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Thursday, April 7, 2005

Click Fraud

Shock announcement: online advertising statistics may be unreliable and subject to manipulation.

The subject of click fraud has been worrying many people of late. It was acknowledged as a risk in the Google pre-IPO documents (Wired, Oct 2004), and was mentioned at an investor conference by George Reyes, Google CFO (CNN Money, Dec 2004). See also ClickZ Network Feb 2005 and Wired, March 2005. (Thanks to Masood Mortazavi.)

Update: further coverage Wired, January 2006.

Tools are quickly springing up, including ClickDefense, ClickLab and ClickSentinel.

Meanwhile, it seems that search engines are currently paying refunds without making much fuss.

Google: “We have regularly paid refunds related to fraudulent clicks and expect to do so in the future.”
Overtures: “We try to be very liberal in our refunds because a big part of what we do is instill trust in our model.”

But can advertisers rely on this? Of course not.

Click fraud is defined in terms of the intent associated with the click. This is inferred from patterns of click, such as the source and frequency (are we getting lots of spurious clicks from competitors, are they trying to increase our costs or distort the charging on certain keywords?) We may presume that as tools and refunds take care of simple click fraud patterns, more complex click fraud patterns will emerge, which will be more difficult to detect and demonstrate.

But all marketing campaigns are vulnerable to people who take the free offer without intending to purchase anything, people who ask lots of questions without having any money, people with nothing better to do than look at stuff they cannot afford and waste the salesman's time. (We call these "tyre-kickers".) Telemarketing is also vulnerable: an automatic dialler can be used to generate calls to a competitor's 800 freephone number. And so on.

Marketing campaigns are also vulnerable to channels that cheat, or can't be bothered to do things properly. Magazines artificially inflate their circulation figures. People paid to hand out leaflets in the street will "accidentally" give you more than one, so as to get through the pile more quickly. And so on.

In this domain, people generally trust because they have no choice - a given marketing opportunity comes with a take-it-or-leave-it trust package. This is commodity trust. Introducing other forms of trust into this domain seems like a tough assignment.

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