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on the BW click-fraud story

September 25, 2006 at · Filed under internet, technology

business week has on its cover a story about click fraud.

it gives a good overview about the subject and how it is impacting online advertisers.

it is very clear that google and yahoo don't have too much incentive to detect and fight click-frauds. yes there is a long-term, big picture risk for google and yahoo in case advertisers lose confidence in the cost-per-click (CPC) model, but in the meantime they are making lots of money. as someone quoted in the article said, if it would have cost them money rather than make them money they would have resolved it already.

i am not sure click-fraud can be completely resolved, but i think several measures could be taken to reduce it:

  • tracking how much time a clicking user spend in the site - if the user (or bot) that clicked the ad leaves the site after a few seconds it is obviously not a very valuable click
  • tracking geo location of the clicking user - if the visiting user is from Kazakhstan and the ad is for grocery service in dallas, tx then there is a good chance this is fraudulent click
  • comparing user behavior based on source - if users that come from a specific site running the ad are behaving very differently from the average user that came after clicking an ad (lower conversion rate, less time spent in the site, etc.), it is a clear sign of fraud

to measure all this there needs to be software installed on the advertiser's site. i am not sure it is a good idea for that software to be coming from google/yahoo.. it makes more sense for google/yahoo to certify 3rd parties click-tracking software and work with the advertiser to define the specific parameters that would define a click-fraud.

all this may lead to a change in the model from CPC to cost-per-transaction (CPT). where CPT will be defined based on the specific circumstances of the advertiser, it may be buying something, or just spending a certain amount of time on the site, or getting to a certain stage in a process that takes place on the site.

CPT has been used for years in the online gambling and sex sites, and its about time it will be used by mainstream advertisers.

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Richard Ball said,

September 26, 2006 @

The BW article fails to differentiate between search engine advertising and contextual advertising. The bulk of click fraud can be mitigated by simply opting out of contextual advertising. Why the advertisers in the BW article complaining about click fraud didn’t do this is rather puzzling.

avneron said,

September 26, 2006 @

very true.

but going off the google/yahoo network also has a lot of value, which the advertisers want to reach.

Michael @ MostChoice said,

September 26, 2006 @

Wanted to comment on the search versus contextual issue. I am the online marketing manager at MostChoice, the advertiser featured in the Business Week story, and while this may not have been entirely clear the problems we faced were with the search network, not the content network which we opt out of. The problem is that for the search engines, especially Yahoo, there are certain “partners” they include in their search network which are not real partners by any stretch of the imagination. These are the sites that sent the bulk of the junk traffic.

We have no problem with the real traffic from partners like AOL, Earthlink, and so forth — those clicks both look like real visitors and convert at the rate you would expect. What we do have a problem with is being forced to pay for the junk clicks mixed in with the real traffic. If we had a way to opt out and exclude these bad sites, we would do it in an instance, but it is not possible.

To be fair, Google has been far better then Yahoo and offers a lot more customization, but it does not completely solve the problem.

Blog owner:
I agree with your call to having third party involved because the truth is it is not just the click but what happens once a visitor comes to the site that gives the best indication the traffic is not real. There need to be more open standards so that advertiser can share data on the worst offenders and help to clean up the search advertising space.

Michael @ MostChoice

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