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March 29, 2006
Clicking To Steal
To Texas-based Auctions Expert International LLC, it was an easy way to make money on the Internet. Sign up with Google, which functions as a kind of online ad agency, and agree to let the online giant place ads on your Web site. Then, every time someone clicks on one of the ads, the advertiser pays a fee, and Google shares that fee with Auctions Expert.
The problem, according to a lawsuit filed last year by Google, is that Auctions Expert began clicking on the ads itself, artificially inflating the number of clicks and driving up the bills sent to advertisers.
Posted by dj at 07:48 AM | Comments (0)
March 20, 2006
The Real Problem With Click Fraud
Reader "Anon" posted a link to today's Washington Post story on click fraud. The story tells a familiar tale--a company hired a fraud-detection firm to audit its clickstreams and found that an estimated one-third of the clicks were bogus. The story also describes the latest bot-clicking technology ("You, too, can deplete your competition's keyword budget in ten minutes!!!"). As usual, no hard numbers, just estimates from various fraud-detection firms that 20%-40% of clicks are fake.
Posted by dj at 07:36 AM | Comments (0)
March 09, 2006
Google agrees to pay $90 mln on click fraud lawsuit
SAN DIEGO (Reuters) - Web search leader Google Inc. said on Wednesday it had agreed to pay up to $90 million to settle a class action lawsuit over advertising fraud by outside parties on its site, in a bid to put the controversy behind it.
The settlement stems from a lawsuit filed by Lane's Gifts earlier this year in an Arkansas state court and is designed to settle all outstanding claims against Google for fraud committed using its pay-per-click ad system back to 2002, it said.
Posted by dj at 01:18 PM | Comments (0)
March 01, 2006
Click-fraud & the public Internet companies
Two recent Internet conferences (Majestic’s and Jupiter’s) highlighted the growing problem of click-fraud. Speakers described how companies are hiring other people to click repeatedly on pay-per-click ads from their competitors. But nobody mentioned that the problem is far more acute with public companies. In fact, individuals can directly impact the financial results of public companies without it costing them a penny.
Owners of ASKJ, FWHT, GOOG, MAMA, SHOP and YHOO stand to gain, while owners of AMZN, ECST, and OSTK should be worried.
What makes this particularly interesting is that despite its name,
click-fraud is not illegal, and there’s practically nothing the victims
can do to stop it. Here’s how this will play out:
Companies wishing to trash their private competitors can hire another company to repeatedly click on pay-per-click (PPC) ads. The competitor’s advertising expenses rise, but there’s no parallel rise in sales and profits. While this is sleazy, it’s not illegal.
But now let’s say you own stock in a search engine company - Ask Jeeves (ASKJ), FindWhat (FWHT), Google (GOOG), Mama.com (MAMA), Yahoo (YHOO) or Shopping.com (SHOP). You can boost the profitability of the company by repeatedly clicking on ads on those companies’ home pages, and by encouraging your friends to do the same. Click-fraud is boosting GOOG’s and YHOO’s revenues, but individual investors probably play little role in this. The companies have such large revenue streams that the impact of individuals clicking on ads to boost revenues has little proportionate impact.
But that’s not true of Shopping.com (SHOP). SHOP is a far smaller company, so a grass-roots campaign by SHOP shareholders to click on ads would have a dramatic impact on its revenues. Given SHOP’s extremely high gross margins, the impact on profits - and thus the share price - could also be large.
Posted by dj at 08:13 AM | Comments (0)
Google Sues AdSense Affiliate for Click Fraud
Google has launched a lawsuit against Auctions Experts International, an online business which allegedly set up am AdSense-supported Website for the sole purpose of perpetrating fraudulent clicks. This high-profile lawsuit is a warning shot by Google to all fraudulent clickers, large and small, but the real question is how effective Google's anti-fraud technology really is. One lawsuit in what most people regard as a sea of click fraud does not speak well for a system that flawlessly detects artificial clicks. This situation might develop into something similar to the music industry's ongoing lawsuits against individual file-sharers: Lots of publicity, but not much fear among actual users, and certainly not much effectiveness in changing user behavior.
Posted by dj at 08:08 AM | Comments (0)
