Google Makes Headway In Click-Fraud Problem

Business Week, Thursday, July 27, 2006 11:45 AM

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It's a long time in coming, but Google's new application for tallying suspect clicks is an important first step in reaching out to its advertisers. The company hopes the free feature will place it back in good standing with the growing number of customers angry about Google's vague anti-fraud initiatives. There had been lots of talk from PR reps about the search giant's firm stance against click fraud, but little to show for it. The company did issue a click-fraud report, but as with anything that reveals Google's proprietary technology, it wasn't in-depth. It did not reveal how Google determined the validity of clicks for fear that scammers would use the info to refine their techniques. Report author Alexander Tuzhilin, a professor at NYU's Stern School of Business, says the new click fraud app represents "a tradeoff between advertisers' right to know for what they have been charged, and Google's right to protect their proprietary technologies from unethical users." Will it be enough? Tuzhilin thinks it will appease many advertisers. He adds that MSN and Yahoo will now be expected to follow suit. Lawyers representing companies suing Google said their clients wouldn't be satisfied until Google ensures that advertisers won't be billed for illegal clicks. One attorney believes the move is solely intended to make advertisers feel better. What he and others would prefer is a neutral third-party auditing system, or maybe a new ad system altogether. As it happens, Google has started testing a pay-per-action model, in which advertisers pay only for clicks that convert to an action, such as a sale or a sign up. That may be Google's way of hedging against the click-fraud problem.

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