Friday, April 28, 2006
Cybersleuths Seek to Uncover Click Fraud Artists
Competing cybersleuths looking to profit from helping advertisers uncover so-called click fraud are fueling a debate about the extent of the online ad scams. The problem is a growing concern for advertisers who worry they are overpaying for ads that never reach their targets. A company that buys an ad on Google, Yahoo or their partner Web sites pays each time someone clicks on their message. Click fraud undermines this system by creating bogus traffic. It usually involves a mischievous hacker -- or more often an automated program -- that repeatedly clicks on an ad, generating bogus clicks and driving up prices. Some analysts believe click fraud is overhyped, while others say the problem is serious enough that it threatens the growth prospects for an industry that played a huge role in reviving the Internet.
While Google, Yahoo and others will refund advertisers who can prove fraud, they have been criticized for being less than forthcoming about the scope of the problem. Their silence has created an opening for a growing number of smaller, third-party firms -- Click Detective, Click Authority and Authenticlick to name a few -- that seek to sell services and software to advertisers for combating the scourge. Most of their estimates of fraud have ranged from 20 to 35 percent on top-tier players Google and Yahoo, and significantly higher for smaller networks, such as Kanoodle and Miva, because they are more likely to attract smaller, less established Web sites. However, Click Forensics, a firm that just launched in March, released its first Click Fraud Index claiming the rate across the industry is significantly lower, averaging about 14 percent. It also reported that fraud was even less on tier providers, such as Google and Yahoo, at 12 percent.
"We think it's still a significant number at 14 percent for what's going to be a US$6 billion marketplace in 2006," said Click Forensics' President Tom Cuthbert. Still, competitors take issue. Michael Caruso, co-founder and president of ClickFacts, questioned whether the index included enough advertisers -- 500 mostly small and medium-size advertisers -- to extrapolate across the industry. "There's an entire group of people, including those in the business, that believe it's higher than what this report is saying," Caruso said. Resolving the question is no small matter considering the ad dollars at stake. Google, Yahoo and other pay-per-click advertising networks generate billions by placing ads on their own sites and on millions of member sites that agree to carry ads in exchange for a revenue cut. John Thys, the chief executive of Radiator.com, which sells car radiators, said ClickFacts' software suggested 35 percent of the clicks to his site were frauds. He estimates he spent $60,000 in one quarter on click ads and has so far received just $500 from Google for one quarter. "That's nothing," he said.
Brought to you by the privacy seal program from Guardian eCommerce.
While Google, Yahoo and others will refund advertisers who can prove fraud, they have been criticized for being less than forthcoming about the scope of the problem. Their silence has created an opening for a growing number of smaller, third-party firms -- Click Detective, Click Authority and Authenticlick to name a few -- that seek to sell services and software to advertisers for combating the scourge. Most of their estimates of fraud have ranged from 20 to 35 percent on top-tier players Google and Yahoo, and significantly higher for smaller networks, such as Kanoodle and Miva, because they are more likely to attract smaller, less established Web sites. However, Click Forensics, a firm that just launched in March, released its first Click Fraud Index claiming the rate across the industry is significantly lower, averaging about 14 percent. It also reported that fraud was even less on tier providers, such as Google and Yahoo, at 12 percent.
"We think it's still a significant number at 14 percent for what's going to be a US$6 billion marketplace in 2006," said Click Forensics' President Tom Cuthbert. Still, competitors take issue. Michael Caruso, co-founder and president of ClickFacts, questioned whether the index included enough advertisers -- 500 mostly small and medium-size advertisers -- to extrapolate across the industry. "There's an entire group of people, including those in the business, that believe it's higher than what this report is saying," Caruso said. Resolving the question is no small matter considering the ad dollars at stake. Google, Yahoo and other pay-per-click advertising networks generate billions by placing ads on their own sites and on millions of member sites that agree to carry ads in exchange for a revenue cut. John Thys, the chief executive of Radiator.com, which sells car radiators, said ClickFacts' software suggested 35 percent of the clicks to his site were frauds. He estimates he spent $60,000 in one quarter on click ads and has so far received just $500 from Google for one quarter. "That's nothing," he said.
Brought to you by the privacy seal program from Guardian eCommerce.
