Is Click Fraud another Savings and Loan crisis?

June 3, 2006

I’ll forgo the diatribe of a defenseless company this time to focus on what will likely be in the news in the relatively near future. The issue is Click Fraud and it’s affecting every company with a $20 to $20k daily PPC budget.

Click Fraud occurs when someone clicks on the ads without intent of buying anything. Harmless enough, but not when it’s done hundreds or thousands of times an hour, which can generate large advertising bills. There are 2 basic flavors of Click Fraud – competitors clicking on your ads to spend your money, and networks of clickers hosting ads on affiliated sites and clicking on them.

In that 2nd scenario, here’s how you make money:
1. buy a domain name ($5)
2. populate with content from others via rss/xml ($0)
3. link the lots of sites together, throw in a little blog comment spam, and attract search engine results. ($0)
4. host Google Adwords on your site, where you make a couple of cents for every click, Google makes the rest.
5. get your brother-in-law and his 27 kids to get all their MySpace friends to click the ads.

Google is making a lot of money this way right now, and has no interest in stopping it, because it helps the stock price. However, the advertisers are starting to get irritated, and I’m guessing that the government will get involved once someone explains it to them. I’ve seen 1 keyword generate a $12,000 bill in a month because it wasn’t protecting against Click Fraud.

Think I’m crazy? Cuban is on top of Click Fraud. Cringely knows it too.

It’s a stretch, but law changes similar to those that brought down the old Savings & Loans could have a brutal affect on internet advertising, including the biggest of them all Google. Could they make PPC ad publishers guarantee click quality, be subject to Sarbanes-Oxley style audits, or just let advertisers have more input on who the ad gets served to (because you know Google knows who you are already).


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: