Click Fraud News and Commentary - Jeff Martin - VeriClix

Jeff Martin Serves as Click Fraud Subject Matter Expert in Lane's Gift's v. Google

2006-08-10T17:10:00.000-07:00

Interactive marketing agency retained as subject matter expert on click fraud
By Counsel for the Class Members

DALLAS, Texas (PRWEB) August 1, 2006 – Zunch Communications, Inc., an international Interactive marketing agency that employs proven and ethical online solutions that deliver the highest ROI for its clients announced today it was retained as a consulting expert in the highly controversial Lane’s Gift’s v. Google case by counsel for the Class Members, several hundred thousand Google advertisers.

“Zunch’s expertise with click fraud issues was instrumental in providing me with meaningful insight as to the importance of Dr. Tuzhilin’s work to our clients, Google advertisers, and in preparation of my presentation to the court,” said Steve Malouf, Co-council for the Class Members. “The Zunch team did an exceptional job and should be extremely pleased with its efforts.”

On July 27, a federal judge in Arkansas approved the $90 million settlement between Google, Inc. and advertisers who said the search engine giant charged them for invalid clicks. By settling the lawsuit, Google will pay $60 million in credits to advertisers and $30 million in legal fees.

Having forecast the huge impact click fraud would have on search advertising dollars, Zunch Director of Click Fraud Services and Pay Per Click Auditing Jeff Martin developed Click Fraud Detective™, a pay per click auditing system that immediately alerts users when suspicious activity is occurring in their PPC campaigns and assists them with recovering their lost advertising dollars.

“We are pleased to have offered our expertise in this area to the parties of the lawsuit. Dr. Tuzhilion’s report, along with the approved settlement, demonstrates Google’s measures to filter out click fraud and other invalid clicks are reasonable,” Martin said. “As Dr. Tuzhilin noted, however, due to the inherit limitations of the pay per click model, advertisers will still find themselves at risk to click fraud, despite Google’s reasonable efforts. Because of this, Zunch will stand ready to assist advertisers in monitoring and auditing their PPC activity and guarding their budgets.”

Click Fraud Expert Jeff Martin Responds to Google’s Attack Against Third Party Click Fraud Auditors

2006-08-10T17:08:00.000-07:00

Leading interactive marketing agency responds to Google’s lash out against third party click fraud consultants

DALLAS, Texas (PRWEB) August 10, 2006 – In a recent report and public statement by Google Business Product Manager for Trust and Safety Shuman Ghosemajumder, the search giant has laid claim that some third party click fraud consultants are using “defective methodolog[ies],” that inflates click fraud estimates and skews data. This seems like a reversal of the recent study conducted by Dr. Alexander Tuzhilin that determined Google’s efforts to combat click fraud were ‘reasonable’ i.e.: they met their contractual obligations.

“Just as Dr. Tuzhilin pointed out that there are inherit flaws in the PPC model which will prevent Google, or anyone else, from fully identifying and filtering click fraud, there are technologies in place which can prevent an advertiser or third party click fraud consultant from accurately accounting for all of the activity all of the time, Zunch Director of Click Fraud and Pay Per Click Auditing Jeff Martin said. “Dr. Tuzhilin concluded that Google’s efforts in combating click fraud were reasonable, in light of the inherit limitations of the PPC model, equally reasonable are click fraud auditors efforts to bring click fraud activity to the surface.”

Ghosemajumder states that fictitious ad clicks recorded due to mischaracterizing events “may be the most significant flaw.” Simply put, a single user may be counted as more than one visitor by a third party auditing system when either of these common events occurs:
1. The user navigates away from the page (either by clicking deeper into the advertiser’s site or by navigating away) and uses their browser’s forward or back buttons to return to the page.
2. The user refreshes the landing page.

“The limitation here is imposed by the Web browser. Whether refreshing the page in question or navigating back and forth to it through the browser’s buttons--Web browsers, by design will retain the original information of the initial visit to the page,” Martin said. “By not maintaining the same variables, the page could end up altered or not rendered at all. Because the original visiting information is stored by the Web browser, when a browser loads the page again it will appear as a normal visit to the page rather than just a return and will be counted accordingly.”

The Google report says in order to solve this problem third party click fraud consultants should rely on the “Google AdWords auto-tagging feature.” The problem is that the more an independent click fraud consultant relies on data provided by Google and their methodologies, the more the consultant loses their objectivity and the more their methodologies may become skewed.

“By using the auto-tagging feature, consultants would be relying on Google to tell them what a unique click is and what is not. This is at the very heart of click fraud auditing and the most significant means in which to hold Google, or any other PPC network, accountable. Because independent consultants must maintain objectivity and neutrality they cannot rely largely upon auto-tagging,” Martin said. “Independent consultants must rely on click stream data that is not contaminated or labeled by any PPC network as valid or invalid, unique or non unique. To not do so makes the consultant more of an extension of Google and their methodologies which is not the function of the consultant and defeats the purpose of third party auditing.”

When the inherit nature of browser technologies and the independent objective role that third party click fraud consultants provide is taken into consideration, one can assume their efforts and methodologies are reasonable.

