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Digital Advertising Information You Need to Know |
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Is Click Fraud's Threat
'Staggering' or 'Overblown'? Click fraud, long a bothersome fact of search advertising, garnered increased discussion after George Reyes, GoogleÁs chief financial officer, declared recently that click fraud "threatens our business model." ReyesÁ comments, made during GoogleÁs first presentation at an investors conference earlier this month, ignited speculation that click fraud could derail the expansion of search marketing. The level of click fraud is difficult to peg. Estimates run from 5 percent of search clicks to 20 percent. One vendor of click fraud detection software thinks as many as half of clicks on high-priced keywords are fraudulent. Stephen Messer, CEO of affiliate network provider LinkShare, told an investors conference in New York devoted to search marketing two weeks ago that click fraud is "rampant" and "staggering." He said it could wipe out ROI in search marketing in 2005. "ItÁs probably the last big year for search before it blows open or people start looking for alternatives," Messer said. Some search marketers say click fraud had not increased and remains a manageable problem nowhere near the threat it is often made out to be by investment research analysts and in many news accounts. "I think it exists, but it is overblown," said Andy Beal, vice president of search marketing at KeywordRanking.com, Morrisville, NC. "The engines have done an unbelievable job of reducing click fraud in the last few years," siad Josh Stylman, managing partner of Reprise Media, a New York search marketing firm. "From what we see, click fraud exists, but is seems like people are looking for a story." Stylman said Reprise often finds its clientsÁ bills credited for clicks that Google and Overture deem to be suspect, typically 5 percent to 7 percent of all clicks. Reprise had needed to lobby the main search engines only a handful of times for suspicious traffic. Jupiter Research analyst Nate Elliott thinks click fraud is "a non-issue." He notes that click fraud is factored into advertisersÁ bids already, at least those who bid based on their ROI. Beal compared it with a retailer knowing that 5 percent of sales will be wiped out be shoplifting. The retailer is vigilant, but he also concedes that merchandise will get stolen. "I think the solution providers are the ones who are making it a big issue," he said. Jessica Stricchiola, president of Alchemist Media, which sells click fraud detection services, thinks the issue is a major problem that Google and Overture try to downplay, partly because they benefit from it in the short term. "The tighter they clamp down on click fraud, the less money they bring in," she said at a click fraud panel at the Search Engine Strategies conference in Chicago on December 16. Stricchiola estimates that 15 percent to 20 percent of all clicks are "artificial." Click fraud comes from various sources, she said. Sometimes it is from disgruntled former employees. Other times, competitors try to drive up a rivalÁs costs. Another big source is from search engine affiliates, particularly GoogleÁs AdSense for Content publishers, which can generate revenue from fraudulent clicks, she said. Search engines and many search marketers reject the idea that Google and Overture do not police click fraud closely out of self-interest. They note that GoogleÁs and OvertureÁs business models are based on delivering profitable leads to customers, who will stop advertising if the clicks they get are not turning into customers. "We try to be very liberal in out refunds because a big part of what we do is instill trust in our model," said Patrick Giordani, senior manager of OvertureÁs loss prevention and analytic team. Overture does not receive many requests for refunds from marketers seeing fraudulent clicks, Giordani said, and it had not seen a rise in fraudulent clicks recently. "I think weÁre catching a majority of it," Giordani said. Stricchiola allows that Google and Overture, in particular, have improved at crediting advertisers, a reaction she credits to advertisers raising the click fraud issue loudly. But she urges clients to monitor their search campaigns closely, look for abnormal traffic spikes and investigate irregularities.
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