Yahoo CEO on click fraud: Yahoo 'click protection system' better

Yahoo CEO Terry Semel addressed “click fraud

Yahoo CEO Terry Semel addressed “click fraud” during the company’s Q2 2006 earnings conference call yesterday.

Semel’s remarks on click fraud were part of his opening statement.

Semel identified Yahoo’s “click protection system” as one of three strategies Yahoo employs to make its advertising inventory “high-value.”

Semel said:

Our high-value inventory, which enables us to deliver the best value to our advertisers, is one of the reasons we believe we have a strong leadership position in graphical advertising. We recognize that's a strategic advantage, and we are focused on extending our leadership to also include text-based advertisers.

Let me give you three examples of the proactive steps we continue to take:

First, Yahoo is and always has been committed to protecting advertisers against click fraud. After a thorough audit of Yahoo's click-through protection by a third party, it was determined that Yahoo has the best and continues to operate a click protection system that is better than recent industry estimates of click fraud levels. We feel great about the third-party validation, but we strive to do even more, and are committed to working to build industry-wide standards on click fraud.

Second, we have strict distribution partner guidelines, and as a result we have recently terminated relationships with publishers that didn't drive traffic that met our standards. We will continue to use advanced technology to raise our standards and bring even greater value to our marketplace.

Third, we have added new partners with high-quality inventory, led by the recent announcement with eBay, that benefit both our search and brand advertising positions. Inventory quality is an important strategic issue to both our Company and to the success of our industry overall, and you can expect Yahoo! to utilize its leadership position to help drive this forward.

Following Semel’s prepared remarks, analysts posed questions. While questions were posed regarding Yahoo distribution partner quality, no questions were posed regarding Yahoo’s efforts to combat click fraud.

While it is significant that the Yahoo CEO took the initiative to address the issue of click fraud during the company’s investor conference call, it is unfortunate that no analyst followed-up for details.

Tomorrow, Google takes the earnings stage to announce its Q2 2006 results.

Following Google's investor conference call in May, I said in "Google speak for Google investors":

One seemingly requisite question was not posed by any questioner: What are you doing about click fraud in order to prevent click fraud liability?