“Shuman says Google may “perhaps help third-party auditing firms improve their methods.” Zunch highly encourages Google to be pro-active in working directly with independent consultants as they will continue to fill a vital role in educating PPC advertisers on the risks of advertising on the PPC model as they relate to click fraud, Martin said. “Independent consultants also help in providing advertisers with the missing account activity information they can’t receive elsewhere. It is in the best interest of advertisers and Google to do so.”

Jeff Martin Serving as a Consultant For The Google Settlement Case - Click Fraud Case

2006-07-22T18:41:00.000-07:00

I have been retained by counsel for the Class in the currently pending Arkansas Class Action against Google (Lane's Gifts v. Google ) through Zunch Communications, Inc. where I serve as the Director of PPC Auditing & Click Fraud Detection. I am unable to say at this point what I have been working on and only that I am serving in a consulting capacity.

Dr. Alexander Tuzhilin was requested by Google and the Class in the currently pending Arkansas Class Action to perform an independentt expert evaluation of Google's handling of invalid clicks. It is a good read, the first of it's kind for sure. I will have more to say about Dr. Tuzhilin's report in the next day or two.

I will be traveling to Texarkana to attend the hearing on Monday, July 24th @ 9am CST. I'll be wearing a blue/green shirt with blue pants, if you see me, don't be a stranger!

The Rumors of My Death Are Greatly Exaggerated

2006-06-26T21:20:00.000-07:00

Nope not dead. There just hasn't been much news I care to comment on lately.

Ben Edelman did produce some nice research on Yahoo and Google PPC programs are being used by spyware/adware flks to pad their pockets - without users actually clickig on anything...

SEMPO is going to do another advertiser poll/study on click fraud - the question is will anything new com from it?

I've been in contact with Steve Malouf again and his sites are most likely being set on another defendant... One word for them - mediate!

So to recap - click fraud is still as big of an issue as it has been. The PPC networks are still prospering from advertiser's losses. And Google is still up to it's "That doesnt look like fraud/low quality clicks to us..." and the "You were never charged for those clicks anyway..." games.

VeriClix continues to grow and more and more members as we are well into the tripple digits. What can we say? We like helping advertiser's anyway we can. Unlike some PPC networks...

How Google and Yahoo can get the Click Fraud Monkey Off of Their Back

2006-04-16T15:27:00.000-07:00

Part of a discussion I had in the HighRankings forums about click fraud focsed on a third party solution that could be entrusted with both search engine advertiser data:

Any PPC data you provide to support your claim is subjective. The search engines and PPC networks can say either:

1. It doesn't look suspicious (or 'low quality' as Google likes to put it) to us -OR-
2. You were never charged for those clicks

The main problem here is that each party has a bit of the information that form the most complete picture. For advertisers, unless they have a click fraud detection and auditing service they are not going to have neither the time nor the data to be able to determine:

1. Is click fraud an issue for me?
2. How much of an issue is it / what is the level of click fraud?
3. How do I get the data and supply it to the search engines to validate my claim?

Pouring through log files just isn't feasible. Marketers should not have to spend their time as a data analyst or 'refund collection hound'.

What I and a few colleagues have been saying for awhile now is that an independent party is needed who can be trusted with both the search engines data as well as advertiser data who can make an unbiased decision. This would:

1. Get the monkey of the search engine's back and aid in restoring the faith of their advertisers.
2. Give advertiser's some piece of mind when spending billions of advertising dollars
3. Create a standard uniform submission policy to allow everyone to know what data is needed and what format to put it in. Perhaps through an application programming interface (API).

Google was quoted as saying that they don't want to give away their click fraud detection practices to competitors. That argument would be irrelevant with a third party organization with a proper NDA. Yahoo is interested in the idea; perhaps John Slade of Yahoo sees the true benefit for all here unlike Google. In the end, just like the case pending settlement, if one of them takes a step forward toward this type of solution others may look bad in not following suit.

Google's Different Stances on Click Fraud

2006-04-05T15:23:00.000-07:00

It seems Google has been confused internally over their capabilities to protect pay per click advertiser from click fraud.

In a recent article in Bloomberg CEO Eric Schmidt says:

Believe me, as a computer scientist, we have the ability to detect the invalid clicks before they reach advertisers.

But the Google Adwords FAQ says:

If we find that invalid clicks have escaped automatic detection, you'll receive a credit for those clicks.

And the Google blog says:

When we believe those clicks are invalid, we reimburse advertisers for them. Some invalid clicks do make it through our filters, but we believe the amount is very small.

I have to admit I find it humorous that Schmidt says to trust him, because of his PhD in computer science that invalid clicks don't reach advertisers then other PhDs at Google say that invalid clicks do reach advertisers. Also, does that mean that Google thinks that there aren't PhDs working against them? Or how about just really smart people who know how the system works and know enough about web technology to be dangerous?

It may have took PhDs to create the first atomic bomb for 'peace', but it doesn't take one to turn into a weapon of war.

Click Fraud - Its What You Don't Know That Hurts You

2006-04-01T17:39:00.000-08:00

Well I read yet another article in Blomberg where Eric Schmidt says everything is rosey for Google and that click fraud "is not a threat to the company's success". Well...what about your advertiser's success? How can click fraud ever be a threat to Google's success when their accounting for an advertiser's money is generalized and incomplete?

It's what advertisers don't know that hurts them.

Google doesn't provide any particular information about WHO clicks on a advertiser's ads, despite having all of this data available.

Google doesn't report on how much click fraud or how many "low-quality clicks" an advertiser's campaign receives.

Google doesn't provide any information as to the amount of money Google "saved them" by detecting fraudulent or "low-quality" clicks.

Google doesn't provide any particulars on how prevalent click fraud is in a advertiser's vertical, despite having a very large sample rate of what they deem is click fraud or "low quality clicks."

Google doesn't provide any information as to what they are doing to protect advertiser's online investments.

If Google's motto is "do no evil" then what does it mean when advertisers, who are the life blood of the company, are questioning Google's motives and morals?

What can Google and other search engines / pay per click networks do?

1. Convert your critics. Saul of Tarsus harshly persecuted the Jews until converted by a vision of Christ.

While Google is defintely no resemblance of Christ nor I of Saul, I would be more than happy to sign an NDA and have Google show me what they are doing to protect advertisers and approach it with an open mind. If they are doing everything within their power than I would be ready to publicly support their continued efforts.

2. Educate & communicate with advertisers:

What is Google doing to protect an advertiser's online investments?
How prevelant is click fraud or "low-quality clicks" on an advertiser's campaign?
How much money has Google not charge them for?
What can advertiser's do help protect themseleves?

3. Get the monkey off their back. Get an independant 3rd party to mack the call as to what activty advertiser's should and should not be charged for based on established guidelines.

My Interview with Internet Retailer Magazine on Click Fraud and the Google Settlement

2006-03-25T11:06:00.000-08:00

I did an interview with Mary Wagner, Senior Editor of Internet Retailer Magazine concerning the recent Google settlement and click fraud services and their role in a post-settlement world.

My goal was to :

1. Show that the settlement is a loser for advertisers past, present and future because:

a) Advertisers, at best, can only get some credits to use the same system that cost them their credited money in the first place

b)Nothing in the system changed. It's still the same process, with the same secrecy, with the same conflict of interest that will yield the same results

2. Show why Google would want this settlement:

a)Throw a small wad of money at the problem to see if it will go away

b)Stop losing billions in marketing capital

c)Maintain their secrecy and make sure they never show any conclusive data as to the actual scope of the problem

d)They get to put a PR spin on it that since the settlement was approved that Google's claim that only 1% of all click fraud is undetectable is valid

3. Show that services such as VeriClix will be there for the advertiser, not only in this soon to be 'gold-rush' for advertisers, but in the future as well to try to keep thing as legit as possible.

Full Story: http://www.internetretailer.com/dailyNews.asp?id=18006

Update: Lanes Collectibles Google Click Fraud Lawsuit is Settled

2006-03-13T19:14:00.000-08:00

Well more and more news is all over the web since I first mentioned the settlement. This reached settlement because:

1. Google lost an appeal to have the case go to a more favorable (for them) federal court
2. Google lost the objection to have to share their data and open their technology up
3. Google was losing billions in marketing capital
4. The media attention on click fraud was picking up steam a little more each month
5. Google gets to try and spin that an agreement to this settlement means that the 1% of click fraud they claim they are not able to track is the only click fraud out there. Which is hogwash!
6. Google gets to throw only $90mm at the lawyers to get them back off even though they may owe advertisers hundreds of millions of dollars.

Wow. Good deal for Google but advertisers get the short end of the stick.

Why?

All advertisers get is credit in the Adwords system. So you get to reuse the same system that you lost money to in click fraud again - to lose even more money to click fraud! WTG Google! They "give" $90mm and they will get a good portion of it back!

In addition, there is no reason for Google to change their system. This settlement is supposed to span the costs of click fraud for 4 years. Even if they only have to shell out $90mm every four years (the majority of which would go back through their system as credits) which they will make billions on. Would you spend $90mm to help make billions? Smart business wouldn't you say?

Lanes Collectibles Google Click Fraud Lawsuit is Settled

2006-03-08T14:58:00.000-08:00

Steve Malouf relayed to me today that officially and publicly the court has been notified that his client, Lanes Collectibles and Google have reached settlement in the landmark click fraud lawsuit case for $90 million dollars.

I'll make more news available as I hear it.

Google's Israel country manager Meir Brand recites the click fraud explanation

2006-02-23T19:35:00.000-08:00

Globes Online has an interview with Google's Israel country manager Meir Brand. Of course, the conversation eventually turns to pay per click fraud. It's humorous to note that the interviewer, Doron Avigad, says that Brand's response sounds like a recitation:

Google is a technology company, and, as such, it is very aware of the phenomenon. We're constantly developing technologies that quite satisfactorily cope with the problem. As far as we're aware, nothing has happened in the field that we've haven't been able to handle at the technological level.

Well of course they are going to get a rehearsed response. Anyone who is supposed to speak in an official capacity have all, more than likely, been schooled on exactly what to say and have stood in front of the mirror to practice. Of course this is contrast to the emails and phone calls I get from clients and future clients who are tired and frustrated over paying for clicks that they never had a chance to convert on. The response has to be approved and canned...after all they are under a landmark lawsuit headed up by Steve Malouf's team.

