Google to Pay $90M in 'Click Fraud' Case

yahoo business ^ | Thursday March 9, 4:16 am ET | Michael Liedtke, AP Business Writer

[JustaCowgirl]

SAN FRANCISCO (AP) -- Google Inc. has agreed to pay up to $90 million to settle a lawsuit alleging the online search engine leader overcharged thousands of advertisers who paid for bogus sales referrals generated through a ruse known as "click fraud."

The proposed settlement, announced by the company Wednesday, would apply to all advertisers in Google's network during the past four years. Any Web site showing improper charges dating back to 2002 will be eligible for an account credit that could be used toward future ads distributed by Google.

The total value of the credits available to advertisers will be lower than $90 million because part of that amount will be used to cover the fees of lawyers who filed the case last year in Arkansas state court. The proposed settlement still requires final court approval.

The lawsuit, filed by Lane's Gifts and Collectibles on behalf of all Google advertisers, revolves around one of the most sensitive subjects facing Google and Yahoo Inc., which runs the Internet's second largest marketing network.

Yahoo, which is also named in the suit, said Wednesday that it intends to fight the lawsuit's allegations.

Mountain View, Calif.-based Google makes virtually all of its money from text-based advertising links that trigger commissions each time they are clicked on. Besides enriching Google, the system has been a boon for advertisers, whose sales have been boosted by an increased traffic from prospective buyers.

But sometimes mischief makers and scam artists repeatedly click on specific advertising links even though they have no intentions of buying anything. The motives for the malicious activity known as click fraud vary widely, but the net effect is the same: advertisers end up paying for fruitless Web traffic.

The lawsuit alleged Google had conspired with its advertising partners to conceal the magnitude of click fraud to avoid making refunds.

The frequency of click fraud hasn't been quantified, causing some stock market analysts to worry Google's profits will falter if it turns out to be a huge problem.

Google executives have repeatedly said the level of click fraud on its ad network is minuscule -- a contention that the proposed settlement amount seems to support.

The $90 million translates into less than 1 percent of Google's $11.2 billion in revenue during the past four years.

Google disclosed the settlement after the stock market closed. The company's shares fell $10.57 to close at $353.88 on the Nasdaq Stock Market, then shed another $2.11 in extended trading.

On the Web:

Google posting about the proposed settlement:

http://googleblog.blogspot.com/

[JustaCowgirl]

Google executives have repeatedly said the level of click fraud on its ad network is minuscule -- a contention that the proposed settlement amount seems to support.

Not sure how the reporter reached this conclusion. Considering that this appeared on yahoo, and yahoo is a party to the suit, this may not be totally unbiased reporting.

Anything bad that can happens to Google is okay by me. Their lead article this morning was yet another treasonous and scathing article about George Bush as Hitler from the Socialist Workers Union, I think of China.

Communist China by the Bay.

[endthematrix]

Just like those $50 off rebate deals that get you into the store...gotta read the fine print. "an account credit that could be used toward future..."

[goldstategop]

Internet marketing is not the way to riches. Google and Yahoo though have made handsome profits off the notion there's a buyers' market online.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

[hoosierham]

This is like the "punishment" imposed on Bill Gates and Microsoft:put even more of what was the problem out to the public.

A real ,immediate,monetary payment is a fine,these future credits are a farce.

[Pro-Bush]

This is what happens when search engine companies become political and corrupt.

[JustaCowgirl]

A real ,immediate,monetary payment is a fine,these future credits are a farce.

Exactly. The settlement is really nothing more than a form of advertisement for yahoo and Google. The court has given them their own little court-sanctioned rebate coupon for advertisers.

[muir_redwoods]

So, exactly what site would I have to click on 500,000 times to cost the left a lot of advertizing dollars with Google?

[JustaCowgirl]

LOL! Maybe Air America is one of their advertisers?

If so, sign me up, too.

[AmericaUnited]

Internet marketing is not the way to riches.

Those selling books on how to make millions doing so would disagree. LOL!

[putupjob]

Kewl! This should be great news for the Stock Price!

I would be willing to bet that 50% of the discussion at Google is: What's the stock price?!!

[goldstategop]

Yeah and Google/Yahoo wouldn't be paying $90 million up the wazoo.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

[dawn53]

Internet marketing is not the way to riches. Google and Yahoo though have made handsome profits off the notion there's a buyers' market online.

I manage online marketing for a company and I would totally disagree.

You can't afford NOT to advertise on the internet...and our figures show that 80 percent of our sales come directly through Google or Google generated search engines. (Google has become like eBay...it's where people go to look, and we use the other search engines too, but most people "google" first.)

The internet can take your business from a local market to a national and international market for much less money than any other mode of advertising.

[endthematrix]

"Internet marketing is not the way to riches. "

I was involved for a time in "affiliate" marketing (same thing) and it has created a niche market for advertisers...and created some ways for generating income to pay for websites. We also now have an Internet filled with websites TOTALLY FILLED with ad banners!

