Marketers fume over click fraud

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One type of Internet fraud is pitting advertisers not just against fraudsters, but against Google and Yahoo Search Marketing Solutions. Marketers are upset about click fraud and charge that the way the nation's two biggest search engines-which sell them pay-per-click advertisements-handle the problem keeps them from stopping click fraud on their sites.

Many don't realize the theft until they are sent a refund by one of the search engines. Others see a red flag when they analyze click-through and conversion reports of customer activity that many set up on their own or through a search-marketing vendor and see odd patterns or a preponderance of clicks coming from one place, and request the search engines fork over a refund. Or, their keyword bills spike from one month to the next.

Click fraud can be perpetuated by a site's competitor. Since a Web-site publisher pays each time someone clicks on the sponsored links he has placed, the competitor hires someone or programs a "click bot" to click repeatedly on the competitor's links, thereby costing him money without bringing him business. Another common source of false clicks comes through the affiliate partners of Google and Yahoo Search Marketing (formerly Overture). The affiliates agree to run sponsored links from the search engines on their sites in return for a fee (in a revenue-sharing agreement), which they receive each time someone clicks on those links. Some affiliates commit fraud by clicking repeatedly on the links or hiring someone to do so.

Their gripe over the search engines is not over the refunds, but the fact that refunds merely appear with no explanation of which keyword and which clicks caused the fraud.

"It would be very easy for search engines to show the advertiser exactly what sites the words are matched to," said Jeffrey Rohrs, president of online marketing agency Optiem, who recently moderated a panel on click fraud at the Search Engine Strategies conference in New York. "There needs to be more advertiser control and more customer service."

Yahoo and Google say that they not only willingly provide refunds when their anti-fraud teams detect foul play, but they continuously check and monitor clicks for cheating and don't hesitate to knock a Web site out of the affiliate network or out of the keyword program if they behave dishonorably.

GETTING CREDIT

"Our goal is to identify unqualified traffic and filter it out before the advertiser even gets charged," said John Slade, senior director-product management, at Yahoo Search Marketing.

But when the advertiser does get charged, gathers the data and proves the fraudulent behavior to Yahoo or Google, it typically gets a credit, but perhaps not the amount it thinks it was due.

"An advertiser may see from his tracking tool that there's been $10,000 worth of click-fraud activity on his account and provide proof, but then the search engine will credit their bill by only $3,000 and send no explanation," said Lori Weiman, director of KeywordMax (a search-tracking tool) at Direct Response Technologies. "They don't tell you which keywords and which clicks [were fraudulently affected]. If the marketers knew this information, they could change their keyword tactics," added Ms. Weiman, who is also the company's attorney.

How big is the problem? Search players complain it has yet to be quantified. But marketers claim 1% to 3% of their clicks each month are fraudulent.

Neither Yahoo nor Google will confirm or deny that number. "We don't disclose numbers on the cases of click fraud," said Salar Kamangar, director-product management, Google, who oversees the anti-click-fraud software engineers and customer-service representatives. "Overall, the number of complaints we've gotten hasn't increased. It has grown on an absolute scale, but has not changed percentage-wise. The losses due to click fraud are very small."

Advertisers have a duty to keep track of their Web sites' click activity, he said. "Because advertisers have complete price control and keep track of their conversion rates, if their bids become less valuable, advertisers are pretty quick to adjust down the value of their bills," Mr. Kamangar said.

Marketers feel they deserve more information. "These are the people who put food on your table. ...The whole area of click fraud wouldn't happen if the engines took a more proactive approach," said Mr. Rohrs.

Yahoo and Google say their contracts with advertisers absolve the search companies from responsibility, so, they argue they have no legal culpability. It's true there is no specific law against click fraud. But, said Peter Raymond, partner in the advertising and marketing group at law firm Reed Smith, "This really is fraud. If you can prove that something someone did was fraudulent, then they can be prosecuted under criminal-fraud statutes that are in every state in the U.S."

Mr. Raymond believes that marketers have a duty to monitor click activity and the search engines have a duty to inform marketers better and be more discriminating about their affiliates.

But is it the engines' responsibility? To be sure, more fraud occurs through the second-tier engines, Ms. Weiman and Mr. Rohrs say, though Yahoo and Google handle most U.S. search traffic.

"The vast majority of my clients are having really good luck with pay-per-click and the stories about fraud are putting a fear out there," Ms. Weiman said.

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