Google Hires Pay Per Click Fraud .....Temps

2006-02-17T17:34:00.000-08:00

The Adwords reps I have talk to, the form letters I have gotten about refund rejections and Google speakers have always eluded to the fact the Google has a large well established team of click fraud experts (although in the same breath they will tell you that click fraud isn't an issue).

If that's the case then it makes me wonder: Why is Google hiring temps to help with click fraud? Craigs list posting

Is losing several billion dollars due to the analyst downgradings of GOOG stock and the Barron's article (citing pay per click fraud as one of their main concerns) putting this issue into the light it deserves at the 'plex?

Maybe this is so when shareholders (or a court) asks them how much money they've spent on research and development to combat click fraud the answer wont be: 68 cents. At least this way they can show they've made some investment (a smart one too since Google probably wont be providing any of its normal lush benefits to the temps) and then cut them loose when the time is right. Nice. This way Google never 'lays off' any click fraud employees.

Pay Per Click Fraud - Stumbling Block for Google

2006-02-13T20:02:00.000-08:00

Google's stock price has dropped another 4% today for a total of 27% plunge in the last month or to use big numbers: Google's market value has dropped almost $40 BILLION dollars.

Barron's published an article outlining several risks that threaten the company's profit margins and cut its market value in half.

Why? Two good reasons:

1a. Microsoft
1b. Yahoo!

Both of these 900lb gorillas are going to do everything in their power to nab as much of the market as possible. Its been heard their might even be financial rewards to searchers for using them and not Google. They both have something Google doesn't - huge portal networks. I think the real player to watch out for is Microsoft. They got the most money and a lot of smart people. A lot of smart people want to work for Google, but a lot of smart people also want to work for Microsoft.

2. Click Fraud

A colleague of mine predicted that we would start to hear less and less about click fraud this year. I don't see it happening. Things are just now getting into full swing. If the Lanes Collectibles case is certified as a class action it could be a turning point in pay per click advertising and how we address click fraud. I'm meeting with Steve Malouf again tomorrow and he says he has some interesting news from a recent trip. It's refreshing to know that advertisers after all of the rejection form letters, communication black holes, poor customer service and poor 'professional' analysis can ban together and affect change. If this suit becomes class action I wonder who will want to break ranks first to make the deal?

Click Fraud Episode II: Attack of the Bots

2006-02-05T10:48:00.000-08:00

The title, unfortunately will be the only thing humorous about this post.

CNN interviewed Merrick Furst, associate dean for undergraduate programs at Georgia Tech's College of Computing in an article entitled: "Expert: Botnets No. 1 emerging Internet threat". In this interview Furst covers the threat of bots as they relate to click fraud:

People are worried that click fraud might be a threat to some of the business models on the Internet, for example, the business model that Google has where every time you click on an ad, Google gets paid by an advertiser.

So let me tell you how a botmaster makes money with click fraud. ... They'll build a Web site that looks like a normal Web site. They'll put up banner ads, or other types of ads on their Web site, and these are ads served up by Google. Google contracts an advertiser to put up ads on sites -- [unwittingly] contracts the botmaster online to put up ads on that botmaster's site. ... So [the botmaster] commands the machines in his bot army to click on the ads on this site. Every time one of his machines click, the message goes back to Google, Google charges the advertiser, the advertiser pays Google, Google keeps 20 percent and [unwittingly] gives 80 percent to the botmaster. ... Let's say even if [the botmaster] controls a small army of 5,000 machines, which is very small in this game -- he can make $15,000 a month in click fraud.

It's nice to have a dean chime in. This is arguably the most serious issue facing pay per click (PPC) advertising, right up there with off-shore organizations that are hired out for click fraud. When bots are used, the zombie machines found all over the world are used to target groups of sites either owned by the hacker using the bots or by someone who may have hired the hacker. The reason this is such a serious threat is that these clicks come from zombie machines:

in different countries
on different IP blocks
from a mixture of businesses, organizations and personal accounts
using different queries
target many publisher sites and search results pages to spread out the attack
are spread out across different dates and times in different amounts

Basically, these clicks look legitimate with the only real tell-tale sign being, as usual, no conversion.

In addition, I blogged earlier in January (Adwords Geotargeting May Not Stop Google Click Fraud) that even geo-targeting, which was supposed to help with this issue, could be circumvented.

Click bots and zombie machines have been covered in the past on this blog:
Hacker-run DNS nameservers used for PPC click fraud - May 2005

Click Fraud Bot User Arrested - November 2005

RealMoney Click Fraud Article: Just Another Peterman - January 2006

RealMoney Click Fraud Article: Just Another Peterman

2006-01-26T18:57:00.000-08:00

I tell you I just don’t know where to start with this one, but I'll do my best.

Cody Willard, who writes for RealMoney, wrote an article "Click Fraud Just Another McGuffin," which I will not be linking to. McGuffin basically means "alot of hype signifying nothing." VeriClix has almost 200 clients, and from what I have heard they don't consider what they have detected to be nothing.

Look, Google knows there are some teens in Siberia, and yes, probably Duluth too, who are messing with click-through rates by repeatedly hitting ads.

