Lane's Gift Click Fraud Complaint

Lane's Gift Click Fraud Complaint

Lane's Gifts and Collectibles LLC v. Yahoo! Inc., Case No. CV-2005-52-1 (Ark. Cir. Ct. complaint filed Feb. 17, 2005).

After parsing the Click Defense complaint last week, I was finally able to get my hands on one of the complaints in the Lane's Gift click fraud lawsuit. This particular version is a second amended complaint in state court, but I'm not sure if this is the "latest" complaint as the case has been bouncing between state and federal court. I heard today that the case was sent back to state court in the last week, but I haven't been able to confirm that.

Lane's Gift Click Fraud Complaint

Lane's Gifts and Collectibles LLC v. Yahoo! Inc., Case No. CV-2005-52-1 (Ark. Cir. Ct. complaint filed Feb. 17, 2005).

After parsing the Click Defense complaint last week, I was finally able to get my hands on one of the complaints in the Lane's Gift click fraud lawsuit. This particular version is a second amended complaint in state court, but I'm not sure if this is the "latest" complaint as the case has been bouncing between state and federal court. I heard today that the case was sent back to state court in the last week, but I haven't been able to confirm that.

This particular version of the complaint alleges three causes of action:

* breach of contract
* unjust enrichment (and various related theories)
* civil conspiracy

I have no idea what the "civil conspiracy" cause of action means. This is an odd cause of action; maybe there's something very specific in Arkansas law. It reads almost like an antitrust claim: "This is an industry wide conspiracy in which all search engines have worked together to develop and/or create a market which allows for over billing and/or overcharging of businesses and/or entities which purchase online PPC advertising." (Para. 47)

An antitrust angle to the click fraud lawsuits would be an interesting development and would potentially raise the stakes significantly for Google and Yahoo. On that front, I had a telephone conversation today with Click Defense's counsel and he used a lot of rhetoric that implied monopolistic practices. I asked him point blank if Click Defense was planning to amend its complaint to add an antitrust complaint and I got a non-commital response, but it seems like a logical move.

As I mentioned in my analysis of the Click Defense complaint, the unjust enrichment claim will likely stand or fall with the other causes of action.

That leaves the breach of contract action. This particular complaint is thinner in describing the basis of the breach of contract than the Click Defense complaint. As I mentioned there, a plaintiff is not required to show all of its cards in the complaint, although this one might be too thin. I could see a judge requiring clearer allegations of exactly how the defendants breached a contract than the very high level allegation made here: "Defendants either expressly and/or implicitly, contractually agreed to provide Internet PPC advertising and/or services to Plaintiffs and only charge for the actual click thruogh advertising from actual customers. Defendants breached that contract by collecting revenues for services which were not provided." (Para. 44)

As I said, it's very possible that there are newer versions of the complaint than this one. If anyone has a newer version, I'd be grateful for a copy.

I'm now scheduled to speak on click fraud at Search Engine Strategies in San Jose next month. If you're interested in the topic, I hope to see you there. (I believe everyone else on the panel has their knives ready to carve up the search engines like a turkey, so it should be an interesting event!).

Posted by Eric at July 15, 2005 02:02 AM | Licensing/Contracts , Search Engines

Posted by Hans A. Koch at 03:41 PM | Comments (0)

July 07, 2005

Making up Click Fraud stats

Looking at both sides of the Click Fraud Argument SEO Chat Is Google admitting the extent of Click Fraud? And are the Click Fraud companies inflating their numbers to get more customers and attention?

Got Ads? says

Certainly there are a lot of "whisper numbers" from the click fraud detection outfits. Generally these estimates seem inflated and embellished, without any hard proof. The commenter at seochat who quipped "95% of statistics are made up" is probably on to something. Also, launching lawsuits to garner attention isn't proof of accuracy.

