metrics used to measure the traffic of a Web site is the number of "unique visitors" -- that is, how many different individuals visited a given site in a given time frame. This contrasts with the total number of clicks, which includes repeat visits by prospects.

Cookies Under Attack

Many consumers use anti-spyware software to eliminate cookies -- the mini-files deposited on the hard drives of Web users that are employed by sites to track unique visitors. Now, advertisers are fighting back with new technology. United Virtualities, also in New York City, has developed a backup ID system for cookies set by Web sites and advertising networks. The technology, called the Persistent Identification Element, is tagged to a user's Web browser. It provides advertisers with a unique identification, just like a cookie, and the tags cannot be deleted by any commercially available anti-spyware software today.

"All advertisers, Web sites and networks, use cookies for targeted advertising, but cookies are under attack," said Mookie Tenembaum, founder of United Virtualities. "They are being erased by 40 percent of users, creating serious problems. PIE will give publishers and third-party providers a persistent backup to cookies, effectively rendering them unassailable."

The PIE software is contained in just one line of code, he said.

Tenembaum said that from the advertiser's point of view the erasure of cookies constitutes a threat to an array of server-side applications, not just advertising, but also site registration and traffic counting.

By Gene J. Koprowski
UPI
06/18/05 5:00 AM PT

Posted by Hans A. Koch at 05:00 AM | Comments (0)

May 17, 2005

Click Fraud Being Offered By Email

When Google was naming potential problems that could affect the company adversely in their IPO filing, they indicated PPC click fraud was one of their biggest worries.

Considering the report by Tim Yang, it appears as if Google may have even more to worry about when it comes to click fraud. Apparently, Tim received an email from an Indian company (or ad clicking syndicate, if you go by Tim's description) offering to provide his site (which features AdSense) with 1000+ "unique" clicks. In return for these revenue-boosting fraudulent clicks, the syndicate wanted 50% of the revenue Tim collected.

Tim engaged the email's author, Sanjay Das, in a back-and-forth that took a number of emails to complete (read Tim's post for the discussion). The conversation was ended with Tim turning Sanjay's offer down.

However, Tim's post indicates one thing: click fraud is becoming so popular that people are offering their services as ad clickers. In fact, during Tim's dealing with Sanjay, he received an additional offer that increased the initial click count from 1000+ to 5000+, further revealing how far click fraud as come. Not only do you have offers for ad clicking services, they also come complete with the haggling you'd expect from a used-car salesman.

As Jensense points out, until recently, click fraud was unheard of in the mainstream. But now, publications like the Wall Street Journal report on the concept.

I think it's safe to say that once you start getting spam offers for fraudulent click services, the problem has officially reached mainstream status.

About the Author:
Chris Richardson is a search engine writer and editor for WebProNews.

Chris Richardson | Contributing Writer | 2005-05-17
http://www.webpronews.com/insidesearch/insidesearch/wpn-56-20050517ClickFraudBeingOfferedByEmail.html

Posted by Hans A. Koch at 03:38 PM | Comments (0)

Is Click Fraud Really a Problem? by Tommy Maric

Click fraud is currently a major topic in online advertising.
Many argue that it presents a threat to the stability and viability of pay-per-click (PPC) advertising, the key revenue generator for both Google and Overture. In actuality, click fraud is not a significant issue at all.

Click fraud occurs when ads are clicked for reasons other than a genuine interest in learning more about the product or service advertised. Click fraud occurs in two forms. In one instance, fraud arises from competitors trying to sabotage each other. One competitor clicks on the ads of another just to drain the budget of that company. The other instance occurs when webmasters (or people associated with the webmaster) repeatedly click Google AdSense ads (which are syndications of others’ ads) on their own web pages in order to generate more revenue. While both Overture and Google have developed sophisticated technologies to detect click fraud, their systems are, and may never be, foolproof.

The real question is how much does click fraud actually damage the PPC industry? Gross fraud, i.e., when one person or technology consistently and repeatedly clicks on an ad, aside, which Overture and Google can easily detect, we believe that click fraud has no real impact on the industry. The following explains why.

Efficient market theory says that it is impossible to “beat a market” because prices already incorporate and reflect all relevant information. As the PPC industry has matured, efficiency has begun to take root. That is, the price of each keyword has been driven up to the point where it reflects the highest price an advertiser is willing to pay for a click.

