Google's Questionable Clicks

I found this article on Forbes.com. Interesting since online advertising is a billion dollar industry and only growing.

Google's Questionable Clicks
Rachel Rosmarin 08.10.06, 3:30 PM ET

San Jose, Calif. -

After wining, dining, dancing and karaoke-ing at the "Google Dance" inside the search company's Mountain View, Calif., headquarters Tuesday night, 2,000 online advertising strategists came face to face with Google's Chief Executive Eric Schmidt Wednesday morning, and he wasn't nearly as much fun.

On stage at the Search Engine Strategies conference, he wouldn't even answer one of their most basic, burning questions: How much click fraud happens within Google's advertising system?

"We don't want to give out the details," Schmidt said. "But we believe we have it under control, and we believe it is getting better. Though, we don't know what we don't know--we only know what we can detect."

Schmidt's wishy-washy claim comes at a time when his company and third-party click fraud detection firms are sparring over the prevalence and method of tracking the bogus clicks, which occur either when competitors automatically or manually click on each others' ads to waste marketing budgets, or click their own ads to get extra cash from search engines.

Although Google shows individual advertisers limited false-click data for each ad campaign, the company refuses to disclose an industry average, or total dollars spent on bad clicks. Third-party auditors often estimate averages and use tracking technology not employed by search engines to measure clicks and where they come from. Advertisers then try to use reports generated by these auditors to get refunds or credits from Google and other search engine ad networks.

On Tuesday, Google's click quality team published a report dismissing the click fraud estimates of three third-party software companies. "Firms [are] stating that their measurements show much higher levels of click fraud than we believe could possibly be realistic (e.g., 14%), which is troubling," according to Google's report.

This month, click-fraud auditing companies have put the range of false clicks at between 8% and 35%. One firm, Outsell, estimated that about 15% of clicks are fraudulent, and that they cost U.S.-based search engines and advertisers about $1.3 billion a year. Google's opinion of Outsell? "It was an opinion survey," according to the Google report.

As recently as Aug. 3, Google, Yahoo!, Microsoft and IAC/InterActiveCorp's Ask.com committed to work with the Interactive Advertising Bureau to write click-fraud prevention guidelines, as well as to create standards for how to identify click fraud and how to define a "click." That announcement came on the heels of a judge's approval last month of a $90 million settlement of a click fraud lawsuit. Jim Spanfeller, chief executive of Forbes.com, is the chairman of the IAB's executive committee.

But Google's words and actions indicate that public transparency on the click fraud issue is not a top priority, regardless of how committed the company says it is to solving the problem.

"With nearly half a million advertiser accounts, if anyone is in a position to have a statistical guess, you'd think it'd be Google," says Scott Brinker, CTO of Ion Interactive, a firm that measures click fraud by tracking behaviors after a click. But since Google doesn't share its data, it is frighteningly difficult to come up with a number, he says.

"There are going to be patterns of click fraud detected only on their end and only on our end," he says. "The ideal would be for search engines and third parties to cooperate and look at a combination of the data."

Jon Waterman, chief executive of online marketing firm Findology, which on Tuesday launched click-fraud detection software Fraud ID, says he doesn't blame Google for retaliating against third-party auditors in its report.

"There's no need to bash people in this business, but I want an open forum," Waterman says. "Discredit our data, and we'll respond in real time. I'm sure that can only help address this industry's problem."