7/7/2005

Posted by Hans A. Koch at 06:23 PM | Comments (0)

July 05, 2005

Google Wins $75,000 In Click Fraud Case

GOOGLE QUIETLY WON A $75,000 judgment in May in a click fraud case against former AdSense participant Auctions Expert International and its two founders. Google's lawsuit, filed late last year in Santa Clara County Superior Court in California, charged that the Houston-based Auctions Expert "artificially and/or fraudulently" generated clicks on the ads Google served to the company's Web site. Auctions Expert, like other AdSense publishers, received a share of pay-per-click revenue when Web visitors clicked on certain ads on the Auctions Expert page.

Google alleged in legal papers that Auctions Expert hired dozens of people to click on the site's ads, to the tune of at least $50,000.

When Google sued Auctions Expert, the search company presented the move as part of its anti-click fraud efforts. A company representative stated at the time: "We are vigilant in protecting our advertisers and the integrity of our programs... This lawsuit against Auctions Expert demonstrates the success of our anti-fraud system and that we will take legal action when appropriate."

Despite the recent legal victory, Google still must deal with significant challenges arising from click fraud. Currently, the search giant faces at least two high-profile lawsuits relating to the problem--one filed in Arkansas several months ago, and one filed at the end of June. The June suit, filed by Fort Collins, Colo.-based Click Defense, a pay-per-click monitoring company, alleges that Google "failed to take any significant measures to track or prevent click fraud," and "fails to adequately warn its existing and potential customers about the existence of click fraud."

A Google spokesman said both suits are "without merit," and that the company will defend itself.

by Wendy Davis, Tuesday, Jul 5, 2005 6:01 AM EST
http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=31772

Posted by Hans A. Koch at 06:01 AM | Comments (0)

July 04, 2005

Click Fraud Lawsuit--Click Defense v. Google

Click Defense Inc. v. Google, Inc., No. C05-02579 (N.D. Cal. complaint filed June 24, 2005). This is the second major lawsuit again Google for click fraud, following on the Lane’s Gift case filed a few months ago. I have yet to see the Lane’s Gift complaint, but fortunately, we can evaluate this complaint.

What is Click Fraud? (and some possible solutions)

Defining click fraud has always been tough. The Click Defense complaint defines click fraud as “when someone clicks on a search advertisement with an ill intent and with no intention of doing business with the advertiser….purposeful clicks on advertisements for some kind of improper purpose.” (Para. 21). The complaint gives the two typical examples—competitors clicking to burn up an ad spend (Para. 21(a)), and webmasters clicking to boost AdSense earnings (Para. 21(b)).

While I can’t quibble with this definition, it creates problems from a litigation standpoint. How, exactly, is Google supposed to divine clicker intent/purpose? Google knows a little about each click—the ad clicked on, which site delivered the ad, the IP address of the clicker, time of the click—but with respect to any individual click, this information is insufficient to determine intent.

Thus, the plaintiffs expect Google to infer intent through clicker repetition. This isn’t wholly unprecedented; Google uses repetition (among other considerations) to screen out robotic behavior. However, clicker repetition isn’t a good proxy for intent, as evidenced by the statistics on interrupted searches and returns to abandoned shopping carts.

Thus, a “click-series” analysis cannot accurately reveal clicker intent. It will never catch the bad-intent clicker who engages in low volume clicking, and any threshold has to be set high enough not to catch the shopper who uses interrupted search strategies. As a result, Google simply cannot eliminate click fraud when fraud is based on the clicker’s intent. Accordingly, the plaintiffs’ definition creates a legal conundrum—assuming that Google has no practical way to detect every instance of click fraud, when does the volume of click fraud (as defined by the complaint) reach the point that it warrants legal consequences? Without rigorous boundaries around this magic moment, many judges will be reluctant to fashion legal relief.

Having said this, Google could do more with the data it has. First, Google could not charge for any highly-repetitive clicking (robotic or otherwise). Maybe Google is already doing this, but I can’t recall a public statement by Google to this effect. I understand that Google may not want to publicize specific thresholds to maintain security, but at the moment my inference is that it counts highly repetitive clicking in some cases. Google can do better than that.