For instance, a book retailer may pay $1.00 per click based on internal metrics. These metrics dictate, for example, that on average 30% of clickers purchase a book and the average profit per sale is $4.00. So, for every 100 clicks ($100 cost), they make 30 sales ($120 revenue) and generate a $20.00 (20%) profit.
Note that years ago, the same retailer may have been able to pay only $0.50 per click, but as the market matured and more retailers began advertising, competitive bidding forced the price up to $1.00 where the highest return the most advertisers can make is 20%.

The key point is that click fraud is already taken into effect when advertisers select the highest amount they will bid. For instance, there is no difference whether an advertiser pays $0.83/click for 121 clicks with 21 being fraudulent, or $1.00/click for 100 clicks when there is absolutely no fraud. In either case, the advertiser pays $100 and generates a profit of $20, and Overture and/or Google make $100. What changes is the advertiser’s yield (e.g., the percent of clickers who purchased the book) which in turn effects their highest bid price. That is, with fraud, 30 out of 121 clickers (24.8%) purchased the book, and without fraud 30 out of 100 clickers (30%) purchased it. Without fraud, the bid price in an efficient market will rise from $0.83 to $1.00.

In summary, online advertisers must focus on analyzing and improving their internal metrics (e.g., conversions) and not worry about click fraud as it is already incorporated into keyword bid prices. Hopefully, the frivolous lawsuits and refund requests spawned by apparent click fraud will end as those in the industry recognize this undeniable fact.

About the author:
Tommy Maric is the manager of TopPayingKeywords.com.
TopPayingKeywords.com is designed to help webmasters maximize their profits using Google’s Adsense™ program. Through extensive research, TopPayingKeywords.com develops up-to-date databases of the most popular keywords and their accompanying bid prices. For more information, please visit http://www.toppayingkeywords.com

Tuesday, May 17, 2005
http://www.alphaone-tech.com/blog/2005/05/is-click-fraud-really-problem-by-tommy.html

Posted by Hans A. Koch at 09:22 AM | Comments (0)

May 16, 2005

Publisher Propositions from AdSense Ad-Clickers Goes Mainstream

TimYang.com reports about an email exchange he had with Sanjay Das, who promised him 1000+ untraceable AdSense clicks on his ads, which could be upped to 5000+ clicks if he so desired

You can read the full account here, but this is perhaps the most amusing snippet:

My 1000+ visitors are such that each person would click all the Adsense ads on your site. Additionally I can give you IP addresses of each of my visitors to your site. This can be a way to differentiate. I don't know how is the log of the Adsense, but I can give you a helping hand to differentiate my visitors from your visitors. All you have to do is to give me a secondary access to your logs, by either sending me the saved log page (as MHTL) or by sending me snaps of the log pages.

I bet the AdSense team would love that list of IP addresses ;)

Ralph of Fantomasteralso comments:

Still – it may have been a pretty amateurish attempt but what it does indicate is that the concept has trickled down into the mainstream so we’ll probably see a lot more of it happening. Ironically enough, this fellow maintains an e-mail account with (you guessed it!) GMail.

Click fraud has definitely been going much more mainstream - it was unheard of only a few short years ago, even on the advertiser end of things. Now it is written everyone from the New York Times to the Wall Street Journal.

How much longer until it becomes popular enough that email spammers begin mass emailing millions with similar "we will click your AdSense ads" email spam offers?

Posted by Jenstar at May 16, 2005 07:26 PM
http://www.jensense.com/archives/2005/05/publisher_propo.html

Posted by Hans A. Koch at 07:26 AM | Comments (0)

May 13, 2005

Click Fraud: Detection, Analytics and Advocacy

Click Fraud is the greatest threat to the rapid growth of the paid-search marketing sector. Speaking about click fraud to an investor conference in December, Google CFO George Reyes stated, "I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model." Accounting for an estimated 5 - 15 percent of all PPC clicks (estimates differ by sector), click fraud is assumed to cost advertisers tens or even hundreds of millions of dollars per year. The problem has become so pervasive the April 7 edition of Wall Street Journal ran a front-page center column story titled, "In Click Fraud, Web Outfits Have A Costly Problem". (subscription req.)

