April 13, 2006
Google settlement or not, click fraud won't go away
With a planned $90 million settlement, Google could soon dispense with a class-action lawsuit involving so-called click fraud.
But while that may be good for Google, it doesn't mean the problem of bogus clicks on online ads--which advertisers have to pay for--is going to disappear anytime soon. A lack of clear standards for determining what is a fraudulent click, or some sort of third-party clearinghouse to monitor the situation, means some advertisers believe they can't do much more than head to the courts when they think there's a problem.
Certainly, Google and Yahoo, which run the two largest pay-per-click advertising networks, say they're addressing the problem. But some click auditing companies still claim that between 20 percent and 35 percent of clicks on Net advertisements are fraudulent.
Posted by dj at 12:01 PM | 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
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)
January 05, 2006
Click Fraud Case Against Google Continues Its Way Through Federal Court
Check out the full text of the new ClickFraud lawsuit documents.
SearchEngineWatch
After advertising on Google's Pay-Per-Click for the term "Click Fraud" they now they are trying to turn it into a Class Action Lawsuit.
http://ClickFraudLawyer.com
Posted by dj at 11:01 PM | Comments (0)
December 09, 2005
(Click Defense) started down the road and got cold feet
Google ad fraud plaintiff seeks to cut role in case
(Click Defense) started down the road and got cold feet....
It looks like ATI is taking over the lead in the class action lawsuit against Google.
WebPro News AIT Lashes Out At Click Fraud
...he's joined the class action suit in an effort to hold PPC engines accountable.
Click fraud suit changes hand The Register
Google click fraud plaintiff gets 'cold feet' ZDNet
Local company steps back in Google lawsuit The Coloradoan
Posted by dj at 08:04 PM
December 08, 2005
Click Fraud In the Courts
What kind of information do the search engines collect to determine Click Fraud. Maybe these two lawsuits currently in the court system will help release that information.
Only time will tell.
Click fraud in the courts | News.blog | CNET News.com
Posted by dj at 06:24 PM | Comments (0)
September 15, 2005
Texarkana Click Fraud lawsuit stays in State Court possible settlement?
For the second time the Court of Appeals said that Texarkana Click Fraud case will be done in Arkansas not at the Federal level like the Search Engines wanted. The big four search engines Google, Yahoo, Ask Jeeves, and MSN think that going to Federal Court will get better benifits (appeals are less restrictive). Now if the courts demand data there is little they can appeal. This is a big win for Lane's Gifts & Collectibles
The interesting part is one of the big networks may settle by offering their data to a 3rd party clearing house. Here is a quote from Jeff Martin's blog
...one of the major networks might be willing to 'make a deal' and work something out. What he was referring to was the possible establishment of a clearing house model where a 3rd party would be charged with making the call on click fraud claims.Essentially the PPC network would allow the clearing house access to their data and the advertiser would submit their data and claim to the clearing house as well. This seems like a sound solution, one which would probably put the PPC networks back into a positive light with advertisers.
This is the exact same thing that Jess Stricchiola, president of Alchemist Media spoke about at the SES "Auditing Paid Listings & Click Fraud Issues" Track in San Jose. The questions remain - Will Google and others release information to a 3rd party?
http://newsobserver.com/24hour/business/story/2720062p-11283826c.html
http://www.siliconvalley.com/mld/siliconvalley/news/12646040.htm
http://www.marketingvox.com/archives/2005/09/15/click_fraud_suit_sent_back_to_state_court/index.php
http://www.twincities.com/mld/twincities/business/technology/12647186.htm
http://sfgate.com/cgi-bin/article.cgi?f=/news/archive/2005/09/14/financial/f153138D08.DTL
http://www.forbes.com/2005/09/15/schmidt-google-stock-cx_cn_0915autofacescan04.html
Posted by Hans A. Koch at 11:52 AM | Comments (0)
August 18, 2005
Click Fraud Claims Drive Lawsuits
A few years ago, Diane Frerick and Kevin Steele, co-founders of Karaoke Star, a Phoenix-based karaoke equipment seller, were on their way to $3 million in annual revenue. Then, in the summer of 2003, things came crashing down.
They owed much of their success to paid search advertising on Google and Yahoo Overture. By bidding anywhere from 40 cents to $3 for keywords revolving around karaoke (such as "karaoke player" or "karaoke song"), Frerick and Steele were able to generate $6,000 a day in sales from $2,000 in advertising, and were watching business grow at a brisk clip -- 35 percent a month compared with the year before. They dreamed of becoming the Home Depot of karaoke.
