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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.'"
See, it all works out because they make it up from the interest on the money that they don't have to pay out to adwords accounts that aren't over $100. Kinda like how a bank makes money.
Actually there was some other article I read recently about how much Google probably makes off of that, but I can't find it now.
It's more like $1B dollars in fraud is not passed on to the advertiser. Many billions more probably are. Google isn't losing a thing.
The logic behind this story is bogus. The $1 billion in money that these fraudulent clicks cost Google doesn't exist. If not for the bogus clicks, these clicks wouldn't exist.
It's like a software company claiming that false orders cost them $10 billion dollars last year because they received an bogus order for 100,000,000 copies of a $100 product. Had they not received the bogus order, they would not be $10 billion richer.
Duh.
Stupid articles that dont contain any actual information. Got me all excited to know how google filters the false clicks.
If sharing a song makes you a pirate, what do I have to share to be a ninja?
I've been on the net for about 11 years now, and I've not one single time ever deliberately clicked on an ad because it was interesting. I've clicked on accident; I've clicked to allow a download to proceed, or to get a limited time pass to an otherwise charged-for service/site, and I've clicked just for a laugh to fool people into thinking I give a shit, but the day I start to get interested in and buy products based on commercials (online or elsewhere) instead of reading reviews, comparing alternatives and talking to friends/family who've bought something is the day you can take my brain out and give it to someone else.
From TFA "Google does not charge its advertisers for clicks it determines to be invalid. For example, if 10 out of 100 clicks were excluded Google would not charge its advertisers for the invalid clicks, cutting into the company's revenue."
Someone is counting invalid clicks as lost revenue, rather than counting them as, well... invalid? Who at the Googleplex used to work in the music/movie industry?
There are 01 kinds of cars in the world. The General Lee, and everything else.
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.
What is the exchange rate from RIAA dollars to USD? Because it seems they are using the same monetary units.
ID: the nose did not occur naturally, how would we wear glasses otherwise? (apologies to Voltaire)
Click fraud is only inflating the number of clicks made by $1B. Roughly 10% according to the article. Sounds suspiciously low to me. Spam certainly comprises greater than 10% of all email sent, why are click fraud rates so low?
The small company I work for has about $1M in sales annually, and we spend almost $250,000 a year on Google Adwords. Roughly 85% of our sales come from Google. We're getting a conversion rate that is less then one percent and it's gotten worse over time. If it continues to drop, we'll have no choice but reduce our adwords cost-per-click limit and take our advertising dollars elsewhere. No matter how you spell it, that means problems for the G00Gmeister.
On the 0th day, God created C
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.
In the same way that the RIAA is losing quadrillions of dollars to music piracy.
Request your free CD of my piano music.
This is actually even worse. It could be argued that someone might buy a CD or a movie if they were unable to pirate it. But, you can't say that google would get more legitimate clicks if they could eliminate the fake ones.
I guess it never crossed my mind that by clicking on a banner ad I'd be causing economic harm. I thought the ad economy these days was all based on impressions, not clickthroughs.
:)
Makes me want to protect the little guy by filtering out all ads before they display in my browser, just to be on the safe side. Don't want to hurt anyone by accidentally clicking...
You are not a brain: http://books.google.com/books?id=2oV61CeDx-YC
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.
What I'm curious about is what kind of information they disclose to the people that have ads on their site. If I were trying to pay for hosting with ad clicks, I'd be pissed if I was being cheated out of 10% of my clicks because google suspected that they were illegitimate without informing me that they were withholding the money.
Yes, fraud does happen, but why should the advertisers get an undue break when its only on a small scale and not organized by the website operator? It seems awfully fishy that google seems to think that their system is that good.
From what the article says, I suspect that is exactly what is happening if only 0.02% get reported as falsely getting through the measures, you can be pretty sure that google is cheating the website operators. Cheating them by being overly conservative in which clicks to be counted and which ones to toss as being fraudulent. It would be quite surprising to me if the majority of that percentage was a legitimate case of fraud and not a few advertisers trying to cheat the system. 0.02 is unlikely to be larger than the margin of error in their analysis.
I remember the brief time I had one of their accounts, and it rarely worked right, the javascript was regularly broken and rarely actually showed any ads that weren't charity ads.