What is click fraud and what makes it so dangerous to the stability of the major search engines' business models?

The pay per click or PPC business model generates a lot of money for search engines and webmasters who allow paid advertising to be displayed on their sites. A search conducted on Google, Yahoo or MSN will show several advertisements running down the right hand side of the organic search results and sometimes across the top of a search engine results page. Every time a search-user clicks on one of these ads, the advertiser pays the search engine for that click. Advertisers bid for placement under associated keywords and phrases in a virtual auction format. Generally the advertiser with the highest bids, or in Google's case, the one that generates the most revenues through a combination of high bids and stronger click-through rates, wins the highest placement in the list.

For over three years paid-search has been the primary revenue generator in the search engine industry. Promising front-page placement and massive contextual distribution across associated network websites, paid-search delivers rapid exposure to an audience that pre-selects itself based on keywords entered in their search query or found on a document. As a means of reaching a market too massive for TV, paid-search and contextual distribution is an obviously winning idea. Unlike organic SEO, paid-search marketers can make guarantees and back them up with quantifiable (and easily understood) data.

For major search firms such as Google, Yahoo and Ask, paid-search is to one degree or another a fundamental cornerstone of their increasingly bountiful bottom lines. Actually in Google's case, paid-search represents about 95% of annual revenues. Built on the power of paid-search, the major search engines are reporting record revenues quarter after quarter. Paid-search marketing, for the most part, is much easier for an agency or advertiser to facilitate. It is also one of the easiest ways to scam money or damage one's competitors. In this often-unscrupulous Internet age, there are a lot of very talented people stealing other people's money in one way or another. The provision of paid-search advertising which experiences double and triple digit growth from quarter to quarter is a tempting place to practice their larcenous skills.

Savvy webmasters and advertisers, along with a growing number of forensic click-analysts are getting better at detecting simple fraudulent click activity. The growing specter of click fraud has given rise to an industry that detects fraud and works to find ways to combat it and help clients seek refunds.

Jesse Stricchiola, the founder of Alchemist Media, has emerged as one of the leading experts on click fraud detection among SEM practitioners. She was one of the first SEMs to approach the major search engines with highly detailed forensics and is now recognized as a credible advocate for advertisers who feel they have fallen victim to click fraud. In a presentation at the recent Toronto Search Engine Strategies Conference session, "Auditing Paid Listings and Click Fraud Issues", she outlined the two basic forms of click fraud.

The first and likely most pervasive is generally known as "competitor clicks". In this scenario, a business works to drive their competition into financial distress by wasting their paid-advertising budget. Every time an ad is clicked, the cash register dings at the search firm providing that ad space. While keyword bids might be as low as $.015 per click, they can reach into tens and in some extreme cases hundreds of dollars per click. Through simple and often stupid means or highly elaborate robot driven campaigns, one clicks away on their competitors' ads. This form of click fraud is increasingly easy to detect and deal with however the onus is on the advertiser or their agent to diligently inspect and analyze their web-logs. Jesse noted two case studies in which one business worked to burn the budget of competitors. One case involved having staff members click on paid-ads from their workstations. The other involved the use of a specialized "hitbot" commissioned to spend as much of a particular competitor's money as possible. After tracking several identifiable signatures such as IP address and repetition, click-times and the succession of clicks on an ad, she was able to help both clients get their money refunded.

The second basic form of click fraud is called "Affiliate Fraud". Stemming from the vast networks of small affiliate partners who display paid ads generated by the major search engines on their websites, this type of click fraud is more difficult to detect and manage. When looking at a typical website, users are increasingly noticing paid advertising discretely appearing somewhere on the page. These ads usually relate to the topic of the page and are delivered by the search engines based on keywords found on the page or through a specific choice by the webmaster. Every time one of these ads is clicked, the search engine bills the advertiser and gives 50% to the webmaster of the site the click came from. The dozens of ways to scam this sort of system are obvious and as click fraud becomes a bigger concern for advertisers and search engines, people with a propensity for illicit gain are jumping on the short-term bandwagon.