Then, in the summer of 2003, things came crashing down. Suddenly, the number of clicks on certain keywords jumped from 200 to 800, forcing Karaoke Star to burn through its advertising budget, but $2,000 in advertising yielded just $3,000 in sales. "Our orders went up thousands a day but our bills went up thousands a day," Frerick said. "The increased business cost more than it was worth."
Karaoke Star was a victim of click fraud, a web phenomenon that has been attracting increasing attention. In a way, it's like hordes of virtual ne'er-do-wells impersonating potential shoppers and generating a small fee every time they look at an advertisement. Over time, it can really add up. Karaoke Star estimates it lost close to $500,000 to click fraud. That led Frerick and Steele to plan legal action not just against the company they thought was trying to drive them out of business, but against Google and Overture. (Although all the parties have been served with papers stating Karaoke Star's intent to sue, the case has not yet been filed.)
Of course, Frerick and Steele aren't the first to lose money on fake clicks and hire a lawyer to extract their pound of flesh. Earlier this year, Lane's Gifts and Collectibles, a gift shop that advertises on the web, sought class-action status for a lawsuit against 11 search engines including Google, Yahoo, Ask Jeeves and Lycos, claiming they gouge advertisers. (Wired News is owned by Lycos.) In June, Click Defense, which sells click-fraud auditing tools, sued Google, claiming click fraud cost it a cool $5 million.
Although there's no way to know what percentage of clicks on keyword ads on search engines are fraudulent, estimates range from single digits -- that's what the search engines say -- to 20 percent to as much as 35 percent. Click fraud could even threaten the paid search industry's entire business model. At least that's what George Reyes, Google's chief financial officer, said last year in widely publicized remarks.
Those that stand to gain the most are search networks' content partners, which receive commissions on these fake clicks, and the search engines themselves, because they profit whether ads are legitimate or not. It could be a single user, or a team of users, repeatedly manually clicking on an ad. More likely, the fraud is the product of automated "hitbot" software.
Don't count on the search engines to confront the problem, though. Sure, they pay lip service to cleaning up click fraud, and issue credits -- not refunds -- to businesses they identify as having been victimized by false clicks. Usually, however, these refunds are a pittance compared to the revenue click fraud generates for them.
ecently, BlowSearch, a small meta-search engine based in Brooklyn, New York, beta-tested an application that successfully blocked fraudulent clicks and watched its own traffic plummet, according to a former employee of the company. You can bet that Google and Overture, the two biggest engines on the block, have little desire to repeat this experiment, especially since paid search brings in billions of dollars in revenue for both companies.
For small businesses like Karaoke Star, such widespread, easy-to-perpetrate fraud threatens their very survival.
Frerick and Steele, after sifting through thousands of pages of click data, suspected the culprit was Ace Karaoke, a rival headquartered in City of Industry, California, which entered the business at about the same time the click fraud started. To test their theory, Steele bid on a keyword for a fairly obscure karaoke product that went for 10 cents a click. That day, four people clicked on it. Then Ace Karaoke started bidding on that same word. They went back and forth until Steele raised the bid to $2.95 a click and Ace Karaoke dropped out.
"Then I got slammed," Steele said. "The next day the number of clicks went from four a day to 95, then 91."
Another piece of evidence came from Overture, which inadvertently included an excerpt from an internal investigation that fingered Ace Karaoke as a source of illegal clicks in a Feb. 19, 2004, e-mail to Karaoke Star. Frerick and Steele sent three follow-up e-mails to Overture about the investigation but Overture never responded and subsequently revoked Karaoke Star's status as platinum members without explanation.
But it wasn't until a former employee of Ace Karaoke e-mailed Frerick and Steele a video demonstration of Ace Karaoke's hitbot software in action that they decided to take legal action.
To prove its accusations of click fraud, however, Karaoke Star requires hard evidence -- and that can only come from the search engines, which store vast amounts of pay-per-click information. But they are loath to share it.
"It's frustrating because they're the ones with the data to either show this is happening or isn't happening, yet they won't give it out unless we pull teeth," said Jonas Saunders, one of Karaoke Star's attorneys.
