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Old 02-12-2005, 07:44 AM   #1
Larwee

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Join Date: Nov 2004
Location: St. Louis, Missouri USA
Posts: 3,015
Default Click fraud is costing a small fortune

Here an interesting article about click fraud being a threat to the growth of search engine advertising.

Some say the fraud is 10% to 20%. Others say it is less. The search engines say there is fraud but they are doing a good job of dealing with it.
Quote:
Click fraud looms
Date: Saturday, February 12 @ 00:00:30
Topic Business

SAN FRANCISCO -- Like thousands of other merchants, Tammy Harrison thought she had struck gold when hordes visited her Web site by clicking on the small Internet ads she purchased from the world's most popular online search engines.

It cost Harrison as much as $20 for each click, but the potential new business seemed to justify the expense.

Harrison's delight dimmed, though, when she realized the people clicking on her ads weren't really interested in her products.

She was being victimized by "click fraud," a **** that threatens to squelch the online advertising boom that has been enriching Google Inc., Yahoo Inc. and their many business partners.

The ruse has different twists, but the end result is usually the same: Merchants are billed for fruitless traffic generated by someone who repeatedly clicks on an advertiser's Web link with no intention of ever buying anything.

Harrison figures she has spent about 200 hours documenting the mischief that drained her budget and diverted customers to a competitor, costing her an estimated $100,000 in sales.

"Click fraud has gotten out of control," said Harrison, who sells computer software to doctors. "It's stealing money from my pocket. It's just as bad as someone walking into a store and taking a television."

Estimates vary widely on how much click fraud is going on in the $3.8 billion search engine advertising market.

"Click fraud exists, but it's mostly a big paranoia," said Chris Churchill, chief executive of Fathom Online, a San Francisco firm that studies the spending patterns on search engine ads.

Others believe anywhere from 10 percent to 20 percent of the clicks are made under false pretenses.

"Click fraud is like a big elephant standing in the middle of the living room," said Lisa Wehr, president of Oneupweb, a search engine advertising consultant. "Everyone sees it and knows it's there, but no one is quite sure what to do about it."

Both Google and Yahoo acknowledge the perils of click fraud, but believe improved internal controls and the increased vigilance of advertisers will prevent the problem from escalating.

"We are always worried about it, but it hasn't been a material issue so far," said Google chief executive Eric Schmidt.

After recently expanding its staff to patrol click fraud, Google broke up a scheme that had generated several thousand bogus transactions, chief financial officer George Reyes told analysts earlier this week.

Yahoo also has been shoring up click fraud protections, said Patrick Giordiani, a senior manager for the company's advertising subsidiary, Overture Services.

Such reassurances from search engine executives aren't surprising, given how much they stand to lose if advertisers curtail spending, said Jessie Stricchiola, president of Alchemist Media, which helps businesses detect problems and negotiate refunds.

"There's some serious positioning and politicking going on," she said. "Click fraud isn't going to destroy the industry, but it's not going away either."

The search engines have issued refunds to cover the bogus clicks, but Harrison says those payments don't compensate for missed sales opportunities.

This article comes from The Daily Herald
http://www.harktheherald.com/

The URL for this story is:
http://www.harktheherald.com/modules...icle&sid=47622

Last edited by Larwee; 02-12-2005 at 08:22 AM.
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