That is the article's view of the scope of click fraud. Rather one dimensional considering the advertisers, fraudsters and hackers that have blogged and posted about the various means to which to fraudulently take advertiser's money. Click shops in foreign countries, click fraud through instant messaging, automated bots using proxies and cloaking the referrer/IP information and an unlimited supply of compromised "zombie" machines/servers under the control of hackers to do their bidding...er clicking.

But the big question isn't whether or not this nefarious stuff is going on. It's whether or not this evil stuff (to borrow the Googlite phrase "do no evil") is going on to an extent that Google's customers will be surprised to find out about.

VeriClix aims to make sure that advertisers aren’t surprised, but knowledgeable of what their click fraud problem is. Thankfully organizations like Marketing Experiments are trying to bring an independent nonpartisan view of the situation.

It's related to how advertisers in television and magazines (and all other media) have to account for TVs that are left on for the dogs while nobody's home, or for subscribers who never open the magazine. And guess what -- both the sellers and the buyers of such advertisements are aware of and account for this ahead of time.

Here they are referencing ancient, by the Internet standard, marketing methods that utilize a "shotgun approach" to marketing that takes alot for granted and considers highly debatable factors such as the "pass around factor"...one of my favorites. Yes, marketers have known about those numbers for decades. But what could they do about it? Stations and publications all use the same formulas (why not, after all it works toward their advantage?).

Web marketing, except where branding is the primary goal, is about conversions or as I like to call it, "hitting the numbers". The CPC model was a revolutionary model where advertisers supposedly only pay for a visitor that is supposed to be genuinely interested in what the advertiser has to offer. Savvy web marketers want to be able to measure the conversions of their PPC ads, figure the ROI and see what the cost-per-acquisition (CPA) is. Armed with this knowledge they can know where the best web marketing investments lie and allocate their funds appropriately. Click fraud skews the numbers that marketers need to rely on.

You see, Google tells its customers beforehand that there will be click fraud, and it even accounts for that in its pitch. That's right, when Google tells a customer that they can expect X return on investment (ROI) when using Google's ad network, Google's already included click fraud in those numbers. So in essence, the only way for this supposed click-fraud issue to really become problematic is if it's worse than Google realizes. Consider it the online marketplace version of Wall Street's "worse than expected" scenario.

I have spoken with members of the Google Sales Team and been on a panel with Google and Yahoo engineers and execs and they have never said that they make sure to tell prospects and existing advertisers that click fraud will happen and that they can expect it X% much of the time.

The foundation for this comment lies, again, with The Sydney Morning Herald's interview with Eric Schmidt. An acceptable ROI should be determined by the advertiser, not Google or Yahoo. Why should an advertiser have to allocate marketing funds to allow Google and Yahoo to keep dollars that they didnt earn? Why should advertisers be forced to settle for a 3% ROI when it could be 5-6% by recouping marketing capital lost to fraud?

At this point, click fraud appears to be a tiny, tiny fraction of ad hits, probably less than a couple percent of all clicks. But even if the problem were to escalate to a higher fraction of all clicks, Google would simply factor that higher rate into its models and work with the customers to maintain a high ROI. Where the issue could become problematic would be if it becomes such a large fraction of clicks that the ad network ROI becomes unattractive to Google's customers.

Where did they get the all-conclusive data that shows "click fraud appears to be a tiny, tiny fraction of ad hits"? This is contradictory to what Shuman Ghosemajumder of Google and John Slade of Yahoo! had to say on the click fraud panel at Search Engine Strategies in Chicago that I sat on. They claim to throw away more ads than what they bill for. How does that add up to a tiny percent? And again talk of an ROI that Google tries to set for the advertiser.

Is that the case right now? Before answering, I'd suggest a look at the remarkable growth that Google is enjoying. This company is one of the fastest growing companies in the history of the planet, and companies simply don't grow like this if they're selling a bad product. Google's customers are obviously generating high ROI from Google's ad network or they'd stop using it.

Baloney! Google serves the majority of all search results amongst all search engines. Pulling in some ROI is better than missing out on most searchers. Even if that some ROI paid for itself, why should advertisers be forced to settle? I have seen advertisers post in forums that are afraid to complain because they feel that the #1 search engine, which serves the majority of search results, might blacklist them. No I don’t believe that, but apparently at least some inexperienced web advertisers do.

The click-fraud issue exists, to be sure, but Google and its customers are plenty aware of it and already factor it in. Let's move on, shall we?

Almost everyday new VeriClix clients sign up with no idea of what kind of click fraud problem they have. Boy, are many of them surprised.

I hope RealMoney can afford to hire better fact checkers soon before those unfamiliar with the click fraud problem blindly continue to line the pockets of Google and Yahoo with money they don’t deserve.

Food for thought:
Goldman Sachs analyst Anthony Noto believes that keyword advertising accounted for about half of the company's estimated $3.7 billion in revenue for 2005. PPC is even more lucrative for Google. According to Noto, Google will end 2005 with $6.1 billion in revenue. About 99 percent of that revenue comes from keyword ads. So if we use a median of most of the numbers I have seen for click fraud and say that 10% is the median, then, for Google alone, that’s over $600 million dollars that click fraud was responsible for generating alone.

Fraud always follows the money and PPC is the online leader with billions of dollars.

