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4/4/2006
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Report: Yahoo May Gain From Adware Click Fraud

The report from a Harvard researcher traces what appears to be click fraud that starts with the adware vendor and eventually leads to Yahoo. In between are online marketing companies that sell advertising.

Harvard researcher Ben Edelman on Tuesday released a report tying Yahoo Inc. to adware vendors that he claimed were displaying pop-up advertising that appeared to commit click fraud.

The online report, "The Spyware -- Click-Fraud Connection -- and Yahoo's Role Revisited," traces what appears to be click fraud that starts with the adware vendor and eventually leads to Yahoo. In between are online marketing companies that sell advertising.

Click fraud is a term used to describe a practice that looks to overcharge advertisers who pay each time a Web site visitor clicks on their ads. Click fraud is usually committed by competitors trying to boost the advertising cost of rivals, or by unscrupulous Web site operators. Clicks can be inflated either by people clicking on the link, or by an automated system.

Yahoo sells pay-per-click ads on its Web portal, and also displays ads through syndication agreements with partners. It's the latter, according to Edelman, that has gotten Yahoo in trouble.

Oftentimes, Yahoo partners sell the portal's ads to other marketing firms, who in turn sell them to someone else until eventually they appear on adware.

Adware is software that's downloaded onto people's computers without them knowing it. The software is usually installed when people lured by spam visit a malicious Web site, or when they download software that secretly contains adware. Adware often tracks people's Web travels and delivers pop-up ads related to the content of a visited Web site.

Yahoo was not immediately available to discuss the matter, but the company did issue a prepared statement.

"Yahoo! takes the quality of its search ad distribution network very seriously," the company said via e-mail. "We are carefully investigating the claims that have been raised. Once we determine the sources of these implementations, we will take appropriate action, which could include terminating a feed, ending a relationship with a partner or taking legal action against an offending entity."

Edelman claims his research shows that pop-up screens containing Yahoo ads automatically register a click with Yahoo's marketing arm Overture as soon as the ad appears, irrespective of whether the viewer clicked on a link. Assuming the click is registered in Overture, Yahoo would then share revenue with its advertising partner, who would share revenue with its partner, etc.

As proof, Edelman includes in the report video that shows the ads in action, and logs of the traffic that links the bogus click to Overture. The logs were obtained using a packet logger that provides a snapshot of all the traffic flowing through Edelman's ethernet cable, which connects his computer to the Internet.

"Packet logs and the video together are overwhelming proof," Edelman said.

In using the packet logger, Edelman said, "I can see what happened. I can see the traffic was a click fraud."

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