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The Latest Click Fraud Roundup

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Google might be about to settle a click fraud case, but the issue remains very much in the minds of the major media. NPR aired a story on the issue last night providing a nice overview for the audio-inclined. Xeni Jardin who did the piece describes it a bit more here; I was one of the people she talked with. Beyond NPR, both BusinessWeek and the Washington Post have had long pieces as well.

Click Fraud Gets Smarter from BusinessWeek came out before the settlement was announced and takes a long look at the click fraud issue. It starts off with the testing that Greg Boser has been doing, which is notable if only because he's one of the few involved in this with no particular stake. He doesn't specialize in click fraud detection, and so has no particular reason to inflate figures. Nor is he a search engine, with any particular interest in downplaying the results.

The story also covers a study that Fair Issac is doing in conjunction with Alchemist Media -- which does specialize in click fraud detection. Alchemist is headed up by Jessie Stricchiola, one of our long time SES speakers on the subject and a true pioneer in raising alarm over the issue. Fair Issac, the article reports, is the company that analyzes 85 percent of the US credit card detections to seek fraud. Click fraud detection systems that the search engines operate are often likened to detecting fraudulent credit card transactions, so I'd say it's reassuring to see the company enter the space.

The article covers SEMPO stats finding the number of advertisers calling click fraud a serious issue has tripled over the past year, rising to 16 percent in 2005. The article also gets into the mechanics of click fraud, from proxy servers that let you appear to be coming from different addresses to traffic generation software and clickbots that might get injected into computers unknowingly, to help generate clicks.

For their part, the search engines say as they have before: they have fraud detection systems in place; they filter out lots of bad clicks; they understand click fraud is a serious issue but one they say is being managed.

In Game of Click and Mouse, Advertisers Come Up Empty from the Washington Post is another exploration of the click fraud issue, but diving into less depth than the BusinessWeek story. It starts out with one site's auditing firm estimating that 35 percent of its referrals came from bogus traffic on Google, with Yahoo sending 17 percent of fraudulent clicks. The site itself is now seeking a refund from the search engines. The article also covers concerns that Google is rushing to settle the case in Arkansas so as to avoid another case that might suggest Google knowingly failed to act on the click fraud issue.

I haven't done a deep read of the Arkansas case, but from what I can recall, I think the attorneys against Google (and other major search engines) certainly felt the search engines could have knowingly done a better job. In other words, I don't know that the Arkansas case was somehow less damning. It was just on the docket first, and Google certainly has got what seems to me a bargain settlement, if it can wipe out similar cases.

The Washington Post article also looks briefly at the two main types of click fraud: competitive clicking (drive your competitor's expenses up by clicking on their ads) and affiliate clicking (earn money by clicking on ads that are on your own site). Affiliate clicking is seen as more common and helped by software that can generate clicks for you.

Via Threadwatch, Google's 'click fraud' settlement offer may not end California case from the San Jose Business Journal covers more on the case against Google in California, where attorneys say the proposed Arkansas settlement will have little impact on their case. That is, of course, assuming the US District Court in California approves their case as being a nationwide class action before the case in Arkansas is settled. That's a big assumption. The California court won't consider the case before it for class action status until May. The Arkansas case may well be settled by then. If so, then that will end further attempts at class actions against Google as of the settlement date.

Click Fraud: An Industry Crisis? from Kevin Lee over at ClickZ covers tips advertisers may want to consider to determine if they might be eligible for credits in the proposed settlement with Google in a click fraud class action case. In short, if you ran ads across the entire Google network, had ads purchased at high CPC rates or were in a competitive industry, you might have been at risk.


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