"Ninety-Million Dollars is Chump Change"

Google’s proposed $90 million settlement of a class action lawsuit alleging “click fraud,” involving charging keyword and banner advertisers for fraudulent user “clicks” which do not result in an interested consumer visiting the advertiser’s website, may resolve one or both of the lawsuits presently pending against the search engine but it will not have any global affect on the practice.  According to CNET News,

“a lack of clear standards for determining what is a fraudulent click, or some sort of third-party clearinghouse to monitor the situation, means some advertisers believe they can’t do much more than head to the courts when they think there’s a problem.”

While the sponsors of the two largest pay-per-click advertising programs, Google and Yahoo, claim that the problem is being addressed, some estimates claim that twenty to thirty percent of clicks on Internet advertisements are fraudulent.  The search engines themselves refuse to provide any definitive data on the problem but claim that their systems detect the majority of fraudulent clicks.

“Click fraud can occur in several situations.  Sometimes, a company clicks on a rival’s ads in an effort to deplete the rival’s online advertising budget.  But usually, it’s due to Web site owners clicking on ads on their own sites to drive up revenue.  Click fraudsters can either pay people to click on ads for hours in so-called ‘click farms;’ use ‘clickbots,’ software programs written to automate the ad clicking; or “botnets” that hijack numerous machines for that purpose.”

Search marketing is a multi-billion dollar business and the perception among advertisers is that the problem of click fraud is growing.  As a result, we can expect litigation to increase as Internet advertisers seek independent monitoring.

Given the fact that seventy-five to ninety-nine percent of search engine revenue is derived from keyword advertising programs, the public should not expect the search engines to expend a great deal of effort to eliminate a practice that benefits them financially.  Even the threat of litigation may not be sufficient to encourage search engines to fully address the issue; as noted by Alex Lekas, a spokesman for Web hosting firm AIT (Advanced Information Technology, the lead plaintiff in one of the click fraud cases agains Google):

“‘Ninety-million dollars is chump change where the issue of fraud is concerned, particularly when the settlement is ‘advertising credits.”