Second, Google could give advertisers a credit across-the-board based on Google’s system-wide estimates of click fraud. For example, if Google thinks that click fraud cannot be determined on a click-by-click basis, but click fraud comprises 10% of clicks across the network, Google could reduce every advertiser’s monthly bill [billed clicks x advertiser’s average bidded CPC for the month] by 10%.

I don’t think this would immediately lop off 10% of Google’s revenues; I would expect many advertisers would keep spending the same by increasing CPCs, bidding on new keywords, etc. Nevertheless, I would not expect Google to acknowledge the click fraud problem so openly unless the problem was truly out of control or advertisers banded together to force Google to act.

On that front, I remain surprised that advertisers have not attempted to coordinate their actions to date. In my world, the people with the money dictate terms to those who want that money, and a group of large Google advertisers should be able to produce results.

In any case, these musings about possible solutions do not directly affect the lawsuit. However, they highlight the definitional problems and the uncomfortable line-drawing exercises that a judge will have to consider. On this basis alone, a judge may think that this problem is better resolved by negotiation between the parties than through judicial intervention.

The Causes of Action

The complaint alleges four causes of action:

· breach of contract
· negligence
· unjust enrichment
· violation of California’s Business & Professions Code Sec. 17200

I think the last two causes of action are “fluffy.” They are alleged in virtually every case involving some type of allegedly unfair business practices but they rarely affect the outcome. Usually, fluffy claims stand or fall with other, more substantive claims. If the plaintiffs lose the breach of contract and negligence claims, I think the other two claims will fail as well.

The Negligence Claim

Negligence is a tort claim. Every tort requires, as a precondition, that the defendant (Google) owes a legal “duty” to the plaintiffs. Although there are exceptions, parties in a contract generally don’t have tort duties to each other solely due to the contract.

The complaint does not explain why Google owes a duty to its AdWord customers. A cryptic complaint is not unusual; complaints do not need to spell out the underlying legal theories.

The complaint alludes to some duties (Paras. 31-33) that Google should track click fraud, warn advertisers about click fraud, and notify advertisers after click fraud occurs. However, these duties do not currently exist (i.e., there’s no precedent imposing these duties on Google), so a court would have to create them from scratch.

Making new law in this context may give many judges pause because there's a contract between the parties, so the parties had a chance to spell out their duties to each other (rather than relying on default/unstated duties). As a result, it’s possible that a judge will say that Google only has contractual obligations to the plaintiffs and no tort duties, in which case the negligence claim will fail.

The Breach of Contract Claim

From my perspective, the contract breach claim is the substantive heart of the complaint. Historically, my position has been that there is no “fraud” in click fraud cases because the plaintiffs get what they pay for. Advertisers buy clicks, Google delivers clicks—in my book, end of the story. If advertisers want to change the definition of clicks, they can negotiate with Google for a different definition.

The plaintiffs address this by alleging that Google won’t negotiate its contract (Para. 39). This is probably true in Click Defense’s case but not true across all advertisers. I am sure Google will negotiate special deals for top advertisers, so the “take it or leave it” offering simply reflects that Click Defense is a Long Tail advertiser. Plus, a party’s unwillingness to negotiate is rarely important in business-to-business contract cases.

Based on the contract the parties entered into, the complaint claims that Google charges for clicks that weren’t appropriately chargeable under the contract’s terms. The contract says that advertisers pay based on “actual clicks.” The complaint alleges (Paras. 36 and 42) that “actual clicks” do not include fraudulent clicks.

This raises a pure contract interpretation question: what do the words “actual click” mean? Although the word “click” has a pretty well-accepted meaning, I think the phrase “actual clicks” is susceptible of multiple meanings. If I were drafting this provision, I would define “clicks” to reflect how my client’s system technically records them. I would also say that “clicks” exclude any clicks that my client, in its sole discretion, considers to be fraudulent based on the client’s fraud detection systems.

