Zach Coelius

BW has chimed in about click fraud here

I may be a little biased but as I said before this is getting to be a huge problem for Google’s AdSense progrem.

I have a post here on the Triggit blog.

The big thing that I feel no one understands is that click fraud doesn’t steal from Google or the Advertisers. Advertisers have a simple equation. A sale is worth Y dollars, Z clicks = a sale, Z clicks is worth at most Y dollars. When click fraud happens it takes more clicks per sale and the value of each click decreases. Advertisers adjust the price they bid for each click accordingly. Google doesn’t give a shit, they might even make more given that some advertisers are not sophisticated enough to realize the relationship between a click and the real value of an additional sale. But the person that really gets screwed is the publisher.

A click does not have a constant value across the system. Each click has a different value. When a click results in a sale that click created the value of sale. But the way Google prices their clicks is that they all have the same cost. The value created by the click that resulted in a sale is spread across the rest of the clicks that result in no sales. If this was just happening on one site it would be no big deal. The problem is that it is spread out across a whole network of sites. That means that those sites whose clicks result in a lot of sales are sharing the value they create with the sites who clicks result in no sales. When the differential between the conversion rates of these sites is relatively minimal this is less of a problem. But when click fraud enters the system it becomes a big deal. By adding a huge number of clicks that return no sales into the system a great deal of created value is effectively siphoned from those sites whose clicks result in sales. Those that create good audiences are being stolen from. Shame on Google.

More thoughts on Google click fraud.  First, fraud is really bad for all involved.  But it reveals the weakness in the Google model.  Because advertisers do not have control over where their ads go it becomes possible for fake sites to be set up that farm adsense links.  No matter how good Google claims to be at stamping out click fraud, the model they have right now will fail as long as there is no oversight on each and every site that hosts adsense ads (an impossibility in Google’s model right now).  And since Google is making a fortune off of all this they have no incentive changes their model or even to shut down these fake sites.

Here is how the click fraud works.   First they (the bad people) scrape wikis or blogs out there for content, basically an automated cut and paste.  That content is used to make a new page or blog that is that optimized to the top of the Google results by creating link farms that give the new page a high page rank (why not get as many free clicks as you can and make your site look legit).  Once that happens it becomes possible for the fraudsters to either use a bot to increase the number of clicks or hire a bunch of people in China to click away on thousands of these different sites.  The next big innovation here is that these click farms then share their clicks.  So there is now a network of farms all over the world clicking on each other’s adsense links.  Add to this all the zombie or infected computers out there controlled by hackers and you can see that it is possible for these clicks to come from all over the place and defeat Google’s defenses.   

Google is complicit in this fraud because they are writing checks to these sites and I don’t see them doing anything to stop it other then denying that click fraud is even a problem.  I love Google, and adwords is brilliant, but adsense sucks.  So whether it is my team or someone else (we have a great solution but who knows someone may come up with a better one), there will be a better product that emerges that solves click fraud.   Add to that all the work that needs to be done with relevancy, creative control, pricing fairness and increasing innovation in advertising-all things Google fails in now-an you can see that there is lots of room for improvement.  As Paul Graham says “one of the best things you can do as an entrepreneur is find something that really sucks and make it better”.  I think we have found that suckage.  Now we are trying to make it better. 

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