Google Agrees to Pay $90mln on Click Fraud Lawsuit

Hitokiri writes "Google has agreed to pay up to $90 million to settle a class action lawsuit 'Lane's Gifts v. Google'. The settlement stems from a lawsuit filed by Lane's Gifts earlier this year in an Arkansas state court and is designed to settle all outstanding claims against Google for fraud committed using its pay-per-click ad system back to 2002Google has made a statement on their blog."

Comments

Wired had a nice piece a few months ago on this

[Hulkster]

The January/2006 Wired had an article titled "How Click Fraud Could Swallow the Internet" that presented a case study of a charter-jet service victimized by this ... turns out it was their competition doing it to use up their on-line marketing budget. Google Girl basically stonewalled 'em.

Re:Wired had a nice piece a few months ago on this

[linguae]

The January/2006 Wired had an article titled "How Click Fraud Could Swallow the Internet" that presented a case study of a charter-jet service victimized by this ... turns out it was their competition doing it to use up their on-line marketing budget. Google Girl basically stonewalled 'em.

I want to post an insightful response, but Google Girl has stonewalled my thoughts.

must....post...insightful...can't...resist...

Tip of the iceberg

[jimmyhat3939]

My guess is this is just the tip of the iceberg. It's a smart move for Google to try and resolve this stuff once and for all, but I doubt strongly this and related issues are likely to go away anytime soon.

Reasons why I'm concerned about Google's business:

• The fact that it's basically impossible to ascertain how prevalent click-fraud is.
• The fact that many many people accidentally click on ads. Don't believe me? Try clicking *anywhere* on the blue ad box that shows up over results. Notice that a click even way on the right of it counts.
• Many businesses are still in a 'honeymoon' with Google and aren't yet seriously computing the performance of their clicks (how many clicks turn into sales).
• Do you seriously believe Google can keep getting $0.11 of revenue per search done on the site? Don't believe the statistic? Read the SEC filings and compute it yourself.

Cue Google-fanatic flamewar.

Re:Tip of the iceberg

[neodiogenes]

1. It is possible to measure click fraud. There are certain statistics that can be used to calculate its effect quite accurately, even if they can't be used to determine it on a per-click basis.

2. This may be true but in the end the value of a click is the choice of the consumer. People clicking accidentally on a Google ad is no different from people "accidentally" hitting the remote in the middle of a Bud commercial and missing the second half of the 30 seconds. These accidental clicks are factored into the overall effectiveness of the ad.

3. Most small business might be in the honeymoon, but not large businesses. Most of these are looking very seriously at the bottom line, and finding it's lower than they expected.

4. At the per-click rates customers pay for certain terms, yes I believe it. Compared with other forms of advertising paid search is turning out to be an incredible value. The main question is how much Google and Yahoo can continue to fine-tune the targeting to squeeze out that much more revenue.

--- not a Google fanboy as such, but convinced online advertising is where the money is at.

Re:It's credits - not dollars

[LiquidCoooled]

Also, they say its not just for Lane's Gifts.
It is a 90mln limit based on how many people apply for backdated invalid clicks.

From the blog linked above:


For all eligible invalid clicks, we will offer credits which can be used to purchase new advertising with Google. We do not know how many will apply and receive credits, but under the agreement, the total amount of credits, plus attorneys fees, will not exceed $90 million.

Re:Measuring Results

[M0b1u5]

We do things differently on the web. Your suggestion **IS** used by some advertisers, but I suspect it is not too popular.

On the web, all you have to do is create different landing pages for each of your adverts. These are unique, and the stats speak for themselves.

Using decent server side code, it's also possible to distinguish which advertisement your actual purchasers arrived from, and this is quite prevalent amongst serious e-commerce businesses.

If your IT department isn't all that good, you can splurge big time on a very sophisticated WebTrends account, which will do all this stuff, and a lot more besides.

Re:It's credits - not dollars

[dwater]

> the total amount of credits, ***plus attorneys fees***, will not exceed $90 million

Well, that must reduce the amount a little, surely...

Click Fraud Facts

[JehCt]

Click fraud runs about 40% when noobs manage a Google Adwords account. Much of that comes from Adsense via the Google content network, because it's a way for webmasters to line their pockets at the advertisers' expense. Competitor click fraud happens too.

The ways to control click fraud are:
1. Set low bids on the content network. Click fraudsters pick on the richest bids.
2. Exclude sites from the content network that show below average conversion rates.
3. Use your own tracking URLs to double check Google's conversion figures.
4. Don't show your ads in cheap offshore locales. Some sleezebags have set up click fraud offices in these places where people are paid to surf and click on your ads.

Discount your bids to account for the cost of click fraud. As long as you are happy with your net cost per conversion, click fraud is just a cost of doing business. Your bids are lower, Google earns less. If Google wants to earn more, they should the eliminate fraud.