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New study renews click fraud debate
Last year, Google and Yahoo sold a combined $16 billion in Internet ads
SAN FRANCISCO - Deceptive clicks on Internet advertising links distributed by Google Inc., Yahoo Inc. and other
online marketing vehicles are probably occurring far more frequently than the
network operators acknowledge, according to a study by fraud detection
specialist Fair Isaac Corp.
The chicanery involves automated
computer programs or scam artists who repeatedly click on ad links with no
intention of buying anything. The short ad links, which appear alongside search
results and other content at thousands of Web sites, typically trigger a
commission with each click - a financial formula ripe for mischief,
Minneapolis-based Fair Isaac found.
The study's preliminary
conclusions, scheduled to be discussed Friday during a Fair Isaac conference in
San Francisco, threaten to revive suspicions among advertisers that they have
been overcharged as part of a ruse known as "click fraud."
After reviewing a handful of Web
sites since last August, Fair Isaac believes 10 to 15 percent of the advertising
traffic is "pathological," indicating a likelihood of click fraud, said Joseph
Milana, the company's chief scientist of research and development.
"It's still an early result,"
Milana said. "The question remains about how broad the problem is in the entire
marketplace."
The culprits behind click fraud
typically are either trying to make more money from the ads appearing on their
own Web sites or maliciously trying to drain the marketing budgets of a
competitor.
Google, which runs the Internet's
largest ad network, maintains its engineers and filters identify all but 0.02
percent of the click fraud on its network. The Mountain View-based company says
it doesn't bill advertisers for any of the flagged click fraud.
Yahoo, which runs the
second-largest ad network, also maintains its preventive measures weed out all
but a small portion of click fraud.
Fair Isaac's initial estimates
fall in the same range as those made by Click Forensics, a San Antonio-based
consulting service that compiles a quarterly index tracking click fraud
rates.
Other studies have estimated click
fraud rates as high as 30 percent, a figure implying advertisers have paid
billions of dollars for bogus sales referrals during the past few years.
Google and Yahoo have consistently
ridiculed double-digit click fraud estimates as the handiwork of search engine
consultants trying to drum up more demand for their services by alarming
advertisers.
On the flip side, Google and Yahoo
have a powerful incentive to debunk the click fraud claims to preserve
confidence in a system that generates most of their profits. Last year alone,
Google and Yahoo sold a combined $16 billion in Internet ads.
Fair Isaac enters the debate with
a track record for ferreting out fraudulent conduct in other industries.
Best known for a scoring system
that rates the creditworthiness of consumers, Fair Isaac also has helped banks
fight credit card fraud for 15 years. More recently, the company has sold
anti-fraud tools to health care providers and telecommunications companies.
Now, Fair Isaac is trying to
determine whether click fraud is a big enough problem to justify the company
developing a potential solution that could help boost its own profits. "This is
a problem that fits well in our sweet spot," Milana said.
Click fraud doesn't appear to be a
major problem when the ads appear on Google's and Yahoo's respective Web sites,
Milana said.
The trouble starts cropping up
once Google and Yahoo deliver the ads to other Web sites that are part of their
vast marketing networks.
"They just don't know what happens
beyond their own firewalls," Milana said of Google and Yahoo.
Ads on other Web sites accounted
for $4.16 billion, or 39 percent, of Google's revenue last year. Google shared
$3.31 billion of that revenue with its advertising partners. Yahoo doesn't break
out how much of its revenue comes from ads on other Web sites.
By Michael Liedtke (Associated Press)
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| Tech News: | Updated: February 2008 |
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