Click Fraud. CyberGroup January 18, 2006

Transcription

1 Click Fraud CyberGroup January 18, 2006

2 The Basics Advertisers agree to pay Google or Yahoo for preferential placement in searches

3 The Basics Advertisers agree to pay Google or Yahoo for preferential placement in searches

4 The Basics Advertisers agree to pay Google or Yahoo for preferential placement in searches Advertisers also pay Google or Yahoo to place ads in third party websites

5 The Basics Advertisers agree to pay Google or Yahoo for preferential placement in searches Advertisers also pay Google or Yahoo to place ads in third party websites

6 The Basics Advertisers agree to pay Google or Yahoo for preferential placement in searches Advertisers also pay Google or Yahoo to place ads in third party websites When a user clicks an ad, Google or Yahoo recognize revenue from the advertiser s budget and pay third parties a portion Prices per click run from a few cents - $84

7 The Stakes Google earns over 95% of its revenue on the pay per click model 2006 est. $5.2 Billion Because of expectations of growth in this revenue it commands a P/E ratio greater than 100 vs. an average of 14 for the S&P 500 At these high multiples, share prices can collapse on missed earnings. Yahoo s stock tumbled 13% Tuesday afternoon after only growing income by 39%

8 How are Google and Yahoo Responding to Click Fraud? We don t really know specifically Google says it looks at IP addresses and timing patters, among other things

9 How are Google and Yahoo Responding to Click Fraud? Yahoo has a Click Protection System Each click is evaluated along 90 data points. Some of the data points evaluated are: IP address User session information User cookie information The network to which an IP belongs The user's browser information The search term requested by the user The time of the click The rank of the advertiser's listing The bid of the advertiser's listing The time of the search The time of the click

10 How are Google and Yahoo Responding to Click Fraud? Google does offer credits for invalid clicks, but only in the prior two months It is likely that fraudulent clickers and pay-perclick advertisement providers are engaged in continuous escalation and adaptation In November 2004, Google sued a company for hiring 50 people to click on ads on its own website, thereby generating false ad revenue Google was victorious and collected $75,000 in damages

11 Google and Yahoo both assert that they cannot reveal how they combat click fraud They say it would undermine their fraud prevention systems Yahoo also says, We have two patents pending related to this technology, so we cannot currently disclose too many details about the methods we use.

12 Third-party auditors have stepped in to fill the click fraud gap Clicklab, WhosClickingWho, Click Fraud Detective, among many others

13 Third-party auditors have stepped in to fill the click fraud gap

14 Advertisers Could Monitor Click Fraud on their Ads A few lines of code in a web site can help gather information about visitors Browser/Resolution/other stats Referring page IP address

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18 Advertisers Could Monitor Click Fraud on their Ads Invisible code in a web site can gather information about visitors Browser/Resolution/other stats Referring page IP address This is currently available to advertisers Most do not track this information Most do not even keep track of their return on investment

19 Possible Solutions by OSPs If 3 rd parties can do it, Google and Yahoo can too Filter using IP addresses Remove multiple clicks that originate from the same IP Proxy servers at work places or ISPs may assign the same IP address to several users Blocking IP addresses that are suspected of fraudulent clicks is not effective Serious evil doers will either mask their IP or use different addresses

20 Possible Solutions by OSPs Other things to monitor: cookies, ad ranks, time of clicks and searches, browser information, etc. May need to increase the anti-click fraud team Use GeoPositioning Once GeoPositioning improves, can tell if clicks are coming from a competitor s office or a company specializing in click fraud Now can probably tell what country clicks are coming from, so can monitor for suspicious traffic Team up with 3 rd parties to develop new tools

21 Alternatives and Modifications to Pay-Per-Click

22 Other Formats Already in Place or In the Works AdSense Google places links it thinks are relevant on third party sites and splits the revenue with the host Google allows advertisers to pick and bid on whose websites they appear Advertisers can pay based on how many people are expected to see the ad ("cost per thousand" basis) But, they must still compete with advertisers who choose a cost-per-click scheme

23 Other Formats Already in Place or In the Works Pay-Per-Call Links hooked up to telephonic systems like Skype will then connect you with the company when clicked This makes it harder, or at least more expensive to engage in click fraud Pay-Per-Action Advertisers pay only when clickers follow up and provide requested demographic or contact information or purchase a product

24 Flat Rate Model used for other media advertising Fee charged for certain period of time Variations in price for placement In order to match the revenue of pay-perclick, Google could auction off top placement for certain searches

25 CPM (Cost-Per-Thousand) Model AdSense Advertisements Charge based on average number of visits to a site where link is hosted Agree to post the ad for a given period of time to circumvent competitors use of fraudulent clicking to get the link off the site Advertisements on Google Search Charge based on popularity of search term Agree to post for a given period of time Variations for placement

26 Pay Per Time at Site Charge advertisers per unit of time the clicker spends at the site after clicking the link

27 Pay-Per-Sale - The Holy Grail of Advertising according to some - Google gets paid a percentage of the sales that occur after a clicker links to the advertiser's website - Could operate in addition to a flat rate - Could create a sales-per-click scheme where Google gets a percentage of total sales through Google divided by the number of clicks - This way, Google has an incentive to combat fraudulent clicking - Google Wallet

28 Role of Government

29 Outlaw Click Fraud? Enforcement? Incentives? Who benefits? Advertisers? Or search engines? Knowledge Problem Resources Will small advertisers pursue expensive litigation? A threshold? What if Google / Overture is already taking best efforts?

30 Transparency Regime Require Reporting Standards Problems? Too much information?

31 Government Action on the Fraudulent Clicking Problem is a Bad Idea Because it would be excessive/ineffective to outlaw click fraud Seems like a problem that should be resolved contractually between the relevant parties It would be difficult to enforce against particular competitors Jurisdiction problems

32 Government Action on the Fraudulent Clicking Problem is a Bad Idea Because the market will solve this problem itself Stores don't close their doors because of shoplifting. Click fraud is just part of the cost of doing business and advertisers will just budget for it Already there are some Google/Yahoo competitors with different models, like Snap.com If the problem gets so bad that advertisers can't afford PPC advertising anymore, providers may begin offering other models rather than lose advertisers altogether

33 The Future of the Internet: PPC? Generativity: Will new ways to optimize sites to get at the top of search results be developed? Will more companies move to an online storefront so that they can go to a pay-persale model?

34 The Future of the Internet: PPC? OSP Control: How will companies count clicks? Will Google/Yahoo create a new model? When click fraud occurs, will OSPs and ISPs be shielded from liability in the same way the DCMA provides a shield? Is click fraud analogous to other types of real world or online fraud?

35 The Future of the Internet: PPC? Culture: Do people see this as fraud? Who will have the upper hand the advertisers or the providers? Will PPC become obsolete? Create better fraud detection? Movement toward pay-per-sale?

36 Our special guests from Authenticlick