Business, General ramblings, MBA

(Reposted) Biggest threat to Online Advertising: Click Fraud

Click Fraud-defined as artificially inflating the advertising bills by generating false clicks- is the new “big” threat to online advertising. Google and Yahoo generate most of their revenues through online advertisements. They will be in great danger if this is the case. While both the companies say that they do not bill the customers or reimburse them for clicks that are fraudulent in nature, the customers feel otherwise.

The biggest problem here is that the clients and the websites can’t seem to agree on a common definition of “click”. The people who advertise feel that they should be only charged for those clicks that have generated revenue. There are many clicks that are generated by their competitors who do so to drive up the bill of the competing firm. Also, there are many website operators who click on the ads on their own sites- sometimes employing computer “Bots” to do the job- so they can put more money in their pockets.

Shuman Ghosemajumdar, Google’s business product manager for trust and safety, wrote in a recent blog: “Our servers can accurately count clicks on ads, but we cannot know what the intent of the clicking user was when they made that click”.

Some consultants says that as much as 30% of all clicks on the web are fraudulent.

Also, advertisers are often charged for ads that don’t fully loads. Companies like PepsiCo, HP and Kimberly-Clar want common measurement standards by 2007.

Yahoo and Google say that they are introducing “new technology” to remove fraudulent clicks. What exactly is this new technology? We dont know! I feel that the revenue generated by these ads are shared by these giants along with many small players who take part to generate those clicks. I seriously wonder if they will bring something efficient enough to remove all those clicks!! Wouldn’t that decrease their income?? Especially Google, that generates almost all its revenue by advertisements, such a step would be detrimental towards its growth. Afterall, the company went public only in 2004……

For a complete picture take a look at the latest issue of Business Week. You can also find this story here

The Sept. 4 issue of Fortune Magazine also talks about this issue in brief.

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9 thoughts on “(Reposted) Biggest threat to Online Advertising: Click Fraud

  1. I wouldn’t be surprised if it were true..I remember doing a paper abt a year back on Google..that time it was making its money only out of advertisements..and I think its still the case…but I do feel that these advertising giants do indulge in some level of click fraud to generate money! And the funny thing is that when they were asked that how exactly do they know what is a relevant click and what is an irrelevant click, they wouldn’t answer it and also didnt reveal their records!! I’l write more on this topic tomorrow. I feel its really very pertinent to what might happen to Google/Yahoo in the long run.

  2. Shravan,

    I think that they indulge in it indirectly. They do dump tons of ads on small servers who employ many other people to click on those ads. The revenue that ia generated is shared by everyone-Google and Yahoo getting the biggest cake. I dont know why wouldn’t they cheat advertisers…? Who knows..if something really serious comes out of this whole issue, Google might start plummeting down!

  3. Shravan,

    I understand what you mean by typo-squatting. Infact, I have landed up in many such sites myself! I encourage you to read that article of Business Week if you are really interested in this stuff. Ironically, you can also run a search on Google πŸ™‚

  4. Hahaha..well guess what? Wikipedia could sue the domain owner of http://www.wikipedia.org over copyright issues!! This is serious stuff πŸ™‚ Anyway, i didnt click on the links…Have you noticed that when you browse through blogs in Blogger.com, you come to “fixed” pages that hold all kinds of advertisements? The toolbar on the top also disappears in this case!

  5. Pingback: WordPress “more feature” « Sparks Team Blog

  6. Ms. Ruhiji??!!! Aheemm…haha.

    Well I have deleted your comment and have also updated the link in my post πŸ™‚ Thanks for the notification. Good that you haven’t used Blogger. I had to learn some heavy-duty html coding for personalizing my blog! It took me about 10 days to learn whatever was relevant. I happened to stumble across WP and I have never regretted it since!

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