There are a lot of highly talented programmers looking for work around the world. While all of us live in a time of legal transition in relation to cyber-crime, some people live in nations with relatively weak legal systems and abysmal cyber-investigative infrastructures. Faced with huge brains and tiny employment prospects, several turn to cyber-shenanigans for fun and profit. By exploiting fake IP addresses, using clever algorithms to determine click behaviours and finding ways to destroy identifying references, fraud artists can stretch their gains over several months or even years without getting detected. There have been stories of click-for-pay positions offered to web users in Europe, South East Asia and Oceana in which surfers are paid to click on paid-ads on one of their employer's thousands of websites. If done properly, it can be next to impossible for the major search engines to keep up.

Lori Wieman from KeywordMax noted this issue in the same session. KeywordMax provides PPC analytic software for SEMs and advertisers. While the search firms must bear responsibility for dealing with legitimate refund requests and work to limit click fraud, it is unrealistic to expect them to take a firm stand on the issue. Lori stressed that the onus for detecting click fraud remains on the advertisers themselves. In her presentation, Lori outlined a number of specific things advertisers should look for in their web-logs and if found, record using a spreadsheet program like Excel which allows easy comparison of several points of data.

Lori stressed that advertisers (or their agents) should capture IP numbers of those who visit their sites. Every visitor has an IP address and your server will record it. If you record the IP of all visits to your site, you can eventually see how often a specific IP visits the site and how the user got there. If the same IP appears day after day after day (and hour after hour after hour) and it comes from one of your paid ads, you are almost certainly the victim of click fraud. While recording visitor IP addresses, Lori also recommends tracking competitor IP addresses to see if they show up in your web logs. Every visit from an affiliate partner site generates a unique reference number. Lori suggests recording those numbers whenever possible. Visitors can also be tracked geographically and advertisers are advised to check where visits originate from to see if any odd or unexplainable patterns emerge.

Ultimately, Lori notes the responsibility for auditing billings and listings falls to the advertiser. The search engines are improving their ability to track fraudulent clicks but the volumes of clicks they work with make specific-campaign analytics a lower priority. The search firms could help advertisers by offering more detailed billing, creating fraud investigation departments and becoming more communicative and responsive to advertisers' complaints.

At the same time, it is up to the consumer to diligently pursue their complaints. If you think you are a victim of click fraud, Lori urges you to file a detailed report within 60-days of the fraud and to provide as much documentation as possible.

Backing Lori's call for consumer diligence was Danielle Leitch from MoreVisibility, a Florida based SEM. Danielle urged the audience to audit their own server logs as well as use analytic software noting that some things might be missed by software but obvious for human eyes. Danielle also pointed out that if you do receive a refund from one of the search firms due to click fraud, you need to manually adjust your stats as the report activity generated by the search engines will not be changed. Keeping track of campaign metrics is the key to detecting and dealing with click-fraud.

Danielle used a number of PowerPoint slides to show a forensic audit she conducted for a client. She found a number of click-fraud signatures including similar IP addresses, tell-tale timing and geographic patterning. By compiling very detailed notes and developing both verbal and written contact with the search engines, Danielle was able to get her case-study client a substantial refund.

As an issue, click fraud can be managed and perhaps even eventually tamed but that will require a high degree of cooperation between the search firms that sell the ads and the advertisers or their agents who purchase them. It is in the best interest of the major search firms to work with advertisers and their SEM agents to protect the integrity of the paid-advertising systems. Facing a number of paid-ad focused lawsuits, one of which is threatening to be granted class action status the search engines are being forced to be more open to the concerns of their consumers. With the advent of click forensic analytics and advocacy as a professional segment of the Search Marketing industry, a strong foundation for such cooperation is being built. While click fraud remains the most frightening issue on the paid-advertising front, increasing sophistication of consumers, advertisers and search media and a willingness to collaborate presents a strong and responsive defense.

This SEO News was posted by Jim @ 4:29 PM

Friday, May 13, 2005
http://news.stepforth.com/blog/2005/05/click-fraud-detection-analytics-and.php

Posted by Hans A. Koch at 04:29 AM | Comments (0)

May 10, 2005

Click Fraud: A Legal Look

Click fraud is a growing concern among search engine marketers, but who ultimately is to blame? Perhaps more importantly, what's being done to address this increasingly contentious issue?

A special report from the Search Engine Strategies 2005 Conference, February 28 - March 3, 2005, New York, NY.

