Click fraud: Google, Yahoo collaborate on definitions, what about independent auditors?

Click fraud: Google, Yahoo collaborate on definitions, what about independent auditors?

Summary: Google has dominated the click fraud news cycle of late and has succeeded in portraying potentially damaging events as positive public relations stories.

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DMM62106GST2.jpgGoogle has dominated the click fraud news cycle of late and has succeeded in portraying potentially damaging events as positive public relations stories.

REVIEW (in chronological order)

Click fraud: “there is a perfect economic solution, which is to let it happen."

Google CEO Dr. Eric Schmidt’s pure economic analysis of the phenomenon and impact of click fraud in a pay per click advertising system was presented and summarized by Schmidt at a public event earlier this year:

over some amount of time, the system is, in fact, self-correcting. In fact, there is a perfect economic solution, which is to let it happen.

At its corporate blog, Google headlined a story on the Google CEO comments as follows:

"Let click fraud happen"? Uh, no.

The flippant headline and subsequent Google reassurances that “Anyone who has followed Google knows that Eric, and others at Google, have stated several times that Google fights invalid clicks, that we've devoted significant resources to manage it, and that we take it very seriously,” resulted in a positive public relations spin.

“Lane’s Gifts v. Google Report”, by Dr. Alexander Tuzhilin, Professor of Information Systems at NYU

In conjunction with announcing its court filing of a “omnibus response to objections” involving its settlement in the Lane’s Gifts v. Google click fraud case, Google made available to the public the 47-page independent expert’s report, also a court filing.

Google says, “The bottom-line conclusion of the report is that Google’s efforts against click fraud are in fact reasonable.”

Google’s “bottom-line conclusion,” however, may not be the bottom-line conclusion advertisers reach.

The report provides undoubtedly the first public, unbiased analysis of the mechanisms of the Pay Per Click (PPC) - Cost Per Click (CPC) advertising model.

Among the report's findings, "the main problem of the CPC model: it is inherently vulnerable to click fraud."

Excerpts:

the measures…are only statistical measures providing some evidence that Google’s filters work reasonably well. This does not mean, however, that any particular advertiser cannot be hurt badly by fraudulent attacks, given the evidence that Google filters ‘work.’ Since Google has a very large number of advertisers, one particular bad incident will be lost in the overall statistics. Good performance measures indicative that filters work well only mean that there will be ‘relatively few’ such bad cases…

Since its establishment in the Spring and Summer of 2003 the Click Quality team has been developing an infrastructure for detecting and removing invalid clicks…Currently, they reached a consolidation phase in their efforts, when their methods work reasonably well, the invalid click detection problem is ‘under control,’ and the Click Quality team is fine tuning these methods. There is no hard data that can actually prove this statement.

Google ‘estimating invalid clicks' reporting tool

The Google AdWords blog announced “a new AdWords feature enabling advertisers to have a much more detailed picture of invalid click activity in their account.”

Shuman Ghosemajumder, business product manager for trust and safety at Google said:

Our goal is to provide that transparency so advertisers who previously may have been unnerved or concerned about these wildly exaggerated figures will be able to see now what Google is doing to protect them.

Ghosemajumder also indicated:

Google has had to limit the data it provides to prevent fraudsters from reverse engineering its systems and methods of operation.

How transparent is Google’s ‘estimating invalid clicks’ reporting tool, given that:

1) The tool relies on data self-reported by Google,
2) Google is limiting the data it provides.

NOW

The Interactive Industry Commits to the Development of Click Measurement Guidelines; The IAB announces the Formation of an Industry-wide Click Measurement Working Group:

The Interactive Advertising Bureau (IAB) announced that they are forming an industry-wide Click Measurement Working Group to create a set of Click Measurement Guidelines. These Guidelines, a joint effort with the Media Rating Council (MRC), will provide the detailed definition of a "click" and the standard against which clicks are measured and counted including the identification of invalid clicks and/or fraudulent clicks.

Member companies who have confirmed their participation in this Working Group thus far include: Ask.com, Google, LookSmart, Microsoft Corp., Yahoo!, and others.

Additionally:

The Click Measurement Guidelines will also outline an industry driven auditing and certification recommendation for any organization involved in performance based marketing like search engines, ad networks, third party ad servers or any company that counts clicks as a part of the media currency.

While the new organization will develop “auditing and certification recommendations,” member companies will, apparently, not be obligated to permit third-party independent auditors to verify and publicly report on click fraud activity that may be transpiring at the companies.

According to IAB:

The establishment of these guidelines will provide marketers with a standard for the consistent and reliable measurement of their performance based marketing. Independent auditing against the complete guidelines should provide advertisers with added security for their internet advertising investment and further solidify the increased level of accountability and transparency already established by this medium.

Those search engines and vendors in the search industry that will allow for “independent auditing against the complete guidelines,” will undoubtedly benefit from enhanced competitive positioning within the advertiser community.

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Topic: Google

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