Google and the ‘Click Fraud’ Menace

Web search companies were being accused of

overcharging for invalid clicks

Introduction

• Cost per click : 2002• Value of total settlement : US$ 90million • Comment by Yahoo about their click

protection system• Settlement amount : US $90million low as

compared to companies total revenues $6.1billion , income $1.5billion

Background• In 1994, internet advertising began worldwide.• Internet is only electronic ad supported medium to record revenue of $5.9 Billion in Q1 ’10, whereas in 2002 annual revenue was $ 6.1 Billion.

© IAB Revenue Report 2009

Internet Advertising

• Internet medium opened up possibilities• Digital advertising• IA Target specific• Ad tools used• PPC• Top Players

Google’s AdWords Program

• Advertisers to bid for keywords

• Highest bidder’s ad placed on highest point

• Nominal one-time activation fee

• Cost-per-click (CPC) pricing

• Cost-per-impression (CPM) pricing

Google’s AdSense Program

• Program for websites to display relevant Google ads on its content pages

• Google’s technology would match website content with relevant ads

• Fee paid by the advertiser shared by Google and the website publisher• Global business could display local

advertising with no additional effort

Google(figures in US$ Million)Particulars

2007 2008 2009

Total Revenue

16594 21796 23651

Operating Income

5084 6632 8312

Net Income

4204 4227 6520

Yahoo!(figures in US$ Million)Particulars

2007 2008 2009

Total Revenue

NA 1700 1500

Operating Income

NA NA NA

Net Income

NA 130 186

Market shareOnline search engine companies

Google86%

Ya-hoo

!6%

Bing

3%Baidu

3% Others2%

(source:marketshare.hitslink.com)

Phenomenon of fraud case

Click fraud refers to clicking of online ads on purpose without a genuine intention of buying or knowing more about the product or service.

Invalid clicks done manually or through software programs called ‘online bots’.

Firm’s competitors generating invalid clicks.

Click fraud continued Another form of click fraud-through Google

Ad sense program In order to remain undetected, the

perpetrators of click fraud closely simulated genuine human visitor behavior.

Click fraud caused an increase in the cost per click for keywords.

Search engine based their keyword pricing on the popularity of the search term and how many people were competing for it.

QUANTIFYING CLICK FRAUDThe massive threat or opportunity was already identified by the

giants like Google and Yahoo.

• Dec 2004 Google’s CFO George Reyes admitted the threat to Google’s business.

• Analysts found it tough to figure out the actual number of click frauds taking place.

• Vice President of Coremetrics admitted the cost of search advertising that went up due to this due to the PPC programs.

• In Aug 2005, research report by MarketingExperiments.com estimated that as much as 29.5 % of PPC clicks could be fraudulent.

QUANTIFYING CLICK FRAUD Contd..• Most analysts however estimate it to be in the range of

5% - 20% on the internet adds.

• In April 2006, the click Fraud Network which prepared a click fraud index estimated an industry wide average to be 13.7%, whereas for well known search engines like Google and Yahoo it was around 12.1.

• Advertisers and analysts felt the need of an individual

organization to access and coordinate the level of fraudulence to counter it.

The Bi-directional aspect:• Massive losses for the industries like Google and Yahoo.

• Huge opportunity for hackers and other fraudulence creators to earn quick bucks.

• Researchers at “Trend Micro” by studying the cybercriminal model authenticated that a medium sized ‘botnet’ could earn hackers millions of $$ a year.

• Example : - Search related to facebook ------ $ 0.0072. - Search related to Loans or ------- $ 2. Home Based Business Opportunities

Combating Click Fraud:• Shuman Ghosemajumder, Business Product

Manager for trust and safety at Google stated several factors:-

- Duplicate IP address. - User session information. - Network information. - Geo-targeting and browser information.

• Through a sophisticated team comprising of PhDs in AI, Machine Learning & Statistics.

• In Nov 2004, Google filed a case against Auctions Expert International LLC for fraudulent clicking of text based adds on company websites.

FUTURE OUTLOOK

• Closely monitor customer conversion ratio with corresponding changes in the pay per click ratio

• Installation of fraud tracking tools• Blogs, images, press releases and video content

became popular• Consulting services and software products were

offered• Absence of clear standards for determining

what a fraudulent click was

Contd…

• Lack of third party clearing house• One solution was to have an independent

auditor• Slowdown in search advertising revenue

growth by 2010

Thank you…