Click fraud wrap-up on Wired
The usual depth of Adam Penenberg is missing from this article on the click-fraud lawsuits. It does quote a company who is filing suit against Google and Yahoo, and lays out how they feel they were attacked by a competitor.

But it misses on a couple of key points:

Don't count on the search engines to confront the problem, though. Sure, they pay lip service to cleaning up click fraud, and issue credits -- not refunds --

Google and Yahoo do refund ad spend that is proven fraudulent. And more importantly, they have incentive to fix this problem -- primarily because of potential impact of bad PR and the fact that revenue that they make from click fraud is small compared to their legitimate business. I don't think it's accurate to represent Google's supposed desires as Penenberg does when talking about BlowSearch's anti-fraud experiment that reduced clicks significantly:

You can bet that Google and Overture, the two biggest engines on the block, have little desire to repeat this experiment, especially since paid search brings in billions of dollars in revenue for both companies.

As I've tried to point out before, the part of the content networks which are most vulnerable to click fraud are a small part of the Google's overall revenue. Perhaps under $120M a year. If that network were subject to 33% fraud, they'd be giving up $40M in revenue, and that revenue is maybe 35% profit. I believe Google would worry more about the fraud than the $15M in profit they would be making in the worst case.

One thing I do agree on: Google and Yahoo could open the kimono and help solve these debates. You'd think they'd want to do that before there are a stack of lawsuits and legal reasons that they won't. Either that or some university researcher needs to do some interesting research to provide credible numbers on how prevalent click fraud really is.

  ¶ 8/18/2005