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Friday, September 14, 2007

Google's Stunning Admission to Double Digit Click Fraud

Noticed a minor story on Techmeme today. It should be a major story! In an interview with Forbes, Shuman Ghosemajumder admits to double digit click fraud on the Google AdWords network:
Forbes: But click-fraud auditors argue that there's a discrepancy: They say you throw away no more than 10% of clicks, while they estimate click fraud rates at as much as 25%.

Shuman: That's just one particular set of numbers. The auditing firm, Fair Isaac, for example, estimated in May that on Google's content network, 10 to 15% of clicks are fraudulent. On ads placed next to search results, they said that there was a negligible rate of click fraud, less than 1%. That implies an overall click-fraud rate of around five to 7%. The number of clicks that we proactively throw out is less than 10%.
Notice the admission that "on Google's content network, 10 to 15% of clicks are fraudulent." That's phenomenal when you consider that a new advertiser, opening an account with Google AdWords is automatically opted into Google's content network! It's up to the advertiser to recognize that there's double digit click fraud on that network. There's no popup to warn a new AdWords user that they're exposing themselves to this risk. However, if they choose to opt out of the content network, Google does display a popup in a clear attempt to dissuade opting out:

Google AdWords content network

In case that graphic is difficult to read, here is what it says:
You are about to opt out of the content network. You may also remain opted in and try content bids, which allows you to set a higher or lower price for clicks coming from the content network. This can help you meet your goals while still getting broad exposure on content sites. Do you still want to opt out of the content network?
Don't you think Google should warn new advertisers about the dangers of being opted into the content network? At the very least, shouldn't they make it explicitly clear that contextual advertising is turned on, by default, as well as search engine advertising? This is why I've been talking about distribution fraud rather than click fraud. That's the real issue that advertisers are contending with. I left a comment on Henry Blodget's post because it's important that people understand that AdWords *is* AdSense. He states:
The most important point about click fraud at Google, which Ghosemajumder does not make, is that the vast majority of it occurs on the AdSense affiliate network, not the AdWords paid-search service. The latter generates more than 80% of Google's profit (profit, not revenue), so the threat to the company's core business is minimal. In fact, if click fraud on affiliate networks ever got out of hand, this might end up driving even more business to AdWords.
No! The most important point is that the AdWords system, by default, opts advertisers into the content network which *is* the AdSense affiliate network. How many AdWords advertisers know the importance of opting out and building contextual advertising campaigns separate from search engine advertising campaigns?

I haven't even touched on Google's implementation of parked domains which, in essence, places contextual advertising on the search network. That skews the less than 1% overall click fraud rate on the AdWords search network for many advertisers. Here's a case in point.

C'mon, Google. Let's have some transparency!

Update: Shuman was kind enough to send me an email with this clarification - "the main thing I wanted to clarify is that I wasn't saying that 10-15% of clicks on AdSense were fraudulent -- I just said that Fair Isaac said that."

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Blogger Dave deBronkart said...

I don't like click fraud, of course, but I don't see a Google admission in this post, do I? The interviewer says some auditors talk about high numbers, and Shuman replies by citing an auditor who asserts 10-15% fraud. But I don't see him agreeing with that - he says the overall fraud rate is ~7%, and they throw out <10%. Ami I missing something?

Mon Sep 17, 09:34:00 AM EDT  
Blogger Richard said...

Hi Dave. Shuman emailed me with a clarification. I don't think he agrees with the numbers. I'll update the post. What's important, though, is the difference in click fraud rates on the content network vs the search network.

Mon Sep 17, 06:44:00 PM EDT  

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