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Tuesday, March 14, 2006

Google’s Click Fraud Pay-Out

Posted by @ 5:41 pm

After downplaying the problem of click fraud for years, Google has acknowledged that click fraud does damage advertisers by pledging a $90 million advertising credit pool to the settlement of click fraud disputes with its advertisers.

Google awarded the $90 million worth of advertising credits in order to settle a lawsuit with online advertiser “Lane’s Gifts and Collectibles”, but it should also cover any other click fraud claims that are outstanding. While Google normally requires any click fraud claims to be submitted within 60 days, the settlement with Lane’s Gifts and Collectibles means that advertisers are eligible to receive compensation for click fraud committed between 2002 and today.

There are two main sources of click fraud: competitors who intentionally click on competing ads or publishers within Google’s contextual ad network who click on ads to increase the revenue that they as publishers receive from Google.

Google insists that the company employs large teams of experts who identify, filter and discard any click fraud before it reaches advertisers’ invoices. Compared to Google’s total revenue from pay-per-click advertising, which was over $6 billion in 2005, $90 million in click fraud-related expenses does indeed look negligible.

Yahoo! Search Marketing and other PPC program providers also face the problem of click fraud within their pay-per-click programs. In the case of Yahoo! a few webmasters have reported to be pleasantly surprised when they received automated notifications from Yahoo! Search Marketing about click fraud refunds being granted without them having asked for those refunds. Yahoo!’s proactive approach in these cases definitely created significant goodwill in the search engine marketing community, which helps in maintaining the trust in paid search programs.

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