Neither Google nor Overture would comment on the allegations or Karaoke Star's plan to sue. David Sue, founder of Ace Karaoke, denies the charges, and claims he too has been victimized by click fraud.
"Someone is trying to frame us," he said.
By Adam L. Penenberg | Also by this reporter
02:00 AM Aug. 18, 2005 PT
Adam L. Penenberg is an assistant professor at New York University and the assistant director of the business and economic reporting program in the school's department of journalism.
http://www.wired.com/news/culture/0,1284,68559,00.html?tw=wn_11culthead
Posted by Hans A. Koch at 02:00 AM | Comments (0)
July 31, 2005
Google Sued for 'Click Fraud'
Pay-per-click analysis firm slams Google in federal suit, alleging the search giant profits from 'click fraud'.
Google profits from the manipulation of its pay-per-click advertising service by others, and hasn't done enough to end the practice, according to a lawsuit filed by pay-per-click analysis firm Click Defense.
The lawsuit, filed in U.S. District Court as a potential class action, alleges Google has been negligent in monitoring fraudulent clicks, at a loss to its advertisers and a gain to its own bottom line.
In addition to more than $10 million, the suit asks that Google be required to disclose "the true extent of click fraud" and to return any money to advertisers that resulted from the practice.
"We believe this suit is without merit, and we will defend ourselves against it vigorously," said Google spokesman Mike Mayzel. The case is similar to a suit pending in Arkansas state court, and Mr. Mayzel said the same comment would apply in that case.
While Google's AdWords program does have a process for click fraud refunds, "the protocol is changing by the week," according to Scott Boyenger, CEO of Click Defense. "When you’re bringing in a billion dollars a quarter, you're going to protect that nut."
Advertising is far and away Google's main source of revenue. The company reported revenue of $1.256 billion in the first quarter, including $462 million in traffic acquisition costs that it shares with its partners.
With Google's service, and others like it, advertisers guarantee a certain payment for each time a user clicks on an ad. Higher payments win more prominent placement in response to a keyword search. The average cost per click is $0.50, though individual payments for some keywords top $100, according to the lawsuit.
Cottage industries of strategy and abuse have emerged around pay-per-click ads. Rival businesses that want to decimate their competitors' ad budgets, as well as ad-hosting sites that get a cut of Google's revenue, use software and cheap labor to ratchet up advertisers' payments. Around 20 percent of clicks are fraudulent, according to Click Defense.
Fort Collins, Colorado-based Click Defense analyzes the sources of clicks on its customers' ads to find patterns that might indicate fraud. It cobbles together its tracking data without the help of Google's closely held records.
But Google knows, or should know, about instances of click fraud, charges the suit, which was filed by the Los Angeles law firm Kabateck Brown Kellner. It accused the Mountain View, California, search giant of breach of contract, negligence, unfair enrichment, and unfair business practices on behalf of all AdWords' customers in the last five years.
Mr. Boyenger said his goal in filing the suit was to make Google open its AdWords records to third-party auditing and establish a formal process for click fraud complaints. As an AdWords advertiser, Click Defense counts itself among the plaintiffs deserving damages.
Arkansas Suit
In February, a similar class action suit was filed in Arkansas against Yahoo, Time Warner (AOL), Ask Jeeves, Disney, Lycos, LookSmart, and FindWhat, in addition to Google. The class would include all customers of all eight search engines' advertising services.
After some confusion about whether the appropriate venue was in state or district court, the case is expected to continue in Arkansas state court.
Upon hearing of the Click Defense lawsuit, the Arkansas plaintiffs' lawyer, Joel Fineberg, was skeptical, saying it seemed redundant. "Our case is substantially broader in that there are more parties involved," he said. 'We will be able to address many more individuals and companies."
Kabateck Brown Kellner declined to comment on the merits of their case versus the one in Arkansas. The suit's jurisdiction would extend throughout the United States due to the large sum sought and the residence of the plaintiffs in other states.
June 29, 2005
http://www.redherring.com/Article.aspx?a=12586
Posted by Hans A. Koch at 04:14 PM | Comments (0)
July 15, 2005
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 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)
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
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)
June 30, 2005
Google sued by 'click-fraud' opportunist
'Fails to protect its customers'
GOOGLE COULD soon find itself in the dock, after a company that makes online marketing tools filed a lawsuit against the darlings of Wall Street this week.
Click Defense Inc says Google fails to protect its advertisers - of which Click Defense is one- from what it calls 'click fraud'.
