Last week, we cited a study finding that 16.6 percent of all pay-per-clicks on the Internet were fraudulent in the fourth quarter of 2007, up from 14.2 percent for the same quarter in 2006. The statistic, as reported by MediaPost, was compiled by Click Forensics, an independent auditor that has created the Click Fraud Index. Given what must be billions of total ad-clicks on the Internet, as well as the constant development of click fraud detection programs by online ad providers, the number seemed surprisingly high.
Enter Google, which maintains that its internal click fraud algorithms tell a different story. According to the Google AdWords blog, the company maintains a “3 part system for invalid click detection” that involves filtering out anything funny-looking, analyzing the filtered clicks to determine how many are actually fraudulent, and then investing accordingly. Freakonomics spoke to a Google spokesperson, who explained the discrepancy between the first and second steps in the Google process:
Not all invalid clicks are click fraud — for example, the second click of a double click is not one with malicious intent. But since our goal is to filter out as much click fraud as possible, we cast the net of invalid clicks wide enough to effectively minimize that proportion and ensure that advertisers are only charged for valid clicks. The invalid click rate [i.e., the total number of clicks filtered out by Part 1] has remained in the range of less than 10 percent of all clicks every quarter since we launched AdWords in 2002.
After these figures are analyzed offline, Google maintains that the number of fraudulent ad-clicks not caught by the filters is less than .02 percent of the total clicks on Google ads. So it looks like, on Google’s end anyway, the number of click fraudsters may not be quite so huge, and that the metrics used by third party auditors such as Click Forensics may be flawed. A Google spokesman wouldn’t speculate as to how many people that .02 percent represents (though whatever the number is, it has likely declined, given that the company’s total ad-clicks were reportedly down 7 percent in January). Anyone care to do the math?
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Interesting topic for a search marketer! Lots of folks have pointed out that engines certainly have a vested interest in understating click fraud numbers, but don’t forget that auditing firms like Click Forensics have a similar interest in overstating them.
The major difference is that an auditing firm like CF can actually show a 3rd party exactly how they’ve come up with their numbers. Search engine click fraud routines are completely black-box, and advertisers must just take them at their word. (This is by necessity to an extent, as disclosing the methods could actually help fraudsters figure out how to better game the system.) There was much talk in the industry a few years ago about establishing an auditing/certification process for click fraud prevention efforts, but this seems to have fizzled out for some reason.
Just to put a little context around this, Google’s 2007 revenue from PPC advertising was about 16.5B. Even using a conservative 1-3% fraud estimate the figure is fairly large, so it’s surprises me the issue has been getting such little attention.
Google? No click fraud? You beleive that? Let me tell you, I have managed a few ad campaigns through Google. Every client I managed, universally dumped their “AdSense” system because nearly 100% of the clicks were fraudulent! How else do you explain how dinky sites in India and Russia that seem to consist of nothing but stolen blog entries and archived mailing lists blow out a campaigns budget before the sun rises in the US every day? C’mon, Google is the Internet’s biggest huckster, just look at their market valuation if you don’t beleive me. Eric Schmidt ran Novell into the ground (even if Steve Ballmer claims to have buried him), and their two principle people need him to referee arguements as to what kind of beds to put in the corporate jet. And people thing the loony from Overstock (Byrne) is wacky… no, sorry, Google is a sham of a company build on ripping people off. Ever since they went public, Google has done nothing positive, and their ad systems are the worst of it.
J.Ja
As an alternative to payment derived from number of clicks there is a service called Project Wonderful (http://www.projectwonderful.com/ ) that allows people to obtain ad space using a never-ending auction avoiding clicks and click fraud. it seems like the right mix between newspaper style advertising and internet technology and seems more efficient.
Maybe this is a matter of semantics, but… it seems that there’s a really big discrepancy in how Google describe fraudulent clicks and how Click Forensics does so.
Is it possible that Click Forensics is reporting on total fraudulent clicks, while Google is reporting only on fraudulent clicks that get billed to their customers without being caught? From reading the post above, I can’t tell what the definition of a fraudulent click is, exactly.
I have to agree with 10. I am a lawyer and was once approached by someone wanting to sue their “business partner” – when I asked what the business was, this person, without any sense of shame, told me that it was based on Google Adsense and that her business partner was supposed to have set up 100s of websites so that they could put Google Adsense’s ads on them… but this person had taken her money and not delivered – so a heartwarming story all round. I did, however, refuse the engagement.
A lot of people are casting doubt on Google’s assurances on the basis that they have the most to gain from lowering the click fraud total.
They obviously did not read Google’s rebuttal, and the paper they produced to discuss it in detail. They state that on an accounting and engineering level, the click accounting firms like ClickFacts or Click Forensics are miscounting. Most notably, they’re counting page reloads as fraudulent clicks, and they’re counting hits from other sites like Yahoo as google fraudulent clicks.
While Google has the most to gain from this analysis, it is close-minded and ignorant to dismiss their claims just because they stand to make money from it.
The cost of click fraud shows up directly in my return per click/dollar spent on programs like Adwords. The greater the fraud the less money I am likely to devote to a particular campaign.
It’s in Google’s interest to mitigate fraud. As and advertiser however I don’t have to worry about fraud as much as I have to watch my conversions and returns.
As a Google advertiser who used to advertise heavily on their content network and subsequently spent a week analyzing the click fraud I got, I would distrust *everything* Google has to say on this topic. It is my strong impression that, if they don’t engage in outright lying, then they intentionally shut their ears and ignore evidence, as it is in their interest to claim that click fraud is low when actual reality is far from it.
They know it’s hard for you to prove that the phenomenon you’re seeing is click fraud, so they internally promote an attitude which discourages acknowledging the problem.
Literally, I would trust *none* of what they have to say on this topic.