• Benjamin Edelman's Blog, Friday, October 10, 2008 4 PM

Research released this week on click fraud from Ben Edelman, attorney and assistant professor at the Harvard Business School in the Negotiation, Organizations & Markets unit, suggests online marketers lack the technical expertise to tell when they're being robbed.

Edelman finds online advertising fraud can happen without sophisticated spyware, even to cost-per-action advertisers. At first glance, conversion-contingent advertising (cost-per-action/CPA, affiliate marketing) seems the perfect way to prevent online advertising fraud. By paying partners only when a sale actually occurs, advertisers often expect to substantially eliminate fraud. Unfortunately, he says, this view is overly simplistic and optimistic.

Edelman notes in his report that banner ads from Allebrands invisibly load affiliate links, which is the simplest example to understand. Other affiliates load affiliate links and drop affiliate cookies as users merely view a banner ad. By viewing a banner ad on a third-party Web page, he explains, "the affiliate can drop its cookies and obtain a commission on purchases users make from the targeted merchants within the return-days period."

Read the whole story at Benjamin Edelman's Blog »