A Confusing View on Click Fraud

2006-01-25T20:06:00.000-08:00

I read Andy Beal's blog post (http://www.marketingpilgrim.com/2006/01/google-facing-problems.html) commenting on Scott Kessler of Standard & Poor's recently downgrading Google from hold to sell where Scott listed click fraud as one of the reasons why.

Well it seems to me that Andy's comment "Advertisers are already pricing click-fraud into their bids by virtue of measuring the return on ad-spend" seems to be an echo of an Eric Schmidt interview with The Sydney Morning Herald (http://www.ktamerica.com/detail_market_a.asp?id=89&page=market) where Eric says "...advertisers are missing the point of Google's new model. It shouldn't matter what Google does with their ads, he argues, so long as the received value, which advertisers can measure, is higher than the price they pay."

To me that's rubbish. It's up to the advertiser to determine what an acceptable ROI is, not the search engines. If an ROI exists of 3% with click fraud, who is to say it wouldn't be 5-6% without.
Eric later says "I have this fantasy that goes like this," he said at one point. "You are the C.E.O. of a large company, and I come to you and say, 'Give me $1 million and give me your Web site, and we will guarantee you will get $100 million in sales.' Which C.E.O. would turn that down?"
What CEO would turn down an extra few percentage points of ROI with a reduction in click fraud?

The second portion of Andy's comments tries to use retail shrinkage from a consumer’s point of view as an example against the seriousness of click fraud. Of course, we aren't talking about the consumer’s point of view, but rather the wholesaler/manufacturer's point of view. Click fraud costs may not necessarily passed on to consumers. Andy's example also misses the mark because if a retail store has a poor shrinkage prevention program then it is the retailer who is out money, not the wholesaler/manufacturer.

I blogged a few days ago (http://www.vericlix.com/2006/01/yahoo-has-good-laugh-at-customers.html) about an SEW forums poster, Discovery, who claims he was laughed at by his Yahoo! rep when discussing his concerns about the click fraud on his client's account and what he expected of them as far as a credit and an investigation.

It's unfortunate, Andy being as public facing as he is, that he doesn’t see the conflict of interest that exists here where search engines are keeping millions of dollars that they didn't earn. The above example mentioned by Discovery is a bit alarming if accurate and could represent the internal attitude of Yahoo! at its core level and not the executive/PR machine level.

I created VeriClix in the hopes of leveling the playing field for the advertisers. To provide them the information they need to get those credits and to try and keep the search engines in check. However, at times, even that seems like a drop in the well. I hope Steve Malouf's team can set a precedent and help advertisers regain more control.

It was interesting to note that GOOG was down 8.5% today with a good deal of selling.

Yahoo Has a Good Laugh at Customer's Click Fraud

2006-01-19T15:53:00.000-08:00

There is a thread started over at the Search Engine Watch forums by Discovery about a keyword that normally fetched him 1-2 clicks a day jumping to 2,134 click...in one day. These clicks cost his client $5,199 and the client made $0 (zero, nadda, zip, nien) , no conversions.

This apparently was the third time this had happened so he called his Yahoo rep who told him it would take 10 days for them to come to a decision of whether the activity was fraudulent or not (whether we are going to give up part of our revenue to you = conflict of interest). Meanwhile his client's account is off (due to the $5k of instant charges) and Yahoo wants the usual 3 x the daily spend average to reopen the account and the client is missing out on their normal daily leads.

At this point Discovery demands a refund in 24hrs with an explanation of what happened in 10 days or his client is going to let loose the lawyers. Its at this point that the Yahoo rep Shawn laughed at him. LAUGHED AT HIM. So, this is how Yahoo handles its PPC client services? This is how serious Yahoo takes click fraud and their customers losing thousands of dollars in a single day?

Im meeting with Steve Malouf again to discuss the current click fraud (maybe soon class action) lawsuit (Lane’s Gifts & Collectibles) where he is serving as part of the council for the plantiff where I hope to be able to help prove their case and help affect a change that is so drastically needed.

Adwords Geotargeting May Not Stop Google Click Fraud

2006-01-10T19:19:00.000-08:00

A click fraud company released a press release today saying that it is possible through "a back door" for a person with an IP in China to view ads for people looking for New York personal injury lawyers.

This could have consequences as it is possible for hackers and fraudsters to access ads they shouldn't be seeing. Google Adwords geotargeting has been one of the best ways for advertisers to limit exposure of their ads to their respective markets to reduce costs as well as to help reduce the amount of click fraud. However, if there a back door, advertisers have lost one of the few resources they have to protect themselves.

Shuman, from Google, whom I was fortunate to share a click fraud panel with at SES Chicago would probably say that while this is unfortunate that they would still be able to detect and throw out "low quality clicks" from countries not targeted with these ads. Unfortunately as John from Yahoo! Search Marketing said on the same panel, they would love to talk about it with us and share...but they are currently under lawsuit and can't say anything. Of course, the PPC networks never felt like talking before the suit either...which was first? The chicken or the egg??

Debbie Does Click Fraud

2006-01-05T19:56:00.000-08:00

Well I probably shouldn't have been surprised but it seems that some pornography sites are taking click fraud to a new level, one that can go as far as to degrade a brand or company name ontop of taking advertiser's dollars.

Kessler International went undercover for 6 months and found pornography sites that were using pornographic pictures who's links were tied to PPC advertising sites - and not in the fetish kind of way. Basically clicking on one of these images took you to an advertisers site instead of more pornographic pictures. So you went to click on an image of Debbie and you might have wound up at Disney [shudder].

This is another example of how we can expect click fraud to grow and adapt. SEMPO last year said click fraud was estimated at $800 million dollars, which probably puts it into the billions by now. With that lucrative of a target for fraud why assume that:
1)It can't happen to you
2)It isn't already happening to you and
3) The PPC networks and search engines don't need help

Look into click fraud detection, auditing and monitoring services folks. Although I cant understand why you would want to pay for one, but get one even if you do pay.

Click Fraud Wired Article Jan - 2006

2006-01-03T18:50:00.000-08:00

The Wired article is a good run-down of what is wrong, how the search engines arent helping, how they are still profiting from click fraud and why the threat continues to rise.

Amount of click fraud:
MarketingExperiments.com indepedent research says that as much as 29.5% of all test PPC activity was fraudulent.

The Great Conflict of Interest:
As I have said time and time again there is an inherit conflict of interest when the PPC networks are the sole decider as to whether they will reach into their revenues and give an advertiser back their advertising investments. As Jessie said at SES Chicago, the search engines are keeping hundreds of millions of dollars that they didn't earn due to click fraud.

Detectable click fraud:

Competitors click on your ads repeatedly from their office (the PPC networks should catch these)

Publishers click on your ads repeatedly from their computer/office (the PPC networks should catch these)

Not-so-detectable click fraud:

Third world click farms. Not easy to detect as there can be so many people clicking a very broad range of ads where patterns are not easy to detect.

Hackers. At any given time there are millions of computers all over the web that have been comprised by and under the control of hackers. Hackers are able to direct these machines, with millions of different IP addresses and spread throughout the world, to click on ads running on a spammy blog or web site they had setup with automated software.

Sploggers. People who use automated software to copy content from all over the web to create fake blogs that can rank in the search engines. Users visit the spamy blog (splog) and click on ads trying to find the content they came looking for.

PPC Armageddon:
A click fraud virus. A hacker who develops a virus with the sole intent of releasing a virus that infects machines around the world, in addition to the machines the hackers already control, to click on PPC ads over and over, billions and billions of times. If/when this happens it could be a turning point in pay per click being a viable business model.

Coverage of the Auditing Paid Listings & Click Fraud Issues Panel at SES Chicago

2005-12-15T18:48:00.000-08:00

Well, the Auditing Paid Listings & Click Fraud Issues panel was very interesting this past Thursday at SES in Chicago.

The panel consisted of:
Jeffrey Rohrs, Optiem - Moderator
John Slade, Yahoo! Search Marketing
Shuman Ghosemajumder, Google
Jessie Stricchiola, Alchemist Media Inc.
Lori Weiman, KeywordMax
Jeff Martin, VeriClix (Yours Truly)

Things started off a little slow, however it didn’t take long for the gloves to come off. I believe it was Jessie who fired the first shot when she pointed out that Google and Overture (Yahoo! Search Marketing) are keeping a significant amount of money that doesn’t belong to them. Click fraud could be costing advertisers hundreds of millions of dollars – a good portion of which stays in Google’s and Yahoo!’s pockets.

I believe it was Jessie who asked for a show of hands from the audience of those who believe click fraud was affecting them. I don’t think I saw a hand that wasn’t raised.

In a nutshell:

Google and Yahoo! think they are doing a fine job in detecting click fraud.
Google believes that as long as advertisers have an acceptable ROI (who defines acceptable?) then everything is fine.
Google and Yahoo! positively acknowledge the services that the click fraud detection and auditing industry can provide and look forward to working with them.
Google says they throw out more clicks than advertisers pay for.
I asked - Then why not COMMUNICATE that to your clients individually? Yahoo! fired back and said simply look the traffic in your log files from Yahoo! Search Marketing then minus the number of clicks reported by the Yahoo! Search Marketing service. I quickly pointed out, to the nods of many people in the audience, that no two reporting tools would ever match up no matter how intricate and detailed they may be. Bottom line, if they want to point out all of the work they are doing for advertisers and how much money they are saving them they need to communicate that to them.
Yahoo! and Google said they would love to talk about ways to deter click fraud and work together, but they can't because they are under a class-action lawsuit. That’s great to hear now, but BEFORE the class-action lawsuit almost NO communication came from either of them except for mostly form letters and few mysterious credits. The lack of communication is part of the reason WHY things have come to this point.
I brought up the concept of using a third party auditor who would take data from the PPC networks and the advertisers and make an impartial decision. Jessie chimed in as well on the idea of a third party. Currently there is an inherit conflict of interest when publicly traded companies decide to police themselves and determine when they will and will not refund money from the major source of their revenue.

Click Fraud Panel at SES Chicago

2005-12-01T19:17:00.000-08:00

Its official, I will be a panelist at the Search Engine Strategies Conference in Chicago on December 8th. Its the last panel of the show (nothing like bringing up the rear) and I look forward to it. If you are going to be there please bring your questions, I would love to hear them.

