Outsell, the research firm that shined the spotlight back on click fraud this week, talks with
Business Week about the possible implications of their study. While Google, Yahoo, and other
search engines say they're working hard to combat click fraud, all evidence points to the contrary: Google's $90 million refund is hardly adequate, and both it and Yahoo are embroiled in other
lawsuits. Meanwhile, Chuck Richard, Outsell's vice president and lead analyst, says the search companies are brazenly denying requests to reveal information about the problem. "I think they are making
absolutely the wrong decision by not being as transparent as possible," Richard says. "We're not saying publish your algorithms, and we're not saying show us your tricks." Both companies issued
prepared statements saying they know about the problem and are fighting it, but refused to comment further. Google called the problem "small." Just how small is it? Outsell found that search
advertisers lost more than $800 million to click fraud last year, which accounted for 14.6 percent of clicks. They applied that figure to last year's search spending figure of $5.5 billion. The
problem is now causing advertisers to scale back their search spending: 27 percent of the 407 firms of various shapes and sizes queried by Outsell said they had already decreased spending (by 33
percent on average) due to click fraud. An additional 10 percent said they plan to reduce spending until Google and Yahoo & co. come up with a plan to protect them. Richard likens the problem to the
Chinese water torture effect--where it drip, drip, drips until you just can't take it anymore. In the meantime, a new in-depth study of click fraud is expected from credit card fraud tracker Fair
Isaac and Alchemist Media, putting more pressure on Big Search.
Read the whole story at Business Week »