It says competitors engage in the practice of clicking on Google ads knowing full well that the advertiser has to cough up real wonga to the searching and advertisng company for every click it generates.
Click Defense chief, Scott Boyenger, says his company has logged click fraud rates of as high as 38 percent.
The company also happens to make software that guards against this sort of thing.
A Google spokesman told Reuters the company believes the suit to be "without merit" and will contest it vigourously.
Click Defense hasn't yet repsonded to our request for a comment.
By INQUIRER staff: Thursday 30 June 2005, 15:18
http://www.theinquirer.net/?article=24308
Posted by Hans A. Koch at 03:18 PM | Comments (0)
Click fraud lawsuit targets Google
A seller of online marketing tools said Wednesday it sued Google, 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 filed its lawsuit, which also seeks class action status, Friday in U.S. District Court in San Jose, Calif.
Click fraud is not "fraud" as defined under the law. Rather, it is an industry term used to describe the deliberate clicking on Web search ads by users with no plans to do business with the advertiser. Rival companies might employ people or machines to do this because the advertiser has to pay the Web search provider for each click.
Users of Google's popular Web search advertising program pay a set amount--varying from pennies to well over $1--for each click, though in rare instances, the payment is as much as $95.
Click fraud can run up thousands of dollars in advertiser costs or benefit a Web site operator that gets a cut of advertising revenue from Internet search providers.
"We believe the suit is without merit and we will defend ourselves against it vigorously," a Google spokesman said.
Google, which had first-quarter net revenue of $1.3 billion, makes virtually all of its money from search ads.
The company, whose stock earlier this week briefly topped $300 after debuting at $85 in August, has previously said that click fraud is not material to its results and that it has technology and teams working to prevent it.
Google and its top rival, Yahoo, have declined to say what percentage of clicks would fall under click fraud. The figure most cited by independent firms that track the practice is around 20 percent.
Scott Boyenger, chief executive of Colorado-based Click Defense, said in an e-mail that his company's tracking system has detected click fraud rates of as high as 38 percent. The company sells software to prevent click fraud.
Google and Yahoo, which is not named in the lawsuit, let advertisers set per-click pricing by allowing them to bid on key words that launch ads when Web users enter matching search queries.
For example, when Web users type "laptop computer" into Google.com, they will see search results as well as a section of ads from laptop makers or sellers.
Google has said it credits advertisers who have fallen prey to click fraud, but Click Defense charges that the company has not done enough to warn advertisers about the risks it presents or to protect them against it.
Click Defense, which advertises on Google.com, is among a new crop of companies that aim to help identify and stop click fraud. Its rivals include Alchemist Media and ClickDetective.
Digital marketing companies aQuantive and DoubleClick also have units that help advertisers tackle click fraud.
http://news.zdnet.com/2100-9588_22-5769677.html
Published on ZDNet News: June 30, 2005, 5:52 AM PT
Posted by Hans A. Koch at 05:52 AM | Comments (0)
June 06, 2005
Google Sued For Ignoring Click Fraud
A class action lawsuit was filed in US District Court against Google alleging breach of contract, negligence, unjust enrichment, and unfair business practices-all involving charges of click fraud. Click Defense Inc, a click fraud protection firm, filed the suit in California in the name of an unknown number of plaintiffs for an amount not less than $5 million.
Click fraud is the term used in the Internet search industry to describe the practice of clicking on search advertisements to run up the costs on advertisers.
Companies buy an advertisement through Google's AdWords program, whereby certain keywords are purchased in order to appear in the sponsored links section of the search engine's results page.
Advertisers bid upon the search terms with the top spot going to the top bidder. Once the advertisement is in place, advertisers pay a fee to the search engine each time the ad is clicked by a searcher.
Click fraud, estimated by some to be as high as 20% of all clicks, is caused by those with a vested interest using software that clicks on the ad hundreds or thousands of times to either drain the advertising budget of a rival company, or create revenue for the seller of the ad space.
Colorado-based Click Defense, a company that specializing in procuring rebates for advertisers, says the average cost per click is 50 cents, but prime search engine real estate can go for as much as $100. Disputing the 20% estimations, Click Defense alleges that click fraud on Google is as high as 38%.
The lawsuit claims that since 99% of Google's revenue comes from advertising, Google has a huge financial interest in doing little about the instance of fraudulent clicks and criticizes the search giant for failure to disclose its own estimate of the number of fraudulent clicks.
