3 Comments

AP: FICO FUD

May 18, 2007
by

Yes, I’m having fun with acronyms and abbreviations. I have to do something to counter the anger at the poor reporting from AP on the Fair Isaac report on click fraud. Gasp! They just found out that 15% of clicks are fraudulent! The problem I have is where the author states (in the opening paragraph) that click fraud is “probably occurring far more frequently than the network operators acknowledge.”

I saw this as I was reading the newspaper this morning (yes, I do read the paper) and was shocked at the poor reporting. Either the reporter has no idea how CPC advertising works, or they wanted to stir something up by leaving out facts and pushing useful responses to the bottom of the article. It is not until seven paragraphs later that he even mentions Google.

What really got to me was the statement that “advertisers have paid billions of dollars for bogus sales referrals during the past few years” because this ignores the fact that most click fraud is identified and not charged for. The author implies that Google and Yahoo! don’t believe fraud happens because it would hurt their business. I have yet to see a report that details the amount of click fraud that is actually charged to the customer.

The article and report are also self serving for Fair Isaac because they are looking into developing a potential solution for the click fraud “problem” to increase their own business. But would you want to do business with a company that really does not understand things? Check out this quote from Joseph Milana, Fair Isaac’s chief scientist of research and development

“Click fraud doesn’t appear to be a major problem when the ads appear on Google’s and Yahoo’s respective Web sites. The trouble starts cropping up once Google and Yahoo deliver the ads to other Web sites that are part of their vast marketing networks.The problem arises because Google and Yahoo have no way of knowing what happens behind the advertisers’ firewalls.”

OK, I have been in this business for 13 years and have been a customer of most major ad network, including Google and YPN, and I run an advertising service, and I have no idea what he is saying. Why would an ad network advertise behind a firewall? Or is he saying that Google does not know what happens behind the firewall of the advertiser after a browser has clicked on an ad and visited the advertiser’s site and taken action? Why would they care? I’m assuming he meant publisher, not advertiser and that he has no idea how ads are served or how pages are scanned to determine relevancy.

The problem arises when old school companies think they can move into the forefront of an industry where they have no way of knowing what happens behind the walls of the technology providers campus.

About Brad Waller

Some say Brad created the first affiliate program. We’ll never know for sure, but we do know that Brad has been running businesses online since 1994 and affiliate programs since 1996. When he is not running the affiliate program for EPage Classifieds, helping publishers monetize their sites with AdJungle, or working on iPhone applications, Brad is also busy starting up the Performance Marketing Alliance, a trade association created to represent and build the entire performance based industry.

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Filed under: Adware, Spyware, Greynets, & Internet Fraud + Contextual Advertising + Internet Strategy + Media
  • http://www.evokemg.com/ Dave Cole

    Brad,

    I hate to call this out, but you state first "…this [assumption that click fraud costs billions of dollars] ignores the fact that most click fraud is identified and not charged for." and then you follow up with: "I have yet to see a report that details the amount of click fraud that is actually charged to the customer."

    Obviously fraudulent clicks charged to customers falls somewhere between 0% and the 15% reported by this article.

    I agree with you that the statement of "customer firewalls" is just dumb, but I think the implication of what they're saying is that Google doesn't have perfect conversion information because not everyone opts in to the remainder of Adwords' tracking information (which gives "G" the ability to spot fraud from the client-side).

  • http://AdJungle.com Brad Waller

    I guess what I was trying to get at is that every report talks about the gross number of total clicks and total fraud clicks – ignoring clicks that are never charged to the customer. I have tracked campaigns and looked at click traffic which was compared to Google's actuals and what I saw as legitimate was very very close to what I was charged for. And yes, there were clicks that were fraud – but I was not charged for more than what I thought I should be paying for.

    What I would like to see from ClickForensics or Fair Isaac would be a 360 degree report that looks at overall traffic, clicks, fraud, and charges. Then I would care if they reported some significant percentage of click fraud that was charged to advertisers and really did cost them money.

  • http://www.cumbrowski.com Carsten Cumbrowski

    The industry did not even came to a consensus about the question what "click fraud" actually is.

    Unintentional/accidental clicks, multiple clicks by the same user on the same ad within a short period of time, clicking for competitive research, Scrapers that trigger clicks by accident, People clicking on an Ad without being really interested into the offer etc. are things that are often included by companies that gain from the Click Fraud Fear and excluded by companies that have something to loose from the fear.

    Same is true for the actual fraud and invalid clicks that are not charged for or refunded by the services as Dave pointed out already.

    Take any claim and report with a grain of salt and check who is behind it and what their interests are in the whole thing.