Google advertisers face minimal click fraud

Eric Auchard

SAN FRANCISCO: Google Inc., on Wednesday disclosed data showing that while its pay-per-click Web advertising system is under regular attack from fraudsters, virtually all such tricks are automatically detected, rebuffing critics who say its online ads are a magnet for fraud.

Click fraud can occur when Web site publishers attempt to trick Google's ad system into counting ads never seen by real users, or when competitors use automated programs to create fake clicks, driving up charges per click and rivals' ad rates.

Invalid clicks also regularly occur if consumers click on an ad then instantly click the back button to exit the ad. Google discounts both.

Financially, what this means for Google is that its computers automatically reject up to 10 percent of potential advertising billings. At current revenue levels, every percentage point of invalid clicks the company forgoes costs Google $100 million in lost revenue, the product manager said.

Shuman Ghosemajumder, Google's product manager for trust and safety, said in an interview that, on average, up to 10 percent of pay-per-click activity is invalid, and in some cases fraudulent, but that its computers automatically detect virtually all such problems, meaning advertisers pay nothing.

The percentage of invalid clicks actually identified by customers is 0.02 percent of all clicks, he said. Consumers click billions of times each month on text and other types of ads that run on Google.com and affiliated Web sites.

"There is a great deal of misinformation that was put out in the course of the last year," Ghosemajumder said.

The Google official acknowledged that the search ad system which is the company's crown jewel -- producing virtually all Google's $10.6 billion in revenue last year -- is under regular attack by the advertising equivalent of SPAM.

Such attacks, and audience fluctuations generally, he said can cause invalid click rates to vary, but have never amounted to problems adding up to anything greater than single-digit percentages in any quarter for as long as Google has run ads.

Criticism of Google's core revenue producing system reached a peak early last year when various industry groups and critics published statistics showing double-digit rates of click fraud, with some figures running 30 percent or higher of all clicks.

Google, which says it keeps key parts of its search system secret to prevent manipulation by bad actors, responded by cracking down on sites that abused its groundrules and redoubling efforts to educate advertisers about its system.

It also settled a U.S. class action action lawsuit last March that had accused Google and other Web search advertising services of failing to police their ad systems against fraud. Google agreed to pay up to $90 million in potential claims.

"The biggest challenge Google faces is really a restoration of trust," advertising industry veteran Kevin Lee said. "Google was a little lax early on (about the problem). They admitted that by choosing to settle a lawsuit, instead of fighting it."

Lee is co-founder and executive chairman of Did-it.com, a search marketing agency who helps advertisers such as D&B, Cingular, Register.com and Crucial Memory. Cingular spend around $200 million on search ads each year.

"Those of us who have been paying close attention to campaigns for sometime had most of this information," he said. "They are becoming more transparent, but the reality is that Google was already pretty vigilant."

One factor that explains why some critics see such high rates of fraud is that some highly desirable keyword searches come under heavy attack at moments, while, on average, Google is correct in saying the threat of such attacks is minimal.

Click Forensics Inc., which provides click fraud detection services to advertisers, estimates that, industrywide, around 14 percent of all Web ad clicks in the second half of 2006 were suspicious and should not be billed to advertisers.

Ghosemajumder acknowledged that advertisers -- who receive detailed data from Google on the results of any ad campaign, may suffer periods where half of all clicks are invalid, and other times when the rate of invalid clicks is minimal.