Click Fraud's Secret Problem

Posted by: Rob Hof on December 05, 2006

My colleague Ben Elgin has an interesting story about why it’s so hard to fight click fraud: Battling it in court means companies such as Google would have to reveal how bad it is and how they’re fighting it. Perhaps worried that would expose too much about its inner workings, Google apparently declined to provide enough information for the feds to pursue what looked like an open-and-shut case, prompting them to drop it. While it’s unclear how big a problem click fraud is, it undeniably exists, so Google and others will have to open up a bit if they want to lay concerns to rest. Or would that only reveal that it’s a problem that can’t be solved?

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Reader Comments

Jack Roberts

December 7, 2006 01:22 AM

Click fraud is a huge problem, Rob. It is much easier for Google to continue to provide search advertisers with credits for repeat or bogus click activity than to risk 'loud' public lawsuits. Also Google, Yahoo, and many other search engines typically seek to settle click fraud cases early and often rather than face possible sanctions from the courts that mandate new, resource-draining and expensive click fraud prevention measures. Google CEO Eric Schmidt recently told the advertising community that click fraud is a Google AdWords reality and that advertisers should just plan on allocating 20-30% of their total SEM spend to fraudulent click activity. Is this the best that Google can do? Looking the other way might have worked a couple years back but not anymore. The SEM PPC budget allocations are quite substantial and the stakes are far too high to ignore advertiser demands for meaningful click fraud protections. Google has hundreds of sales representatives marketing 'advertising budget reallocation' that shifts more advertising dollars from traditional media into search. Are these advertisers walking blindfolded into a fraud-laden online advertising channel? Is this really the best Google can do in terms of click fraud?

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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