Questions swirl around the click fraud issue. Do the search engines need to police more? Is it the search marketer's responsibility to audit closely? Are those doing bogus clicking likely to face penalties? In this session, experts offered an overview of what's going on and examination of the legal issues with click fraud.

The flavors of click fraud

"Click fraud has gained a lot of notoriety in the last six months, certainly in the popular press," said Jeffrey Rohrs, President of Optiem LLC. "People understand the motivations that might be leading to fraudulent clicks, or as we termed in our panel back in Chicago, the non-converting clicks."

Some of the motivations of click fraud include financial gain, competitive advantage, revenge and blackmail. Jessie Stricchiola, founder of Alchemist Media, began by describing the financial gain click fraud "flavor."

"Google's AdSense program, generally speaking, allows the owner/webmaster of any web site—large, small, legitimate, or fluff—to become an AdSense partner," said Stricchiola. "The incentive to become an AdSense affiliate lies in the revenue received from Google based on the percentage of the per-click revenue for the traffic that AdSense affiliates sends to the AdWords ads published on their site(s)."

"Because approval and management of the AdSense program is primarily algorithmic and not human-edited as in Overture," she further explained, "there has been much room for abuse—basically webmasters setting up shop with web sites purely to host content for the delivery of AdWords. These webmasters create their own artificially-generated traffic by automated means—namely hitbots."

Therefore, in this instance of financial gain, opportunities exist to use the Google AdSense program to generate direct revenue for the fraudster.

Lori Weiman, Director at KeywordMax, described the competitive advantage click fraud "flavor."

"For example, suppose one search engine advertiser's ad is in a top position, a hot spot," she said, "and obviously others would like to be in that spot. One way to get the top bidder out of the hot spot is to stop using their keywords (on your ads) and run up your competitor's bill. The hope is that your competitor will walk away and the pricing on the first couple of ads starts to drop."

"We are not just talking about competitors clicking on your ad from curiosity nor a one-time click for information about your site," she said, "but rather about competitive click behavior that happens over a period of time—purposely to get try and get you to stop bidding."

Rohrs described the revenge motivation. "In an instance where a very highly targeted word relating to liability litigation had been bid at $10 a click, for example, somebody came in and had the audacity to bid on Overture for $99, thereby maxing out," he said. "If you understand the Overture system, it can resolve the next ad to down to the a penny below their competitor."

"One of the things that has always been inherent in the system is that if my ad is in the #2 position, and I see someone doing that type of bidding," Rohrs continued, "to pimp them, I can raise my bid up to $98.99, costing them $99 a click. But I will now resolve my ad down to a penny below the third bidder."

"The fourth click fraud 'flavor' is blackmail," he said. "This was the first instance where click fraud hit the national radar because someone who had a clickbot had the sense to send an email, stating that he could solve Google's problem if Google helped him out a bit."

Click fraud techniques

There are two primary methods of generating invalid, fraudulent clicks: manual clicking (by humans) and automated clicking (by software). "Additionally, the two primary initiators of click fraud are advertising competitors and CPC engine affiliates/traffic partners," Stricchiola explained. "What is important to understand is that both competitors and affiliates/traffic partners can and do use both click generation methods to varying degrees."

"For example, an advertiser can identify a single IP address associated with one of his competitors," she further explained. "And the advertiser can inform the CPC engine about traffic from that IP, which the CPC engines are perfectly willing to filter. However, that does not mean that additional traffic isn't coming from the same competitor from a different IP address in a different region—IP addresses which change dynamically and are not very identifiable as far as being able to tie them directly to a single static source. Quite often, there will be more than one advertiser that experiences competitor fraud. When two competitors contact each other and compare notes, these kinds of activities are discovered."

Search engine efforts

"Overture has historically been more willing to disclose traffic data to the advertiser during the refund negotiation process, which has helped resolve some click fraud issues more quickly," said Stricchiola. "Either by refund alone, or by refunding and modifying that advertiser's campaign filters."

"Google, on the other hand, has been very consistently resistant to providing advertisers with specific traffic data associated with refund clicks," she continued, "which is certainly cause for concern when advertisers are being issued arbitrary refunds and not being given any details about how they can better protect their campaigns. Often these refunds are of large amounts on credit cards long after the interest on that amount has been factored into the advertiser's credit card statement."

