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On June 24, 2005, a lawsuit was
filed against Google for alleged click fraud on the
Adwords pay-per-click program. The Plaintiff, Click
Defense, claims Google failed to enact appropriate
measures to guard against fraudulent clicks resulting in
unwarranted marketing fees. Click Defense claims it has
lost over $5 million to click fraud.
Click Fraud
“Click fraud” is a term with a unique meaning on the
Internet. It refers to the deliberate clicking of
pay-per-click advertisements by users that have no intent
of actually making a purchase. It is common knowledge that
unethical companies will set up click centers oversees
where individuals are paid nominal wages to click on
certain ads. Alternatively, companies will use programs
called “click bots” that automatically search out ads
and do the same thing. The end result, of course, is a
bevy of clicks that drain advertising budgets.
Google claims it takes appropriate precautionary measures.
This claim, however, is often met with a snicker since the
sole source of revenues for Google is advertising. This
causes an inherent conflict of interest since Google needs
to maximize clicks to generate revenues. As a publicly
traded company, Google is under pressure to continually
show increased profits. Taking all of this into account,
one must wonder how hard Google works to limit fraudulent
clicks. If you have used the “content search” aspect
of Google Adwords, the incredible poor conversion rates
certainly must raise doubts in your mind.
Click Fraud Percentages
Neither Google, Overture nor any other search engine has
been willing to publish click fraud rates for their paid
advertising program. Hints have been provided regarding a
rate of 20 percent. Active advertisers know, however, the
percentages can be much higher depending on the
competitiveness of the keywords in question. Click
Defense, the Plaintiff in the lawsuit, is claiming a click
fraud rate of 38 percent.
Will This Impact PPC?
The lawsuit against Google was inevitable. Every site
using Adwords is aware of the problem with click fraud.
Frankly, it is a problem with every pay-per-click search
engine although our experience has been better with
Overture.
So, will this lawsuit force the search engines to clean up
their act? It’s hard to say, but there should be one
definite benefit. As part of the lawsuit, Google may be
forced to reveal the true click fraud percentages
occurring in Adwords. If Google moves to quickly settle
the case, you should take it as an indication it wants to
keep the rates confidential. This, of course, will mean
the click fraud percentages are high.
You should watch the progress of this lawsuit if you use
pay-per-click search engines to promote your site. Some
very interesting information should be revealed.
Regardless of the outcome, click fraud is just another
reason to pursue search engine optimization strategies.
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