April 10, 2006 4:00 AM PDT
Google settlement or not, click fraud won't go away
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But critics say the settlement doesn't really address the core problem.
"Unfortunately, the settlement doesn't appear to resolve the basic question of what constitutes click fraud and when search engines are on the hook for it," Eric Goldman, assistant professor of law at Marquette University Law School, says on his blog. "On that front, Google still will have an advertiser relations issue that needs further attention."
While the lawsuit would cover all advertisers who claim Google owes them refunds for fraudulent clicks, experts can only speculate as to what effect the settlement would have on another click fraud lawsuit against Google, filed in federal court in northern California, whose lead plaintiff is Web hosting firm AIT (Advanced Information Technology).
"Ninety-million dollars is chump change where the issue of fraud is concerned, particularly when the settlement is 'advertising credits,'" AIT spokesman Alex Lekas wrote in an e-mail. "It is almost comical how the resolution to the problem is to simply offer up more of the conduit to the problem."
Advertisers who are demanding auditing and certification for clicks on display and banner ads will eventually demand it for clicks on pay-per-click ads too, said Greg Stuart, chief executive of the Interactive Advertising Bureau (IAB), a trade association for the online advertisers. (CNET, publisher of News.com, is a member of IAB.)
The ad network leaders are, by most accounts, trying to offer their own solution. Google and Yahoo say they already employ several layers of filters to detect patterns that could signal invalid click activity and to determine the source of dubious clicks, looking at things like browser type, time of click and Internet Protocol address, which signals whether the click is coming from the same computer over and over.
Google also says it takes action to curb click fraud on its partner publisher Web sites that display ads for money. "We terminate publishers from our partner network on a daily basis as a result of invalid (click) activity," said Ghosemajumder.
But the ad networks say they also need advertisers' help in curbing the problem.
"There is a common misperception that search engines have all the data they need to make authoritative decisions about clicks," said John Slade, senior director of product management in charge of click protection at Yahoo. "There is data we don't have access to unless the advertiser gives it to us; data in their logs, like how long did a particular visitor stay on a site, or how many pages did a particular visitor view."
The problem only gets more vexing. In a new twist, Harvard University graduate student Ben Edelman issued a report last week that includes video and log data he says shows that Yahoo has inadvertently allowed spyware companies into its pay-per-click food chain, costing advertisers even more in click fraud costs. Yahoo said in a statement that it is investigating the claims.
For some, "black magic"--a term for click fraud in the late 1990s--is just a cost of doing business in an evolving digital world. But for those who aren't so willing to dismiss the issue as that, Michael Caruso, founder of click audit firm Clickfacts, asks: "Who can afford to lose 25 cents on the dollar?"
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