Weiman added that the second-tier PPC engines (Findwhat, Kanoodle, etc.) are not very proactive about issuing refunds. "But they seem to be very reactive in following the data you supply them," she said. "We showed them X number of clicks and the frequency was ten times that of the normal amount during a certain time period. If we had not stepped in, the advertiser could have been paying ten times what they should have."

From Raymond's perspective, a class action lawsuit is possible against the search engines. "Although there are a lot of impediments, one of them being the contract that everybody signs with the engines," he said. "Google is responsible for this. Advertisers have all signed contracts saying that Google is not responsible for fraudulent clicks. However, if Google does know in fact that this is ongoing and does nothing about it, they could very well end up liable, and advertisers can take action."

Grant Crowell is the CEO and Creative Director at Grantastic Designs, Inc. He has over 15 combined years of experience in the fields of print and online design, newspaper journalism, public relations, and publications.

By Grant Crowell, Guest Writer
May 10, 2005

http://searchenginewatch.com/searchday/article.php/3503376

Posted by Hans A. Koch at 10:04 AM | Comments (0)

May 06, 2005

Kanoodle Follow Up

After writing my Kanoodle post I did speak to the Vise President and he talked me into putting more money into the account and giving them a second chance. Out of respect that they did take the time to call and they said they would try to change my results I did give them that chance. I explained to him that I didnt mind paying for clicks but was responsible for getting my advertisers results. He assured me he understood my concerns and would put us in a different program.

I am afraid I do not have any good news as we received the exact same results as the first time. I then started to back track all the clicks that came into our site from the referring URL's and searched Hamptons Bride Magazine, we were not found in any of the databases. I then searched keywords that I had purchased and did find our site in some of the them. This showed me these search engines were keyword based only, meaning you can only find your site under the keywords you purchase. My curiosity got the best of me so I decided to see if Kanoodle used their own PPC program. I went to all the search engines that were sending me "Zero" second clicks and searched "Kanoodle, PPC, Pay Per Click and so on. Kanoodle didn't come up in any of the search engines. Hmmmmmmm I find that a bit odd, if it was going to bring them more customers, which in return would bring them more money, why wouldn't they be in their own search network. If you look at the .pdf that I uploaded and go to the referring URL's you can do your own research and come to your own conclusions. I just want to set the record straight that I am totally for PPC programs and we get great results from Google and Yahoo.

Thanks,
John

Friday, May 06, 2005
posted by John at 1:15 AM
http://hamptonsbridemagazine.blogspot.com/2005/05/kanoodle-follow-up.html

Posted by Hans A. Koch at 01:15 AM | Comments (0)

May 05, 2005

Google, Yahoo Leave Advertiser Holding "Smoking Click Fraud Gun"

As reported by Catalog Age magazine, the CEO of executive air service CharterAuction says he's got clear evidence of click fraud against his company by a rival. Even though, he can't get major search engines to investigate his complaint properly, or to take action against the alleged perpetrator. The result? He's reducing his search engine marketing budget to about 5% of what it was two years ago.

Has anything changed for CharterAuction since being the lead story in the Wall Street Journal recently? Nope.

CEO Nate McKelvey describes his initial reaction to Google and Yahoo (Overture) crediting his account due to suspicious activity that, in the end, they were not willing to provide any evidence of beyond the fact that they considered it to be suspicious.

"Google didn't even offer me a refund... they credited my account, which I thought was peculiar," he says.

So, you're probably thinking (like me) hey Mr. McKelvey you need to do your own investigation and hire a lawyer. Well, he's done that and has gathered up damning information from his ISP (against one of his competitors) based on IP address. Even though, McKelvey wants Google and Yahoo to do something about the problem... offer something to control it beyond crediting his account for trivial amounts of clicks when, in fact, fraud is running rampant. One IP address sent about a hundred clicks through his Google and Yahoo ads within a few seconds, a telltale sign of fraud.

So why won't any of the search engines he's buying cost-per-click advertising traffic from give him basic fraud fighting information such as IP addresses of all ad clicks? The answer, as I see it, is clear. Doing so would lead down a path that would allow all advertisers to reduce fraud through taking their own legal recourse... and that's not good for business.

