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Web search engines to fight click fraud

The Internet's leading search engines are teaming up with an advertising trade group to find a better way to identify and measure "click fraud."
/ Source: The Associated Press

The Internet's leading search engines are teaming up with an advertising trade group to find a better way to identify and measure "click fraud," a scam that has raised doubts about the Web's trustworthiness as a marketing vehicle.

The initiative, to be announced Wednesday morning by the Interactive Advertising Bureau, will draw upon the expertise of Google Inc., Yahoo Inc. and Microsoft Corp. — the owners of the top online search engines — to attack a problem threatening to erode their profits. 

Combined, the three companies control 86 percent of the lucrative U.S. search engine market, according to comScore Media Metrix.

Two smaller search engines, InterActiveCorp.'s and LookSmart Ltd., also have joined the alliance along with the Media Rating Council, a nonprofit group formed 42 years ago at the urging of Congress to help track and validate the sizes of advertising audiences.

The collaboration of three fierce rivals like Google, Yahoo and Microsoft shows how serious the industry has become about curbing click fraud before the issue squelches an online advertising boom that's enriching the search engines and their partners.  Google, the pacesetting search engine, earned $1.3 billion on revenue of $4.7 billion through the first half of this year alone.

Click fraud has attracted an increasing amount of attention amid class-action lawsuits and industry studies asserting advertisers have been collectively overcharged by more than $1 billion for bogus sales leads during the past four years.

Google and Yahoo contend that those estimates are gross exaggerations generated by opportunistic lawyers and online advertising consultants hoping to cash in on the anxieties triggered by their calculations.

Part of the difficulty in fighting click fraud so far has stemmed from the inability to come up with a precise definition of the practice — a problem the alliance hopes to solve.

Click fraud has different twists, but the end result is usually the same: Merchants are billed for fruitless traffic generated by someone who repeatedly clicks on an advertiser's Web link with no intention of ever buying anything.

The search engines and their partners are supposed to collect a commission for every click on short advertising links, typically displayed at the top or sides of Web pages, even if the activity doesn't culminate in a sale.  The commissions range from a few cents to more than $20 per click, depending on the words entered in a search box.

John Slade, senior director of Yahoo's defense against click fraud, predicted the alliance's guidelines "will be a game-changing step in measuring and fighting click fraud."

It may take more than a year before the guidelines are finalized, said Greg Stuart, chief executive of the Interactive Advertising Bureau.

The decision to develop the guidelines reflects the Internet industry's "commitment to being the most accountable advertising medium and providing marketers with the highest level of transparency," Stuart said.

Defining and tracking click fraud won't be easy, based on a recent analysis by a New York University professor given rare access to Google's monitoring systems.

That's because it's often difficult to decipher whether Web surfers are clicking on an advertising link out of malice or as part of an innocent online excursion.

"In some cases, the true intent of a click can be identified only after examining deep psychological processes, subtle nuances of human behavior and other considerations in the mind of the clicking person," wrote Alexander Tuzhilin in a 47-page report submitted last month to an Arkansas state court.

Tuzhilin was hired to do the study as part of just-approved class-action settlement requiring Google to offer advertisers up to $60 million in refunds.  That amount translates into less than 40 cents for every $100 that advertisers have paid Google since 2001. The attorneys who filed the suit will share $30 million.