The suit fall just short of accusing Google of physically performing the click fraud itself. The most visible allegation is the charge of negligence on the part of Google, claiming that Google isn't doing enough to prevent the problem.
Click Defense argues that the same software Google uses to track the number of clicks on an advertisement and then bill advertisers could be used to investigate and identify instances of click fraud.
Google's terms of use with AdWords promises a refund in any event of identifiable click fraud. According to Google's 2005 Annual Report, click fraud is a major concern of the search engine.
"If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby causing our business to suffer," as stated in the report.
Google, who reported a first quarter net profit of $1.3 billion, is dismissing the claims of Click Defense.
"We believe the suit is without merit and we will defend ourselves against it vigorously," a Google spokesman told Reuters.
It is important to note that Click Defense Inc. makes money by promising protection against click fraud and procuring refunds for client advertisers. The plaintiff in this lawsuit seems especially suspect considering the nature of the business it is in.
That Click Defense is accusing Google of having a financial interest in not detecting click fraud is a little bit funny as Click Defense has a definite financial interest in nailing Google for it.
A jury has been demanded to investigate the claims and they will ultimately decide, if the case goes to trial, whether there is sufficient evidence of the charges brought against Google.
Jason L. Miller | Staff Writer | 2005-06-30
Posted by Hans A. Koch at 10:11 AM | Comments (0)
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 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 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)
March 03, 2005
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)
November 18, 2004
Internet search giant Google Inc. filed a lawsuit against one of its AdSense Online clients this week, claiming the company defrauded the search company by clicking on its own ads multiple times.
MOUNTAIN VIEW, Calif. — Internet search giant Google Inc. filed a lawsuit against one of its AdSense Online clients this week, claiming the company defrauded the search company by clicking on its own ads multiple times.
The case, filed in Santa Clara County Court, also alleges that Houston, Texas-based Auctions Expert International were in breach of their contract with Google for intentionally manipulating the advertising program.
AdSense allows for “unobtrusive and context-sensitive advertising,” according to Google, by linking a web user’s queries with similar advertising.
“The advertiser pays Google for the user’s click and Google, in turn, pays the majority of the money it receives back to the website author,” Google said in its legal filing.
The AdSense agreements, though, expressly bar any company from clicking on its own sites in order to create ad revenue or to pay other people to click on the company’s sites.
“[Auctions Expert] flagrantly abused the AdSense Online service by artificially and/or fraudulently generating ad clicks,” the complaint stated. “These clicks were worthless to advertisers because they generated significant and unjust revenue for the defendants, who were paid by Google as if the clicks were legitimate.”
Pay-per-click fraud has been a hot topic recently for Google over the past year.
In March, 32-year-old Michael Bradley was arrested by the FBI after he developed a piece of software called “Google Clique” that roamed the Internet, clicking on AdSense advertisements.
Bradley first tried to sell his software to the search company for $100,000, and then, when Google failed to respond, threatened to release the program to the “top 100 spammers.”
Google also mentioned the subject in its April IPO filing with the SEC as a potential threat to its stock viability.
“We have regularly paid refunds related to fraudulent clicks and expect to do so in the future,” said Google. “If we are unable to stop this fraudulent activity, these refunds may increase.”
Calls to Google attorney David H. Kramer, with Wilson Sonsini Goodrich & Rosati in Palo Alto, were not returned as of this posting.
The case is Google Inc. Vs. Auction Expert International L.L.C., et al., CV030560.
Thursday, November 18, 2004
http://www.xbiz.com/pressrelease_piece.php?id=6183
Posted by Hans A. Koch at 08:36 AM | Comments (0)
October 22, 2004
Google Sues Alleged Click Fraudsters
SearchEngineLowdown: Google Sues AdSense Fraudsters
Google cracked down on alleged click fraudsters today, suing Texas-based Auction Experts for allegedly clicking on their own AdSense links in order to generate more per-click income. Google's complaint said that the firm "flagrantly abused the AdSense Online service by artificially and/or fraudulently generating ad clicks." Click fraud has become an increasing problem for pay-per-click advertisers, especially among categories that command very high click prices.
22 Nov 2004
http://www.marketingvox.com/archives/2004/11/22/google_sues_alleged_click_fraudsters/index.php
Posted by Hans A. Koch at 08:31 AM | Comments (0)