Who is listening to McKelvey? Lawyers looking to persuade him, and others, to join in a class-action suit against the search engines - that's who! It's only a matter of time for Google and Yahoo. They either deal with the fraud issue pro-actively or get nailed in a mega-class action lawsuit... forcing their hand.

Posted by Jeff on May 5, 2005 11:29 AM

http://www.affiliatecluetrain.com/archives/2005/05/google_yahoo_le.php

Posted by Hans A. Koch at 11:29 AM | Comments (0)

May 04, 2005

One Company’s Click Fraud Tale

Nate McKelvey says he has hold of a smoking gun—and no one in authority is interested.

Specifically, the founder CEO of executive air service CharterAuction says he’s got clear evidence of click fraud against his company by a rival. But he can’t get the major search engines to investigate his complaint properly, or to take action against the alleged perpetrator. And that has led him to reduce his search engine marketing budget to about 5% of what it was two years ago.

McKelvey’s story is unique, both in its level of detail and in the amount of publicity it has received: He was the lead in a Wall Street Journal article on click fraud last month. But both its shape and its bitter tone are similar to many other anecdotal stories of click fraud from other small and mid-sized advertisers who are involved in search engine marketing.

Click fraud—bogus click-throughs on an advertiser’s ad by someone other than a legitimate visitor—depends on the pay-per-click business model that Google in particular has worked to build. When a visitor clicks on the ad, the advertiser pays a small fee to Google, or whatever company placed the ad. If the ad appears on a search results page, the search engine keeps the fee. If it was placed on another party’s Web page, the placement company shares the fee with that third party operator.

The problem comes when hoaxers try to game this system by clicking on ads they’re not interested in, forcing advertisers to pay for useless clicks. Web site operators might intend these bogus clicks to boost their fees from the company distributing the ads; or they might be in competition with the advertisers and hoping to drain their online ad budgets by forcing them to pay for pointless clicks.

The click-fraud problem received some attention in November 2004 when Google sued a Texas-based Wed site for clicking the ads placed on its own pages. The suit was hailed as a first step by the big search engines to combat the click fraud problem-- something even Google CFO George Reyes called a major threat to his company’s business model.

But there have not been any high-profile suits by the search engines against the other form of click fraud, the one in which one company purposely defrauds another. That’s the form that McKelvey says his company has fallen victim to. He says he has proof of the act, but adds that Google and Yahoo have been unwilling to give his case a satisfactory hearing.

McKelvey runs CharterAuction, a Quincy, MA-based company that offers private chartered jet service using an innovative online auction model. He founded the company in 1999 after several years spent running another charter jet service and with a clear notion that the Internet held some unique business possibilities that weren’t available offline.

One of these was the auction model, which links the price of a flight to real-time demand among Charter’s executive users. But another, McKelvey says, was the opportunity to linking the cost of marketing his company’s services to performance through pay-per-click ads.

“I was one of the first in my industry to spend time and money on search engine marketing,” he says. “I monopolized [search ads] for 18 months, maybe even a couple of years. It was so effective at that time, because most of it was real traffic. I was getting several hundred click-throughs per day, and registering as many as 50 prospects per day directly from my ads.”

McKelvey started by advertising on early networks such as Go2.com, then signed on with Google and Overture as they came up. At one time, he says he was advertising on as many as a dozen engines, including some obscure ones. Originally, he was paying as little as 5 cents a keyword; but as the medium became more popular, those bids elevated until eventually he was spending $20,000 a month and placing $20 bids on about 20 keywords such as “executive jet”.

“When it started getting up into that $20,000 range, I said, ‘This is ridiculous,’ and I started increasing my keywords to about 200 to minimize my exposure,” McKelvey says. That helped keep costs and ROI in line for a short while. But eventually ad spending began creeping up to the $20,000-a-month figure again. The value proposition was eroding—something McKelvey didn’t notice until 2003, when an investor questioned the amount he was spending on search marketing. “It had been kind of running on autopilot,” he says of the CharterAuction SEM effort. “But when you dug into the statistics, it wasn’t paying like it used to.”

The concept of click fraud had been on McKelvey’s mind since his first days as a search advertiser. But he dismissed the notion; with an economics degree and several graduate computer science courses under his belt, he felt that such fraud would be easily traced and not worth committing. Still, the realization that his SEM efforts were not paying the way they once did sensitized him to the performance of his keywords.