Auditing Paid Listings & Click Fraud Issues
Did you really get that much traffic from paid listings last month or is something funny going on? Reviewing your paid traffic is an essential task any serious search engine marketer should undertake. Discover how to spot abnormalities and follow-up with search engines if you suspect a competitor or someone else is creating clicks just to drive up your costs. Also discover the proactive things paid listing providers already do to protect advertisers.
Moderator:
Jeffrey K. Rohrs, President, Optiem, LLC

Speakers:
Shuman Ghosemajumder, Business Product Manager, Google
Jeff Martin, Director of PPC Auditing and Click Fraud Services, Zünch Communications
John Slade, Director, Product Management, Yahoo! Search Marketing
Jessie Stricchiola, Founder, Alchemist Media Inc.
Lori Weiman, Director, KeywordMax

Google CEO - Eric Schmidt: You Don't Need To Know What We Do With Your Ads

2005-11-25T19:58:00.000-08:00

The Sydney Morning Herald had a good article "The search engine powered by money" referring to the Google Adwords PPC network, mostly.

Some highlights:

..."[Google] is trying to have big retailers link their inventory systems directly to its advertising auction." (A knife in the back to SEMers.)

"...many advertisers criticize Google for being like a black box, because the company gives them less specific information and control than they would like."

"...but Google has sometimes been hard to deal with. There is a growing sense that a significant number of clicks that advertisers pay for are fraudulent - made by competitors trying to deplete advertising budgets or by websites trying to bolster the revenue they get for displaying the ads. Google says it has technology to minimize "click fraud", but many think the incidence of fraud is not as low as Google contends."

And Schmidt's response is what you would expect a public company, one not with a "do no evil" mentality to say:

"...advertisers are missing the point of Google's new model. It shouldn't matter what Google does with their ads, he argues, so long as the received value, which advertisers can measure, is higher than the price they pay."

WHAT?

I'm missing the point? My dear Eric, you miss the point. Who is Google to set my expectations? Who is Google to define what is an acceptable return on my investment?

What Eric is saying is that as long you make some money don't complain. So I should be happy with my 2% conversion rates when they could be 5%?

Google tries to solve everything through code. Sorry guys, just as you realized there will always need to be a human element to search, ditto for search advertising.

I don't understand why they don't want to provide advertisers will ALL of the information relative to their advertising campaigns unless there was a good deal of information they don't want you to know. Like maybe click fraud is more of a problem as their CFO had said it was a while back. They have tried to back pedal from that statement so much its wonder they haven't gone back in time.

Google needs to tell us exactly what is going on with our advertising campaigns:

What sites are featuring our ads?

What is our conversion rate by keyword for each of those sites?

Let me know this information so I can cut the fat and channel that more PPC money to similar sites and increase my ROI!

Click Fraud & The Travel Industry

2005-11-19T19:03:00.000-08:00

From what I read over 50% of all online users who are booking online start with the search engines. Because of this, and the fact that a combined organic listing and a paid listing could double or triple conversions, makes pay per click advertising a must-have for serious online travel booking sites. That combined with the $1-$12 keyword buy-ins makes the travel industry an ideal target for click fraud.

The same basic rules apply for monitoring for pay per click fraud, or as some call it "Google Fraud":

1. Establish a cost-per-acquisition tracking model.
How can you measure ROI without knowing what it costs you to obtain a sale? How do you know if your PPC advertising is making you money or hemorrhaging money? You should know, on a keyword level, how much every PPC advertising dollar earns in revenue. Are you spending $1 to make $2 or $2 to make $1?

2. Sign up for a click fraud software service.
A click fraud company such as VeriClix (which is free of course) should provide you a click fraud auditing and monitoring solution that automatically archives all PPC activity and monitors in real-time for suspicious activity.

3. Keep in touch with your account reps.
Talk with your PPC rep at Google, Overture (Yahoo! Search Marketing), Kanoodle, etc. When you feel you have captured suspicious activity and request a refund.

Click Fraud Bot User Arrested

2005-11-04T17:46:00.000-08:00

Jeanson James Ancheta was indicted by a Washington D.C. grand jury because he "...used the software to perpetrate click fraud, garnering tens of thousands of dollars..."

Still not convinced you probably have a click fraud problem? Google, Yahoo! (Overture), Kanoodle and the rest of the PPC networks make statement after statement that click fraud is only a small problem (although they have whole teams dedicated to it) and that you can trust them to monitor your pay per click ad campaigns and get you back every penny you deserve. It just isn't so folks.

The few arrests like these are cheered on by the PPC networks as the problem being dealt with effectively. Truth is, even security researches are doubtful whether click fraud bot arrests like this actually curtails the fraud activity. Why? Because the world of click fraud is tied to viruses and malicious hacking.

As computers are taken over and controlled by viruses / hackers it means that they can be used to host click fraud bots and click your ads all from different IPs from all over the world. This is why you cannot leave click fraud monitoring up to the search engines and PPC networks. Only you or the agency managing your advertising campaigns are familiar enough with your ad campaigns to spot suspicious activity such as click spikes and conversion drop offs related to ad placement and spend.

VeriClix is the web's only free click fraud software service that alerts advertisers in real-time to defined suspicious activity levels. VeriClix allows advertisers to run powerful custom reports and export their reports and click activity information into a variety of formats. Create your free click fraud monitoring account today.