While marketers, search marketing agencies and search engines themselves agree click fraud in pay-per-click advertising is an issue that must be resolved, there seems to be little consensus on a solution. And now, as tension among stakeholders mounts, even the extent of the problem has become a point of contention.
At last week's Search Engine Strategies Conference in San Jose, Calif., Google presented results of an internal study that it says "debunks" systems employed by third-party click fraud auditors. The sparks flew when Google announced the findings of its report, "How Fictitious Clicks Occur in Third Party Click Fraud Audit Reports," during a standing-room-only panel discussion on click fraud at the show.
Panelist Shuman Ghosemajumder, business product manager, trust and safety at Google, said he has grown increasingly concerned about flaws he sees in click fraud auditing reports, which routinely contain requests for refunds from advertisers that work with independent auditing firms to determine instances of click fraud.
'We've debunked their systems'
"We continue to identify numerous flaws in these reports," Ghosemajumder said. "We've debunked their systems to some extent to find out why these clicks are occurring." He said the flaws based on measuring so-called "fictitious clicks" lead to gross overestimations of the scope of the click fraud problem.
One research firm, Outsell, said 14.6% of clicks are fraudulent, according to its survey of advertisers that collectively spend about $1 billion on advertising. Ghosemajumder said during the panel that he thinks Outsell exaggerates the issue. "What they did is take an opinion survey of advertisers and averaged those estimates," he said. "That study is not an accurate reflection at all about the extent of the problem."
Ghosemajumder's announcement about the study, which examined data from three auditing companies--Click Forensics, ClickFacts and AdWatcher--took fellow panelists by surprise.
"It would have been great if you shared that data with us in advance," said Lori Weiman, director of KeywordMax, a company that handles search campaign management, including auditing. Weiman and other panelists took issue with the flawed data claims and with Google's surprising panelists with its reports in a way that some felt sandbagged them.
"The general consensus is the context in which Google presented that report was unprofessional and counterproductive to our moving forward as an industry," panelist Jessie Stricchiola, founder of Alchemist Media, a search engine marketing company, told BtoB after the session. Click Forensics President-CEO Tom Cuthbert was also a panelist. Cuthbert and Stricchiola, as well as other search executives, have long contended that in order to solve click fraud problems, site data must be married to the search engines' data, information they say Google and other engines have to date been unwilling to provide.
Google has already borne the wrath of the ad community over click fraud.
The engine agreed in March to settle a click fraud class-action lawsuit brought by advertisers for $90 million. In fact, the judge approved the settlement just last week. Lane's Gifts & Collectibles filed the lawsuit in Miller County Circuit Court in Texarkana, Ark., in February 2005.
Under the agreement, advertisers will receive credits towards new advertising for any fraudulent clicks.
Ghosemajumder told BtoB he wants to work with the auditors, not against them, "to help third-party firms fix this data." He said, "We'd love it if these firms could provide us with useful information that allows us to improve our [own] systems."
Everyone seems to agree on one thing: Click fraud is definitely an ongoing concern. Danny Sullivan, founder and editor in chief of SearchEngineWatch, an industry portal, told BtoB that perception is reality.
"It's a big problem perception-wise," Sullivan said, no matter what the actual scope of the problem is, which makes it a problem that "has to be cleared up."
"One thing that definitely has to change," he said, "is advertisers feeling they are not being supported."
One advertiser who agreed said he is frustrated about the time and energy it takes to contend with potential click fraud. "It's frustrating that we have to go to another vendor to deal with this issue," said Shane Vaughan, worldwide search program manager, small business at Hewlett-Packard Co.
Gene Chan, worldwide search marketing manager, Imaging and Printing Group at HP agreed, adding that advertisers' main responsibility in terms of click fraud is to lean on search engines to work with them to fix the problem. "It is up to advertisers to push publishers to do so," he said.
As far as resolving the problem, search executives unanimously applaud the Interactive Advertising Bureau's announcement a week before the conference that it is working with the search marketing industry to come up with standards for defining and identifying click fraud.
"That's what the industry needs to legitimize itself," Vaughan said. "I think the IAB announcement was a good step forward."
"I think it is important. There are no standards. We need to come up with solid methodologies," Weiman said.
Get the standards
John Slade, senior director, global product management for Yahoo! Search Marketing and a panelist in Tuesday's session, said "a lot of people [are] trying to do the right thing" and move forward as an industry. "The important thing is to get the standards published."
S. Brian Mukherjee, senior VP-North America at MIVA, a performance marketing company, said he hopes the issue can be resolved but, in the meantime, his company is overcompensating. "We've taken a hit on the revenue side," because of click fraud allegations made by clients, he said. If any click fraud activity is suspected, his company eats that cost whether search engines issue clients a refund or not.
Patricia Hursh, lead search strategist at SmartSearch Marketing, a search engine marketing agency, said while she is affected somewhat by click fraud, "it's not a show-stopper to any of our clients' paid search ad campaigns. We don't see this bringing the industry to its knees," she said. In fact, Hursh said, the issue may provide search marketers with an unintended benefit. "It may hasten the move to a pay-for-performance advertising model" that some engines are currently testing, since basing dollars on performance rather than simple clicks "eliminates the motivation for fraud."