Then in January 2004 came notices from both Google and Overture of “unusual click activity” on his account: about $70 in the case of Google, and $16.91 for Yahoo. “Google didn’t even offer me a refund—they credited my account, which I thought was peculiar,” he says.

McKelvey asked around within the air charter industry to see if anyone else had a similar experience. “It’s a very small industry, and everyone knows everyone else,” he says. Eventually he came upon a charter company that had gotten the same notice from a search engine. An executive at that company had tracked down the IP addresses for the clicks and found one that hit his ad several hundred times in a single day.

“I asked for that IP address, searched my own logs and sure enough, I found it had hit my ad a lot,” McKelvey says. In fact, this IP address sent about a hundred clicks through his Google and Overture ads within a few seconds, a telltale sign of fraud. All told, the same address hit McKelvey’s ads more than 3,000 times at different places around the Web—while more fraudulent clicks hit the other charter company’s ads.

In October 2004, McKelvey got his Web hosting provider to trace the IP address to an Internet service provider, and then found out from that provider that the address was registered to a New York-based rival. “I called around to ten or 20 other air charter companies that were using search engine marketing and warned them to look out for this IP address,” he says. “Turns out everyone was finding it among their clicks. Everyone was getting hit.”

With a suspect IP address in one hand and credits for “suspicious click activity” from the search engines in the other, McKelvey got in touch with Google and Yahoo to find out if the two fit together. But he says he got no practical help and virtually no answer from either one.

“I called and said, ‘Look I need to know the IP address that this click activity is coming from, because I have a suspicion it’s one of my competitors,” he said. “But they refused to give me that information. It’s like they’re willing to charge for the clicks, and yet they’re not giving you any real accounting on the clicks.”

The search engines have traditionally been reluctant to get specific about either the scope of the click fraud problem or their counter-measures to detect and deflect it, arguing that the more they reveal about their processes, the more the bogus clickers know about defrauding their systems. But advertisers with click fraud gripes such as McKelvey’s have complained that the pay-per-click model has become too established and too expensive for marketers to be satisfied with less-than-specific remedies and compensations.

In fact, McKelvey tried to contact both search companies again after his story appeared in the Wall Street Journal on April 6, figuring that increased publicity for the case would make them more anxious to cooperate. This time, Google would neither confirm nor deny that an investigation into the incident was occurring—although the spokesperson was “very nice, very sympathetic,” McKelvey says. At Yahoo, he could only leave a voicemail message, to which the company has not yet responded.

The people who are calling, he says, are lawyers looking to persuade him to join in a class-action suit against the search engines. Rumblings about the possibility of such a suit have been abroad in the search industry for a while. They have picked up some strength recently since two small businesses—a gift shop and a private investigation firm-- filed suit this past February against Google, Yahoo, and a number of other search engines in an Arkansas court. The pair alleges that by charging for advertising services while knowing that a certain portion of those services are bogus, the search engine plaintiffs are taking money fraudulently.

But McKelvey says he’s not interested in becoming a party to a class action. “I don’t want to go down that road,” he says. “I just want them to fix the problem. But when I call them up and try to get them to fix it, they seem to be unresponsive.”

Right now, Charter Auction spends the minimum amount to keep its SEM account open with Google and Yahoo, while exploring other marketing avenues such as print ads. McKelvey feels it’s necessary to keep a presence in search, despite his click-fraud experiences. “Obviously, it’s death for a company not to be listed on the search engines,” he says. “But I only put in the minimum amount per click, five or ten cents.” He doesn’t foresee raising that level unless he gets some satisfactory assurances from Google and Yahoo that his click fraud case is being pursued with vigor.

To make matters worse, the competitor McKelvey says was behind the fraudulent clicks continues to come up in first position for search ads on both Google and Yahoo. “The thing that continues to eat at me most is that I’ve demonstrated that this IP address, coming from a competitor, has hit everyone in the space, and yet [the search engines] continue to allow them to advertise,” he says. “Why would any reputable search companies want to have dealings with a company like this?”
May 4, 2005 11:43 AM , By Brian Quinton
http://searchlineinfo.com/CharterAuction_click_fraud/

Posted by Hans A. Koch at 08:38 AM | Comments (0)