Click Fraud Climbing

FEBRUARY 4, 2009

Idle fingers…?

They say that in bad economic times crime rises.

If online click fraud rates are any indication, they could be right. (Click fraud occurs when an automated computer program imitates a legitimate user by clicking on a search ad to generate a bogus charge.)

“Just as more street crime has been reported over the past few months, as the recession has deepened, so has more online ‘street’ crime, such as click fraud,” said David Hallerman, eMarketer senior analyst. “Hard times make for more illegal activity.”

In fact, according to Click Forensics, click fraud is at an all-time high.

The firm’s “Click Fraud Index,” now in its third year, shows that the overall industry average click fraud rate grew to slightly more than 17% for Q4 2008, up from 16% in the previous quarter.

“The online advertising industry is not immune to the growing tide of cybercrime during this recessionary period,” said Tom Cuthbert, president of Click Forensics, in a statement. “Both the overall click fraud rate and the rate of click fraud originating from botnets were the highest ever in Q4 2008.”

The US was responsible for most of the current cybercrime wave, but Canada (originating 7.4% of total click fraud), Germany (3%) and China (2.3%) also contributed to the rising click fraud rate.

Mr. Cuthbert cautioned, “Advertisers should pay close attention to their online campaigns throughout the year.”

Google and Click Fraud: ClickForensics CEO Fires Back

from Silicon Alley Insider by Henry Blodget

An argument between Google and click-stream auditing firm ClickForensics about the level of click fraud on Google is getting increasingly heated.

Last week, Forbes published an interview with Google click-fraud czar Shuman Ghosemajumder, in which Ghosemajumder said, in effect, firms like ClickForensics have no idea what they're talking about. This week, the fair and balanced Forbes interviewed Tom Cuthbert, CEO of ClickForensics, who responded in equally vehement fashion. Forbes' Andy Greenberg knows a lot about this issue, so his questions are smart:

Forbes: You say that click fraud is increasing, while Google's Shuman Ghosemajumder says that click fraud is under control. Are you accusing Google of hiding the extent of the problem?

Cuthbert: You'll notice in your Q&A with Shuman that he doesn't actually answer the question of whether click fraud is getting worse. That's because he knows from Google's own data that the problem of click fraud is getting worse and will continue to get worse.

Are your estimates inflated by "fictitious clicks"--clicks that Google doesn't count?

...All of our data is also based on Google Click ID, and Shuman knows that. He may be correct about other auditors in this space, but what he's said and the way he said it is misleading...

How do you handle "click-backs," situations in which a user reloads an advertisement's landing page? Do you and other auditors count the page's reloading as another click on the ad? [a Ghosemajumder assertion]

Absolutely not. Using Google Click ID prevents us from counting click-backs, and even when we have analyzed the number of click-backs compared to the overall problem of click fraud, it's a very small percentage. Regardless, using Click IDs and other methodologies means there are no fictitious clicks in our data.

If I sound somewhat aggravated, it's because I am. Shuman knows very well that we use Google Click ID. But he has a tendency to talk about fictitious clicks and then bring up our name to try to link us with that, even though he knows it's not true. We're a bit frustrated with that.

Lots more where that came from. For what it's worth, we've spent time with Cuthbert and find him and ClickForensics' methodology very credible. We also thought Ghosemajumder's decision to start talking about click fraud more openly was an intelligent one. As to the substance of the arguments, we believe there is merit to both. And here's our take on the click fraud issue:

• It's getting worse.
• It is more prevalent and more of a concern on third-party ad networks (distributed search/Adsense for content) than on Google's own sponsored search.
• It's especially bad news for content providers who make a living using AdSense, et al.
• It is something advertisers should pay attention to and spend money analyzing
• If nothing else, the use of a good third-party auditing firm provides comfort that money isn't being thrown away.
• Google et al could/should consider providing more detail about, at the very least, the number of total clicks vs. the number of clicks the advertiser was charged for.

Google Gets Smart on Click Fraud

from Silicon Alley Insider by Henry Blodget

Google has been has been intently focused on click fraud for years, but has done a piss-poor job of communicating this. Its communications strategy has effectively been to say, "Click fraud's not a problem, third-party auditors like ClickForensics don't know what they're talking about, and if you don't just take our word for it we're not going to bother to explain ourselves." Finally, however, the company appears to have gotten as wise about this communications challenge as it has about others.

Google's click-fraud czar, Shuman Ghosemajumder, grants a long Q&A to Forbes.com in which he patiently explains many of the reasons why third-parties do not have all the information they need to accurately assess clicks--and, for the first time, he manages to gives the impression that Google is not being vague because it has something to hide. Forbes.com's Andy Greenberg asks a lot of the right questions, and the Q&A gives the impression that Google really does have the click-fraud problem under control.

The most important point about click fraud at Google, which Ghosemajumder does not make, is that the vast majority of it occurs on the AdSense affiliate network, not the AdWords paid-search service. The latter generates more than 80% of Google's profit (profit, not revenue), so the threat to the company's core business is minimal. In fact, if click fraud on affiliate networks ever got out of hand, this might end up driving even more business to AdWords. Key points after jump.

• Fair Isaac estimates that click fraud is far worse on AdSense and other affiliate networks (10%-15%ish) than on AdWords (1%). This is not new news, but Ghosemajumder appears to confirm that these estimates are in the ballpark, noting that they average out to an overall rate of 7%. Google itself has put the fraud number at "less than 10%."
• Google has a strong economic incentive to throttle the click-fraud problem, and it has dedicated major technical expertise to tracking it.
• The main reason third-party auditors like ClickForensics can't track the problem accurately is that they don't know what 1) the click-through rate is for any given ad and 2) the percentage of clicks that Google has eliminated as "invalid." (Google doesn't share this data with advertisers). ClickForensics and other auditors have always argued that it is Google that doesn't have enough information, as Google doesn't know what happens after a purported "clicker" leaves Google and visits the advertisers' site. The truth is probably somewhere in between.
• Ghosemajumder says it is difficult to say whether click fraud has increased in recent months, as ClickForensics and others have reported. This is not a flat-out denial, but it also doesn't necessarily sound like a dodge (Given the complexity of the issue, it may, in fact, be difficult to say). Google's tiny refund rate of 0.02% has not changed.