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Click Fraud: No Watchdog To Police Counterfeit Ad Impressions

In recent months, the Web's top search engines have come under fire over concerns about click fraud. But questions still remain about exactly how prevalent click fraud really is.
Pay per click ads are sold at auction: the highest bid for a specific keyword wins the top spot next to search results. The more expensive keywords are most often targets for fraud, but Stricchiola says click fraud doesn't occur in a uniform manner according to bid prices, key words or advertiser.

In fact, advertisers are left to their own defenses to determine if they've been a victim of click fraud and doing so often takes longer than the limited 60 day period for billing disputes stipulated in their contracts. Stricchiola says many companies don't realize this, or that search engines are only required to look at their own click data to resolve a dispute and not any information from server logs or traffic management tools provided by the advertiser. That can be the most crucial for determining click fraud.

"Search engines have a camera outside a bank, they don't see what happens inside the bank," she says. "If someone or some people make away with a million dollars, the advertisers actually have the cameras in the bank. ... They have the information to determine if a click should be billed for."

So why not create some sort of third-party intermediary to keep click data from both search engines and their advertisers, in a confidential location, that can be used to settle disagreements about disputed clicks? Stricchiola would like to see it. So would Cuthbert, who says Click Forensics has talked with the major search engines about it.

Yahoo determines click fraud by evaluating clicks on its ads with up to 50 data points, including IP address and information related to a user's cookies, session and browser. If an advertiser suspects fraud, they should say something, John Slade, the director of product management for Yahoo! Search Marketing, said during a panel discussion on click fraud at Search Engine Strategies, an industry conference in New York in March.

"It's important for you as advertisers to monitor your clicks," he told an audience of advertisers. "We've fired [affiliate] partners in the past and we'll do it again."

Anyone who purchased advertising from Google dating back to Jan. 1, 2002, is a class member in the class action lawsuit, Lane's Gifts and Collectibles et al. v. Google, Inc. et al. in the Circuit Court of Miller County, Arkansas. It alleges that Google failed to adequately detect and stop click fraud.

Google has proposed a $90 million settlement fund that would be distributed in the form of advertising credits, with up to $30 million of the fund going toward lawyer's fees. The Court has scheduled a hearing on July 24 to consider whether the settlement is fair.

Another click fraud lawsuit against Google in California is on hold pending the review of the Arkansas settlement. Yahoo also faces click fraud suits in the Arkansas and California courts.

On May 19 and 20, Google sent email notification of the settlement to all of its advertisers since 2002. In a statement posted on the company Web site, Nicole Wong, Google's associate general counsel, said "The vast majority of invalid clicks are detected and filtered out before they reach our advertisers' bills; if advertisers detect additional invalid clicks, our click quality team investigates and provides refunds as appropriate."