• by Shankar Gupta , March 3, 2005

For small search marketers, click fraud can pose major problems by decreasing conversion rates and ratcheting up ad costs. But, while the challenge is well-known, finding a solution isn't so easy--and, in some instances, might actually be hampered by search engines themselves, said industry experts at a panel discussion Wednesday at the Search Engine Strategies Conference in New York.

"People are losing money--money is, in effect, being stolen," said Reed Smith attorney Peter Raymond. Click fraud occurs when a competitor, affiliate, or disgruntled employee creates fake traffic to a site though pay-per-click ads.

The difficulty in stopping click fraud, Raymond said, lies in both proving that it's happened, and linking that proof to a particular person or company that can be sued. One of the biggest barriers for marketers is that they don't have access to that information, said Ben Edelman, a spyware consultant.

Raymond and Edelman were joined on the panel by Adam Penenberg, an author and columnist for Wired; Danny Sullivan, the editor of SearchEngineWatch; Lori Weiman of search engine optimizer KeywordMax; and Jessie Stricchiola of Alchemist Media, another search engine optimization company. Both KeywordMax and Alchemist Media offer click fraud detection service.

Weiman said that one of the major obstacles to a click fraud crackdown is that search engines are reluctant to share the data that documents such fraud. She spoke of one instance in which her client had been billed for traffic that had apparently been generated fraudulently, and the search engine involved hadn't done anything to prevent it. "The search engine clearly wasn't being proactive in detecting fraud," Weiman said. She declined to identify the search engine in question.

Some panelists suggested that search engines have an incentive to turn a blind eye to click fraud. "You'd like to look to the search engines because they have all the data," said Ben Edelman. "But the practical reality means leaving money on the table for them."

"[Search engines] have the ability but not the right incentives, and advertisers have the incentives but not the ability," said Edelman. "In a perfect world, you could trust the search engines to handle this problem."

Some search engine professionals, however, dispute the idea that top-tier search engines are sitting on their hands. "They have just as much incentive to eliminate click fraud as advertisers," said Matt McMahon, executive vice president at Fathom Online. He added that if click fraud gets out of hand, search engines will see their entire business models become devalued. "Direct marketers chase conversions, and fraudulent clicks don't convert," he said.

Chris Churchill, Fathom's founder and CEO, said that search engines were easy targets for people who aren't seeing the return on investment or conversion rates that they're looking for from pay-per-click ads--and that major search engines were working to address it. "It certainly is out there, but there are several top-flight companies out there that are working to solve the problem."