March 21, 2007 9:00 PM PDT

Yahoo names click fraud czar

Yahoo has promoted one of its staff attorneys to an executive-level position that is akin to being click fraud czar at the second largest Web search provider.

For seven years, Reggie Davis helped the Web search company defend itself against lawsuits by advertisers who claimed they were overcharged for pay-per-click ads that resulted from click fraud. Click fraud occurs when clicks are generated by people paid to click ads over and over or by automated software programs, usually for the purpose of boosting revenue for the Web site the ads appear on.

Now, Davis is the company's first vice president of marketplace quality, responsible for reducing the amount of click fraud and making sure advertisers and publishers are happy with the company's display and search listings.

"The mandate I've received...is to increase advertiser trust," he said in an interview on Wednesday, preceding the company's announcement planned for Thursday. "The goal is to develop the highest quality (advertising) network in reality, and in perception."

Click fraud has long been a thorn in the side of the major search engines, which have historically refused to disclose how big of a problem it is. But Google and Yahoo have slowly been lifting the veil and providing more tools for advertisers to help prevent click fraud. Neither company will disclose their click fraud rates.

However, Davis said the "discard rate," or percentage of clicks that for some reason or another were problematic and thus the advertiser is not billed, averaged between 12 percent and 15 percent at Yahoo. The rate of fraudulent clicks, those designed only to run up charges to the advertiser, is a "subset" of that total discard rate, he said.

Google claims that its discard rate is less than 10 percent and that its click fraud rate is in the single digits, or 9 percent or less. Click Forensics, which provides click fraud services and operates a Click Fraud Index survey of advertisers and agencies, pegs the click fraud rate for the top tier search engines at just under 12 percent.

Tom Cuthbert, president of Click Forensics, said the fact that Yahoo was creating a vice president position devoted to advertising system quality signals that the company is taking the issue of click fraud seriously.

"We believe Yahoo is taking a more honest approach than the others in talking about the scale of the problem," he said. "Advertisers can draw a conclusion by looking at the tracking to their site and looking at invoices. But there is still a big disparity between clicks that are bad and should not be paid for, and what advertisers are paying."

Last month, Google said it would give advertisers more information on how much they are saving by filtering out fraudulent clicks, and allow them to block specific Internet Protocol addresses from receiving the ads. That move is designed to stop rivals from using click fraud to eat through a competitor's advertising budget and to prevent them from bidding on the ad's keyword for the purpose of using it in their own ads.

Both Google and Yahoo have settled click fraud class-action lawsuits and they are working with the Interactive Advertising Bureau and others to establish guidelines for quantifying click fraud. A hearing on a challenge to the settlement in Yahoo's click fraud lawsuit is scheduled for Monday, Davis said. The judge has already given preliminary approval to the settlement and Yahoo expects it will be granted final approval.

Reducing click fraud will boost Yahoo's efforts at marketing its new advertising system, dubbed Panama, which went live in October. The system offers features that are designed to make it more competitive with Google's more popular AdWords system. One major change, which mirrors AdWords, is that Panama determines the order of ads on things like relevancy and clickability and not just the advertiser's bid price.

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2 comments

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About time! Read this!
Pay Per Click is a big loser for many large ticket items like we sell.

We sell medical mobility products. Most of the people visiting our site are using it for a catalog never intending to buy.

I think there is a lot of waste and fraud with pay per click for many products and services on the web effecting a large percentage of companies.

Google and Yahoo are aware of this and they have the data and have not released this data to the customers.

Do you think google/Yahoo is going to admit that a large percentage of poeple doing PPC are wasting their time and money? NO WAY!

I think people are figuring this out now in a big way. That?s why Pay Per Action is being offered by google.

Google/Yahoo know the secret is getting out now. If people knew what google and yahoo know they would not even try PPC for many products people are trying to sell on the web.

The word is getting out on this and will soon shock the PPC biz and the big search engines. Pay Per Sale will save google and yahoo and others will follow.

It will take a while but the pain for the publishers and google/yahoo will be worth it.

The big secret is now being exposed and will save many of the advertisers and google/Yahoo.

Thank God!
Posted by hlawton55 (3 comments )
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Rearranging deck chairs don't save Titanic or stinky sinking ships. Click fraud is underestimated by web-traffic auditors. The fraud is deceptively downplayed by major financial beneficiaries and their small time accomplices or affiliates. Big or not, no one is immune to click fraud. There is mounting unease over click fraud. By some estimates, click fraud could be over sixty percent. However, even one percent of $90 billion of global 2008-2009 Internet ad spend is too high, mainly because advertisers are still deceived, overcharged by millions and thus defrauded every day.

Read how, for example, "Yahoo protects online fraudsters, locks out legal ethical experts," web links here <a class="jive-link-external" href="http://www.networkworld.com/community/node/29113" target="_newWindow">http://www.networkworld.com/community/node/29113</a> , <a class="jive-link-external" href="http://tyneham.blogspot.com" target="_newWindow">http://tyneham.blogspot.com</a> , <a class="jive-link-external" href="http://tyneham.newsvine.com" target="_newWindow">http://tyneham.newsvine.com</a>
Posted by tyneham (16 comments )
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