FWIW, one big problems with this was ethical companies protecting against trademark violations. Any website could grab any affiliate banner to generate "hits." Well if your company didn't want to part of that site...well you first had to know who, then contact, ask them to withdraw the banner....on and on.

[goldstategop]

I've been involved in some marketing but let me ask you this: how many click thrus actually buy as opposed to merely looking at what's on a website? You've got a lot of wasted traffic. Now if there was a fool-proof way to separate serious buyers from the merely curious, then I think you could argue Internet advertising is a profitable proposition.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

[JoeSixPack1]

But sometimes mischief makers and scam artists repeatedly click on specific advertising links even though they have no intentions of buying anything.

Been going on since the days of the BBS's. A simple programming redesign would have ended this but easy money, unregulated accounting and a new geek's only 'old boys' club just wasn't going to rock the scam boat.

[SkyPilot]

Their company motto is "Do no evil."

The problem is, they don't recognize that good and evil are defined by what God says morality is, so they can just re-adjust whatever they think evil is so that they come out on top.

This "Do no evil" ridiculousness reminds me of the insightful Atheist's Creed" by British journalist Steve Turner.

______________________________________________________________________

We believe in Marxfreudanddarwin
We believe everything is OK
as long as you don't hurt anyone,
to the best of your definition of hurt,
and to the best of your knowledge.

We believe in sex before, during, and after marriage.
We believe in the therapy of sin.
We believe that adultery is fun.
We believe that sodomy is OK.
We believe that taboos are taboo.

We believe that everything is getting better
despite evidence to the contrary.
The evidence must be investigated
And you can prove anything with evidence.

We believe there's something in
horoscopes, UFO's and bent spoons;
Jesus was a good man
just like Buddha, Mohammed, and ourselves.
He was a good moral teacher
although we think His good morals were bad.

We believe that all religions are basically the same--
at least the one that we read was.
They all believe in love and goodness.
They only differ on matters of
creation, sin, heaven, hell, God, and salvation.

We believe that after death comes the Nothing
Because when you ask the dead what happens they say nothing.
If death is not the end, if the dead have lied,
then it's compulsory heaven for all
excepting perhaps Hitler, Stalin, and Genghis Khan.

We believe in Masters and Johnson.
What's selected is average.
What's average is normal.
What's normal is good.

We believe in total disarmament.
We believe there are direct links between warfare and bloodshed.
Americans should beat their guns into tractors
and the Russians would be sure to follow.

We believe that man is essentially good.
It's only his behavior that lets him down.
This is the fault of society.
Society is the fault of conditions.
Conditions are the fault of society.

We believe that each man must find the truth that is right for him.
Reality will adapt accordingly.
The universe will readjust.
History will alter.
We believe that there is no absolute truth
excepting the truth that there is no absolute truth.

We believe in the rejection of creeds,
and the flowering of individual thought.

"Chance" a post-script

If chance be the Father of all flesh,
disaster is his rainbow in the sky,
and when you hear

State of Emergency!
Sniper Kills Ten!
Troops on Rampage!
Youths go Looting!
Bomb Blasts School!

It is but the sound of man worshiping his maker.

[goldstategop]

And you know how people hate to look at ads. Its harder to reach buyers since no one likes spam e-mail and if you're not listed on the first two pages of the search engines, forget it since most people aren't going to scroll too far just to find you. Its human nature.

(Denny Crane: "I Don't Want To Socialize With A Pinko Liberal Democrat Commie. Say What You Like About Republicans. We Stick To Our Convictions. Even When We Know We're Dead Wrong.")

[Hardastarboard]

Google's business model always reminds me of the old joke about selling a book titled "How to Get Rich Quick". When you buy the mail order book every page is printed with one line - "Publish a book on how to get rich quick". I think that's the business model of 3/4 of the businesses that advertise on talk radio, too.

"Spend your way to wealth"

"Make big money selling over the internet"

"Work from home in your pajamas and get wealthy"

Right.

[dawn53]

Sure, you have a lot of click throughs that don't buy...at that moment.

But our research reveals that within a month of looking, many non-buying click throughs will return and purchase.

When you pay for advertising in a newspaper or on TV, how many people view that won't buy...millions, but you still advertise to reach the viewers/readers that will buy.

The internet is much more efficient, because at least the people typing the words into the search engine know about the product and have an interest in it, whereas, many watching on TV or reading a newspaper couldn't care less.

[dawn53]

Actually, IMHO, when google started "content advertising" they were setting themselves up for fraud (of course, you can turn off the "content advertising" feature if you're a google advertiser...which is the smartest thing to do.)

Why have google place your ad on a website where they "think" people will be interested when there is a financial incentive for the website to get "clicks" on that ad ?(they get half of the google fee.) Many advertisers don't realize that google is "content advertising" their keywords.