Google’s contract doesn’t provide any clarification of “clicks” or “actual clicks.” Without such a definition, the plaintiffs can try to define it favorably to them. Because Google already reduces its raw number of clicks to reflect robot activity, the judge could decide that “actual clicks” includes other reductions as well. Personally, I think it’s a stretch to convert “actual” to mean “non-fraudulent” (especially using an intent-driven definition) but that’s for the court to decide.

In addition to the breach of contract based on “actual clicks,” the complaint alleges that Google breached an implied covenant of good faith and fair dealing. Although all contracts contain this implied covenant, judges often interpret this covenant narrowly. However, some judges would consider self-dealing (as alleged in Para. 34) to violate such an implied covenant. As with the interpretation of the words “actual click,” it is difficult to predict in advance what a judge will do with this allegation.

Summary

To recap: I think that the plaintiff will get zero traction with its unjust enrichment and 17200 claims, and I think the negligence claim will probably fail because Google does not owe a tort duty to the plaintiffs. I personally think the contract claim should fail as well, but much depends on the way the judge interprets the words “actual click” and the scope of the implied covenant, so neither of these interpretations are easily predictable in advance.

What’s Not Alleged

Despite the fact that the plaintiffs tried to bolster their legal attack through 2 fluffy claims (unjust enrichment and 17200) and one weak claim (negligence), I found it noteworthy what the plaintiff might have claimed but didn’t

Notably, the plaintiffs did not allege that Google committed fraud in inducing advertisers into its contract, nor did the plaintiffs allege that Google made a misrepresentation in its marketing or breach any warranty that might have arisen in the marketing or sales process. Any fraud/misrepresentation/warranty would have come from statements outside of the contract, such as Google’s marketing materials, press releases, publicity statements or securities filings. The complaint does reference some of these extra-contract statements (e.g., Paras. 27-29) but does not use these statements to support additional causes of actions. (Note that the contract disclaims many of these extra-contract statements in Sec. 4, but plaintiffs can overcome these disclaimers in some situations).

Although the complaint references statements in Google’s securities filings, the complaint also does not allege that Google committed any securities law violations. While this complaint would not be an appropriate place to do so (the identity of plaintiffs would not overlap between the two actions), most plaintiffs’ attorneys would happily sink their teeth into a rich defendant for every possible claim it can. Perhaps a securities fraud lawsuit is coming from these attorneys, but I doubt it.

I don’t want to overinterpret the absence of these causes of action, but typically plaintiffs’ attorneys allege everything they can. So my inference is that either the plaintiffs didn’t research these topics (which would reflect either sloppiness or a hope for a get-rich-quick settlement), or they did research the topics and found nothing legally useful. Either way, the fact that the plaintiffs base their principal claim (the contract breach) on a contract that is highly Google-favorable does hint at the legal weakness of the plaintiffs’ action.

Conclusion

I vacillate between two competing perceptions about click fraud lawsuits. Sometimes I think that Google deserves some legal heat for its blasé attitude towards click fraud. Other times, I think click fraud plaintiffs are merely media grandstanders and quasi-extortionists. Unquestionably Google can do more to address click fraud, but advertisers—especially Click Defense (given its specialty in click fraud topics)—know about click fraud and yet voluntarily decide to enter into a contract with Google and voluntarily choose the keywords and pick the CPCs they think are profitable knowing that click fraud exists.

I think Click Defense’s complaint is legally weak but not frivolous. Perhaps with sufficient legal sophistry, Click Defense can find a way to convince a judge to give it legal redress. Nevertheless, I remain convinced that click fraud should and will be solved through business dealings rather than in a court of law.

UPDATE: I've noticed that Click Defense continues to advertise on Google, occupying a top spot for the keyword "click fraud." It's really, really hard for plaintiffs to convince a judge of the merits of their case when the plaintiffs keep placing new orders with the defendants under the same terms. I think Click Defense's advertising tips the balance in this case towards publicity stunt instead of serious lawsuit.

