The click fraud problem is spurring debate almost as impassioned as the net neutrality debate!
Following my story yesterday, "Google CEO on click fraud: 'let it happen' is perfect economic solution", I posted a sample of the click fraud debate sparked in the blogosphere at "Google 'search shrinkage': click fraud debated in blogosphere".
Below is a sample of commentary by Digg contributors.
What's cocky about letting a free market correct itself? I believe Google's 100% right on this one; once advertisers realize people HATE those big flashing ads and click fraud becomes so widespread they simply can't afford to continue spending that kind of money on those ads, they'll become more intellegent advertisers.
Either way, Google's still going to make a fortune on it.
There is a huge difference between not seeing an ad because you just did not notice it, versus paying for a false view of your ad.
Click fraud is equivalent to paying for a TV ad across multiple channels, with a few fake TV channels thrown into the mix with you knowing--no one is going to see it on the fake channels (obviously), but you are still going to pay for it. Obviously, there will be instances where your ad will actually be shown to real people, but that's what you are paying for, and not the fake users.
There's a big difference between an act of commission and an act of omission. I don't care if lots of people don't look at my billboard. I care a Lot if someone saws it down. I don't care if lots of people don't see my ad thru Google. I care a lot if someone is running a clickbot to drive up my prices or if google makes millions from clicks that never happened.
Google's goal of "do no evil" fails to justify click fraud that's rampant on Google. It is evil to charge small business owners for clicks that weren't real. It's evil to say "Just leave it alone. It will be alright" when you make millions a day from fraud. It would be like me telling a cop who wanted to arrest me for selling crack to leave me alone and the market would work it all out. Sure..
It's a sad fact, but fortunately I do not need to worry about all this - since it quickly became obvious that you can make more money by serving AdSense ads than by purchasing them.
Sigh. Click fraud is theft. It's a crime like any other crime.
Google's "let it happen" attitude is akin to the police saying they're going to let muggers just keep mugging people because eventually nobody will have anything left worth stealing and it'll die out.
Click fraud isn't just numbers - it's real money. It's life and death for many small businesses that rely on online advertising.
Viewing click-fraud as self-correcting only benefits Google. There are two scenarios here. If no click fraud exists, advertisers pay the correct price, and Google receives the correct revenue. If click fraud exists, regardless of the degree of false positives, advertisers pay extra, and Google receives gratuitous revenue. Google CEO Eric Schmidt claims that eventually, scenario 2 balances itself out and yields scenario 1 (and there will be advertisers who fail to recognize click fraud, translating into extra bucks for the search engine giant). In other words, Google either breaks even by fair game in the first situation or comes out ahead in the second one. Ultimately, it's a win-win situation for the search engine giant. Self-correcting? More like self-generating revenue. Shame on Google for attempting to justify fraud.
EC101: An economic phenomenon is self-correcting only if the effect of that phenomenon somehow limits that phenomenon, such that a new equilibrium is reached. Click fraud would be self-correcting if there were a marginal cost to committing each act of fraud, i.e. in the brick and mortar world. It isn't self-correcting in the online world, since there's no incremental cost to falsifying more clicks. Reducing the revenue generated from each click doesn't really reduce the incentive to committing fraud; just increase the number of false clicks. It doesn't cost anything to falsify more of them anyways. It's the same reason that spam can be profitable.
It's EC101. Schmidt is wrong.
This is circular logic of the worst sort, based on an undeserved confidence in Google's ability to spot fraud, and its faith in their model. You don't need to be an advertising guru to feel utterly cheated when your budget for the day dissapears in a few hours. And it is typically this, the human element of the Google experience, that they often spectacularly fail to grasp.If you have any doubts about this just note how often the Froogle interface, for example, has changed, how clunky their Sitemaps system is etc etc.
Google are riding a wave, but they've made the false assumption that it is a wave of their own making. It's not. They are currently well known that's all. If their CEO is willing to admit publicly that click fraud is fine, not because it can be combatted, but because it is irrelevant to Google, then they can hardly claim to have the vice-like grip on public perception they'll need to survive long-term.
In short, this is pure arrogance.