Posted on 03/09/2006 2:10:24 AM PST by 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/
Sounds like you have good reason to be suspicious.
Maybe they need some kind of periodic user signup where you have a set of letters and numbers that only the human brain can decipher before the user can exercise the click-through advertising options. (Sometimes my feeble brain has a hard time deciphering those images, I have to admit.)
But of course that only penalizes Google by creating less traffic for their advertiser fees, so they won't do that. The existing system penalizes the poor advertiser, so that's ok.
I've never seen that before.
It's almost so farcical to be believed.
YIKES is all I can say.
(The part about 'there is no absolute truth' is astounding, in my opinion. Heck, it's ALL astounding, now that I think about it)
Just about anything that is left-oriented. Political ads, especially.
FReepers, correct me if I'm wrong, but I think when you do a Google search, the ads that show up along the right side of the browswer window are paid ads (sponsored links). So I think if you did searches for political information, you'd be likely to see some. I Googled "DNC" and got ads for Itsez and dontblamemeivoted4kerry
Wait a minute. That is too sweeping a generalization. The existing system penalizes poor advertisers, for sure. But it also penalizes small advertisers looking for narrowly targeted, low traffic keywords.
| In an Internet marketer’s message board, an affiliate marketer told of complaining to Google about a competitor costing him thousands by artificially raising ‘click-through rates’ using a ‘hitbot’ program. An “unsurprisingly incompetent customer service rep” told the marketer that an investigation would take three weeks. Three months have passed with no word from Google. The marketer continues: “It is obvious that Google doesn't care about click fraud or its customers.” |
I meant 'poor' advertiser as in unfortunate advertiser. It was a tongue-in-cheek comment.
http://www.thestandard.com.hk/news_detail.asp?pp_cat=17&art_id=13808&sid=6985596&con_type=1
Google to pay up in `click fraud' lawsuit
1. Competitor click-fraud is most prevalent on expensive key-words typically found in highly specific niches eg executive jet leasing, etc. There was a story a few months back where one company had to halt its $10k/mo Google advertising because it was so easy for their competitors to drain their budget.
2. Affiliate marketing (where your advertisement shows up on non-Google websites) is prone to click-fraud due to its very nature: marginal, unprofitable web sites have an incentive to execute click-bots so that they can take part in the 50/50 fee split.
It's a real long-term problem for Google/Yahoo, because any logic they put into the program to decipher trends/traffic patterns, IP addresses/locations, etc, can be easily defeated by increasing random click-bots.
We'll probably see affiliate marketing dry up, since that is the most prone to fraud; ads will return to the primary Google/Yahoo sites, where they will have to be monitored more closely for competitor click fraud.
bttt
Wrong
Good time to short this stock.
http://www.businessweek.com/ap/financialnews/D8G8B5S08.htm?campaign_id=apn_home_down&chan=db
Google Shares Dinged on $90M Settlement
P.S. Short Google!
However, using affiliate marketing and paying only for purchases referred makes sense.
Yes indeed it is.
CPA (cost per acquisition) isn't nearly as popular as CPC (cost per click) because it can't be abused. That is, the only reason so many marginal web sites signed up for the affiliate program in the first place was CPC. They know they won't get any CPA, but the ad impressions will still be up there on their web sites taking up space.
There is a fool-proof way to seperate them. THe one who actually buys something is the customer. I am deliberately being sarcastic. Sorry.
It is incredible how many companies bought into the idea that if their IRL company wasn't making money, that the internet would be their saving grace.
The Discovery Channel spent 10's of millions on their web site, being promised by some middle-management exec that it would pay itself back in a year.
When it didn't happen, he made the excuse that it was the programmers' fault. He kept his job and the programmers got dumped.
The way for a brick-and-mortar company to have a positive web experience is to use it as another means of advertising, not as a sales tool.
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