UPDATE 2: I got my hands on the Lane's Gift complaint and have blogged on that too. The updated blog post also references some of my insights from a conversation with Click Defense's attorneys.

Posted by Eric at July 4, 2005 11:00 AM | Licensing/Contracts , Search Engines
Comments

Where does robotic activity fit into your definition of click fraud? Its not clear to me that manual clicking can reach high enough numbers to be a major problem, since the "cheater" would have to shuffle IP addresses at the very least. However, putting some trojan-compromised drones to work could generate significant revenue (or drain on your competitor); sort of a distributed denial of service attack in slow motion.

I would expect that this is already being done - look at the energy spent generating comment and wiki spam and click fraud would seem to generate a more certain and larger payday.

Does your analysis of the complaint change if automated click fraud is alleged?

Posted by: jeff at July 5, 2005 10:29 AM

Note that I didn't offer my own definition of click fraud; I was happy to work with the definition offered by the plaintiffs. The short answer to your final question is no. Under the plaintiff's definition, the plaintiffs expect Google to divine intent, and Google gets the same information from a click regardless of whether the click is made manually or via a robot. Eric.

Posted by: Eric Goldman at July 5, 2005 12:29 PM

Click fraud takes multiple forms, including competitors clicking each other's ads to drive down their advertising budgets (and perhaps exhaust a competitor's daily, weekly, or monthly budget, such that their ads no longer appear), and the type of automated click fraud to which jeff alluded (which may involve a very sophisticated program which automatically distributes clicks through thousands of proxies, or the triggering of software embedded by virus/worm in thousands of computers throughout the world).

What I find most interesting about this lawsuit is that the Plaintiff (http://www.clickdefense.com/) describes itself as "The leading ad tracking, optimization and click fraud detection company". That is, they claim to be victimized by the type of activity they "lead" in detecting. I am left wondering if the lawsuit is more about generating publicity than it is about obtaining an award of damages. ("The complaint alludes to some duties (Paras. 31-33) that Google should track click fraud, warn advertisers about click fraud, and notify advertisers after click fraud occurs. - perhaps they want Google to buy them, because one would think that these are services they offer.)

http://blog.ericgoldman.org/archives/2005/07/click_fraud_law.htm
Eric Goldman

Posted by Hans A. Koch at 11:00 AM | Comments (0)

Reporting publisher click fraud to Google just got easier

A JenSense exclusive! The AdSense team has asked me to announce a new reporting feature, similar to the "spamreport" that Matt Cutts announced at the WebmasterWorld conference last month, but this time, the purpose of the reporting feature is for reporting publishers engaging in click fraud.

If you know of a publisher engaging in click fraud, you can now report them anonymously by clicking the "Ads by Google" on that publisher's site, and then including the term "invalid clicks" in the comment field. And if you do not wish to stay anonymous, you can include your email address as well.

So what exactly is an invalid click? Google includes an "invalid click" definition on their AdSense support site.

Invalid clicks are clicks generated through prohibited methods. These prohibited methods include but are not limited to: repeated manual clicks, or the use of robots, automated clicking tools, or other deceptive software.

It seems that AdSense is taking a significant step up in catching as much publisher click fraud as possible. Click fraud has once again hit the news, with the recent lawsuit Click Defense (who, ironically, continue to advertise via Adwords) filed against Google.

And it also serves as a reminder of something David Kramer, a partner at Wilson Sonsini Goodrich & Rosati who represents Google said in February following the lawsuit Google filed (and subsequently won a default judgment on) against former AdSense publisher Auction Experts International.

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

So what kinds of things should be reported with the new "invalid clicks" tag instead of the "spamreport" tag? Click bot activity (programs that automatically click AdSense ads), click rings (where a group of publishers band together for the sole purpose of clicking each others ads, usually on a rotation basis), explicitly inciting clicks (often by sending emails asking for clicks, requesting clicks before another action - such as a download - can be done, or requesting clicks in a private area of the site that the mediabot cannot access), and hiring people to click.

