Thursday, May 25, 2006

The bigger they are the harder they fall

Yeah, you can just ignore this... it's about click fraud.

Before Google can actually become the next Microsoft, it has already become the first choice in criticism in any arena in which it’s ‘big’. As the popular saying goes, the bigger they are, the harder they fall. From the perspective of a Google investor, criticisms deserve attention. Obviously, Yahoo, Microsoft, and maybe are viable competitors in the online search/advertising space. How well Google performs has everything to do with expanding advertising opportunities for publishers as well keeping people coming back to, advertising on which nets Google the majority of its revenue. A potentially bigger obstacle (but not one that is unique to Google) comes from the prospect that the recent click fraud settlement of 90 million dollars may not actually settle much. I don’t know who the original plaintiffs were, but companies like web hosting provider AIT are unsatisfied and are withdrawing themselves from the class, hoping to get a larger settlement or a ruling against Google., perhaps the most strident anti-Google blog, apparently has heard from inebriated Silicon Valley sources that the majority of Google's revenue growth is derived from such clicks. While Google takes steps to ban publishers who benefit from click fraud, the suits allege that Google has not been doing enough to stop fraudulent clicking. The blogger there goes as far as to claim that the majority of Google’s revenue growth comes from click fraud, implemented, for example, by bots that spread like viruses or malware. These bots would browse to sites and click on ads shown on the malware beneficiaries’ sites, earning them commission.

Even if Google was good at catching fraud, it’d be difficult if not impossible to detect sparse and distributed fraudulent clicks from bots on ads for expensive keywords like ‘asbestos’ (my friend says law firms buy such ads for as high as $50 a click) or let’s say ‘web hosting’. Since Google prices keywords on an auction system, highly contested ads will naturally be very expensive in order to be given top spots (and get clicks).

Surely, click fraud is nothing new and if anything, online advertising has come a long way in meeting the needs of advertisers. We’ve come a long way to Google’s brand of context relevant ads from the dot-com days of paid advertisement viewing (I got checks in the mail for keeping an ad bar open). I’m not trying to say that Google is blameless (although zombie computer owners surely share a large part of it with the bot writers and beneficiary publishers), but it is a pity that with the great progress we’ve made, Google is coming under fire for small segments of the market (albeit highly profitable).

Currently, advertisers are free to contest clicks and apply for refunds from Google. There is a market for fraud detection tools as well as alternative advertising options such as impression-based ads as opposed to click-based ads. In the end, I think it comes down to a matter of whether or not people believe advertising on Google helps companies achieve their goals and whether advertising in another medium or with another provider like MSN or Yahoo’s Overture is more efficient.


bob2001 said... vanished in the night, like the mighty con job that is was.

Anyhow, I found a funny blog about that very situation.

Follow the link below. I found the content to be humorous.

Will said...

That was quite funny. Too bad we'll never get a confession.