Google Sued for Ad Fraud; Another Class Action Settlement?

Today Google was slapped with a an advertising fraud lawsuit that will be fascinating – and important – for AdWords advertisers to watch.

The lawsuit, which seeks class action status, was filed by the firm of Kabateck Brown Kellner, on behalf of David Almeida, a Massachusetts-based private investigator. The lawsuit claims that Google defrauds advertisers by obscuring the fact that new AdWords campaigns are set by default to display ads on both Google’s search results pages (and like pages served by partners like AOL) and pages owned by site publishers who display AdWords ads via Google’s Adsense programs.

Readers of my weekly SEW Content Advertising column are familiar with this phenomenon, and my suggested best practice of creating separate search and content campaigns.

At the risk of making life harder for my friends at Google, I need to point out that the suit seems to get one important fact wrong. Reports today in CNET, Yahoo! Finance, Wired and other outlets imply that advertisers are presented with the ability to “opt out” of displaying ads on the content network during campaign creation. Here’s the way Yahoo puts it:

“During this process, users encounter two adjacent boxes. Into the first, customers enter the amount they wish to pay per “click” of an ad displayed on The second box is marked “optional.” Into this box, a user can enter the amount they would be willing to pay per “click” of an ad appearing on a third party web page. But leaving the box blank does not prevent ads from appearing on third-party sites.”

The truth is, advertisers don’t see this option during campaign creation. The only way for them to opt out of displaying ads on the content network is for advertisers to explicitly edit the settings of their campaign after creating it, and un-check the box labeled “Content Network” – which is checked by default. Some would reason this makes Google even more exposed to fraud charges.

Another irony: some of the reporting claims the content network is inherently flawed in some way. Here’s how Yahoo! puts it:

“Ads on third-party sites are widely-acknowledged to be far less effective (and therefore less valuable to the advertiser) than ads on”

Readers of my column know that the content network is not “less effective;” savvy advertisers realize that great, profitable results can be obtained by advertising on content sites. The rules and best practices for creating effective content campaigns are, however, much different than for search campaigns. To Google’s credit, they’ve been trying to make these differences more clear.

I’ll dig into this subject more deeply in the next installment of my column. Meanwhile, my predictions, no matter which way the lawsuit is decided:

1. Google will finally make opting out of the content network much more straightforward, with clear instructions during campaign creation.

2. Google’s advertiser education efforts, via their tutorials and help files, will much more explicitly teach the differences search and content ad campaign best practices.

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