Things such as "Please click our ads" listed above an AdSense ad unit would still fall under "spamreport" for being an AdSense terms/policies violation.

It could also work for advertisers who notice a high number of suspected fraudulent clicks coming from one AdSense site. They could then go to the site and report suspected fraudulent clicks, including details from their own data of why they suspect the publisher may be committing click fraud.

It is also a public move to show Google is serious about combatting this type of click fraud, and as a result, possibly increase the number of advertisers who currently opt into the content network. And it will be interesting to see if there is an increased number of publishers complaining at the WebmasterWorld AdSense forum about being suspended over the next while.

Posted by Jenstar at July 4, 2005 09:11 PM

http://www.jensense.com/archives/2005/07/reporting_publi.html

Posted by Hans A. Koch at 09:11 AM | Comments (0)

Google Wins Judgment in Click Fraud Case

Google won its suit against an AdSense partner publisher that it had accused of deliberate click fraud. Two months ago, a California judge granted Google a $75,000 judgment against Auction Experts, a Texas firm, according to MediaPost. In its complaint, Google had alleged that Auction Experts had hired individuals to click on the ads that appeared on the firm's sites, racking up advertiser costs of at least $50,000.

July 5th, 2005
http://www.mediabuyerplanner.com/2005/07/05/google_wins_judgment_in_click/index.php?rss1

Posted by Hans A. Koch at 08:25 AM | Comments (0)

July 01, 2005

PPC Click Fraud

one of the biggest threats to the continued growth of Search Advertising is the increasing plague of click fraud. Although there are varying forms of click fraud, most people define it as any click generated, and paid for, where the intent is to drain the advertiser's budget. Advertisers know some clicks are more qualified than others, and not every visitor from their PPC campaigns will convert to a customer. But, they have a right to expect that the traffic they are paying for is coming from people at least marginally interested in their products or services.

What Motivates Click Fraud?

Why does click fraud exist? What motivates people to deceive the system by sending PPC advertisers bogus traffic? The short answer (as usual) is money.

Many Pay Per Click Advertising networks are partially, (or in some cases totally), dependent on affiliate sites to generate traffic for their advertisers. These networks syndicate their customer's ads so they will appear on the sites of their affiliates. Every time someone clicks on an ad the PPC Network and the affiliate site share the revenue. The more clicks the affiliate site generates, the more money it makes. While the vast majority of affiliates are legitimate trustworthy sites, others are in the business of exploiting loopholes in the system to line their pockets with real money by generating fake clicks. Often times the weapon of choice used by these rogue sites to cheat the system is a software script that automatically clicks on PPC ads.

Another variation of click fraud uses a more personal touch to steal advertiser's money. In the hyper-competitive world of Pay Per Click Advertising the battle for premium positioning at an affordable cost can cause companies to use less than ethical techniques to gain an edge. Companies can drive up their competitor's marketing costs by clicking on their Pay Per Click ads. If their competitor's marketing costs get too high they may lower the bids on their keywords, or stop bidding on the word altogether. Either way, the cost for the word goes down, giving the fraudulent company an opportunity to increase their ranking on the page at a lower cost.

The Search Engine's Response To Click Fraud.

All the Pay Per Click Search engines have systems in place to detect click fraud, and screen questionable clicks. One example of how they do this is by keying in on the IP address where the click originated from. If they see too many clicks coming form the same IP in a short period of time they will often screen the traffic.

The Search Engines are in a unique position when it comes to Click Fraud. On the one hand they benefit from it. The amount of revenue attributed to Click Fraud varies depending on who you ask, but everyone agrees that if illegitimate clicks were completely eliminated, all the major Search Engines would suffer a significant hit to their revenues and stock prices. However, the Search Engines also realize that the long term health of the industry depends on establishing trust with their advertiser base. Going forward we can expect to see Search Engines deploy increasingly sophisticated methods to eliminate fraud, and corresponding responses from the dark side of the Search Advertising industry.

