How Google Manages Click Fraud

Finin writes "In February 2005, Google was sued by Lane's Gifts & Collectibles in a class-action lawsuit over click fraud. The company alleged that Google had been improperly billing for pay-per-click ads that were not viewed by legitimate potential customers. As part of a settlement earlier this year, Google agreed to have an independent expert examine their click fraud detection methods, policies, and procedures and make a determination of whether or not they were reasonable measures to protect advertisers. The report of the expert, NYU Information Systems Professor Alexander Tuzhilin (a Professor of Information Systems at NYU), is now available." Update 07/26/2006 at 12:52 GMT by SM: Fixed the link to Tuzhilin's report.

Comments

Re:Enron

[GundamFan]

There is no way of knowing for sure but Google does produce things (like gmail and gcalender) and is not simply a black hole that money comes out of (how investment profesonals fall for that I will never know). I know that I trust a company that doesn't hinge there busness model on energy futures trading (what is that anyway?) more than one who's busness I understand (essentaly advertising).

Re:From the objections_response

[Aladrin]

Damages to a third party CAN be more than the company makes.

The number itself might be unreasonable, but not the fact that the damages are more than the income.

Billboards

[MichaelSmith]

Advertisers will pay for a billboard without any guarantee from the advertising company about how many people will drive past the sign, how many of those will read it, how many will take the information in and act on it. The client is assumed to be taking a risk in that regard.

Over time people decide for themselves whether a particular type of advertising is working for them. If the business keeps coming in why should there be a need for this type of analysis?

Re:Billboards

[jalefkowit]

Advertisers will pay for a billboard without any guarantee from the advertising company about how many people will drive past the sign, how many of those will read it, how many will take the information in and act on it. The client is assumed to be taking a risk in that regard.

But "outdoor advertising" firms make no representations that they can measure these things. You know what you're getting when you buy space on a billboard. AdWords is different because Google sells it with claims that they can track these things (indeed, they bill you based on the results of that tracking). If Google's click tracking is inaccurate, you aren't getting what you thought you were getting. That's the difference.

Re:Billboards

[mstone]

That objection can be solved if you add the concept of 'noise' to Google's reported numbers, and I'd say most people already do that.. at least to some degree.

I don't think many people expect every adwords click to result in a sale for the advertiser. Instead, people just check to see whether there's a correlation between 'more adwords clicks' and 'more sales'. If 100 adwords clicks produce 30 additional sales, you can say that the adwords are 30% effective. Then it's up to you to decide whether those 30 additional sales are worth the cost of those 100 clicks. If so, you can write 70% of their adwords fee off as a cost of doing business. If not, you can close your adwords account, or lower the amount you're willing to pay per click.

If Google was padding its numbers, people would see lower return rates from their adwords accounts. Those people would then be less willing to pay for the service. They wouldn't expand their accounts to cover other words.

In other words, there's already a feedback mechanism that punishes Google for any loss of efficiency in its adwords program, and rewards Google for providing the best results it can.

Re:Enron

[IamTheRealMike]

Google make pots of money because AdWords does result in a good return on investment relative to other forms of advertising.

Consider this. Imagine a fictional company that spends $10,000/month with Google on advertising, and is completely happy with the service because it results in lots of leads and sales. So it is actually profitable to spend this money. There are many companies in exactly this situation. Does it matter if 90% of clicks are fraudulent (which is probably not going to happen unless you are being deliberately targetted by a competitor)? If you are still getting a great ROI then no it doesn't matter. The invalid clicks are just noise.

Google does produce something valuable if not physical - it produces a ton of people viewing websites who then go onto buy things. Same as any form of advertising. Except the relevance of AdWords makes it more valuable than most.

Academic community

[Anonymous Coward]

It is interesting to see Google asked someone from the academic
community to do this study.

The most the study says is that the algorithms the Google
uses are good to detect click fraud. It does not give any clue on
how much fraud is not detected by the algorithms.

Re:google future

[mstone]

Why? Google already has a solid and profitable business model.

The additional projects are just R&D with a very public face. They offer great brand exposure. They give Google's software team lots of experience dealing with the realities of building and maintaining software that thousands to millions of people use every day. They keep the company from developing tunnel vision. And in some cases they've put Microsoft on the defensive, so it has to spend time and resources defending its own markets rather than trying to take over Google's market.

Those are all solid and reasonable benefits for the company, even if none of the projects can ever be turned into a direct-revenue cash cow.

And if one of those projects happens to hit the combination of factors that does allow it to turn into The Next Big Thing, the payoff from that one winner will more than cover the cost of all the other research along the way.

Re:Statistics about click fraud shown to Adwords u

[Jonah Hex]

Now this seems like a damn stupid idea to me. Say I'm trying to discover methods to click fraud my competitors or perhaps come up with automated software to sell. I can now use a dummy account with Google using search terms no one would hit and test different methods of fraud while getting feedback on which methods trip their detection.

Jonah HEX

Re:From the objections_response

[mjh]

The number itself might be unreasonable, but not the fact that the damages are more than the income.

Really? Aren't the damages in this particular case supposed to be fees that advertisers paid to Google that they shouldn't have paid? If that's true, how can the plaintiff attorneys allege that the damages for click fraud exceed the total revenue that Google has taken in during it's entire lifetime?

NOTE: I'm not saying your wrong. I just don't understand. Can you clarify?

Re:Thinking about stuff

[outlander78]

"Probably. Besides, why would the user ever pick that last option?" (The last option being to download the ad and the ad's linked page, without displaying either.

If you really don't like ads, or especially a certain type (say, flash-based or pop-up-based ads), then the option to have the link "clicked" and cost the advertiser money without giving them any benefit might be appealing to the users of the ad-blocking software.

Personally, I like text-based meaningful ads like the ones Google provides, but can't stand the intrusive pop-ups, and would like to see a means of discouraging their use. How can following a link to a legal site be illegal?