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False Ad Clicks Cost Google 1 Billion Dollars A Year
Meshach writes "There is an interesting story at CBC which claims that Google loses one billion dollars per year to fraudulent ad clicks. The article contains an interesting description how how the company determines if a click is false. 'The company explained that it determines which clicks are invalid through a three-stage system. Most of the illegitimate clicks are automatically detected analyzed and filtered out in the first stage ... The second part uses automatic and manual analysis of the AdSense network to weed out false clicks before they are logged to an advertiser's account.'"
Google doesn't get to charge for fraudulent clicks. That isn't the same as "loosing" $1,000,000,000.
Google isn't out any cash for the fraud, it is people who **buy** Google ads and pay per click who potentially loose money to fraudulent clicks, not Google. And there no way that Google can catch all click fraud, so it is **inevitable** that at least some advertisers will be charged for fraudulent clicks.
Nice post. Way to make Google look like the victim when they aren't the ones who actually pay for fraudulent clicks.
Google loses nothing as a result of clicks it determines to be fraudulent, other than its time and a little server space. On the balance sheet, it's simply as if those clicks never happened. No out of pocket expenses are incurred by google. Eliminating every fraudulent click out there would not increase Google's bottom line one iota, other than its incremental costs of dealing with this fraud.
We merchants/advertizers are the ones screwed. Google says that 10 percent of clicks are fraudulent? I have zero idea if this is an over-estimate, under-estimate, or dead-on accurate. However, I do know that google has very little incentive to "mark down" my bill every month. My family runs a small business -- http://www.beadstore.com/ -- and sometimes advertise on google. How many of those clicks I pay for each month are fraudulent? Who knows. I certainly can't tell.
This isn't to say that I distrust Google. The fact is, that when we advertise, our sales go up. So something is working. Advertising on Google makes a bigger difference than any of our other venues. But those numbers suggesting that 30 percent of our advertising budget may be/once was/is potentially lost to fraud? That is truly scary.
ROFL. I don't see why the point of the article is so hard to grasp, but here is the explanation of the logic:
Google discards those clicks voluntarily. If they hadn't, they could be charging the advertisers for each such click, and would be making more money.
The logic is not bogus.
I recently upped my AdWords spending to the (substantial, for me) tune of $15 a day. 20% of my budget was guzzled down by four sites, which all used a technique similar to the following: they had a zillion hand-crafted content pages up, one page on each site was quite close to one of my own search terms, and the page was organized into a workflow. (Search for "apollo bingo card templates" to see the example. No way in heck I'm tossing them a link for it.)
The AdSense block is under the header for each stage in the workflow, which suggests to unsophisticated Internet users that my ads ARE the next stage in the workflow. You might think I'd be happy about that, because it means a lot of users naively click on me thinking I'm the next step in the workflow, but ALL CLICKS ARE NOT EQUAL. As soon as somebody clicks on my ad, they get whisked to a completely different site and realize "Thats funny, something must have gone wrong". So they click back and I'm out nine cents. Repeat times a couple of hundred over the last 48 hours.
My CTR (click-through rate) for ads on other sites is in the general region of 1%. Thus, I can reasonably assume that about 1% of the audience reading content with my keywords is at least marginally interested in the product I sell. The CTR on ads on these pages which drew clicks by visual deception was in the teens. That means 15x the earnings for the owners of the deceptive pages. However, the conversion rate (percentage of folks who go on to download my free trial or buy from me) from customers with normal levels of interest (i.e. from other AdSense ads, for example) is about 20%. From these pages, it was less than 2%. Thus, the revenue split from a sale of my software goes from something like 40/40/20 advertiser-Google-me to 100/100/-100 advertiser/Google/me. (I am obviously hoping to tweak the campaign to the point where it is closer to 20/20/60, but even at 40/40/20 its still a positive return on investment.)
Anyhow, when you work out the math it had me paying something close to $25 to generate a fifty-fifty shot of selling a $25 piece of software. I've since banned the deceptive sites (you can manually choose to not allow your ads on certain domains or URLS), of course, but there are still advertisers getting screwed by them as we speak. And, looking through my logs, there are a LOT of sketchy sites in AdSense which would have cost just as much if they had been blasting through enough traffic. That really threatens the utility of the platform. If its 75% conmen to 25% upstanding sites like Mrs. Smith's Teaching Resources there is no reason for me to pay a single penny for the ads since I'll have to babysit the campaign every hour or get a negative ROI.
Help poke pirates in the eyepatch, arr.