Decreasing The Amount Of Click Fraud For Your Campaigns.

While it's impossible to completely eliminate fraudulent traffic, there are some things you can do to increase the percentage of good traffic from your investment in Pay per Click Advertising.

As a rule of thumb, the more a Pay Per Click Ad network depends on affiliates for its traffic, the more susceptible it will be to fraud. The reason why the overall traffic quality is better on Google, Yahoo and Lycos is that each of these sites has their own branded destination where consumers go to search. If you advertise on these sites you know where your ads will appear (although even these bigger sites use affiliates to varying degrees). Once you venture into the second tier Pay Per Click networks however you'll find that almost all of their traffic is generated through partner sites. Companies like Kanoodle, Enhance etc...don't own sites where people go to search the web. Nearly all their traffic is generated through their affiliates which makes it more difficult to control fraud.

Conclusion:
Unfortunately, click fraud is a necessary evil of Pay Per Click Advertising, at least for now. However, as with most aspects of PPC Advertising everything eventually boils down to conversions and profits. If your campaigns are generating enough quality traffic to meet your conversion metrics you should continue to invest in the campaign, even if some of the clicks are fake. If your traffic is riddled with too many automated clicks it will eventually become obvious in your conversion numbers, and you should stop the campaign and put your money into pay Per Click networks that control more of their own traffic.

Author's Name : Stan Hauser
Added: 07-01-2005

http://www.dish-television.com/article.php?n=10

Posted by Hans A. Koch at 04:06 PM | Comments (0)

Google hit with new click fraud lawsuit

Click Defense Inc has filed a lawsuit against Google, according to Reuters.

A seller of online marketing tools said on Wednesday it sued Google Inc., charging that the Web search giant has failed to protect users of its advertising program from "click fraud," costing them at least $5 million. Click Defense Inc. filed its lawsuit, which also seeks class action status, on June 24 in U.S. District Court in San Jose, California.

Click Defense claims it has detected click fraud as high as 38%, which is nearly double the commonly cited 20% click fraud rate quoted by most independent firms that track this.

Search Engine Watch also has further information, including the full filing in PDF format (18 pages) here.

So far, a Google spokeperson is only responding with "We believe the suit is without merit and we will defend ourselves against it vigorously."

Kevin Lee, chairman of search marketing firm Did-it.com discussed the issue with Christine Blank of DMNews.

"No one has fully defined when a click is 'fraudulent' versus simply a click from a poor quality source," he said. "So it is difficult to know if the firm initiating the lawsuit ... truly believes the fraud problem to be as big a deal as stated, or if they are just using the legal action for public relations."

A few things struck me as unusual immediately after this lawsuit was announced. First, the company suing is a click fraud detection company, and they have suddenly received a huge amount of media attention about the very thing their product is about - click fraud. And by citing they have discovered click fraud percentages of nearly double what is commonly quoted, they are effectively advertising the fact that their product can detect nearly double the amount of click fraud that most people believe exists. And a few news articles are reporting Click Defense as a click fraud opportunist, using it as a means to publicize their product in a way that other click fraud detection companies are not.

If a Adwords advertiser reads about the click fraud lawsuit and thinks 'Yikes, I better get something that can track my clicks better and make sure I am not being hit with nearly 40% fraudulent clicks too', which of the many services would you choose to go to? I bet Click Defense has had booming business success for their click fraud detection software since they filed.

Also, Click Defense continues to advertise with Google Adwords. It certainly raises the question of why does a company continue to advertise using a service that it believes delivers 38% fraudulent clicks?

Yes, fraudulent clicks do exist, but this case strikes me as likely being more for publicity than anything else, which I probably wouldn't have thought of if this company hadn't been promoting click fraud detection software in the first place.

Further discussion is at Search Engine Watch forums and WebmasterWorld.

Posted by Jenstar at July 1, 2005 08:44 PM
http://www.jensense.com/archives/2005/07/google_hit_with.html

Posted by Hans A. Koch at 08:44 AM | Comments (0)