Posted on 06/30/2005 9:13:32 AM PDT by CHARLITE
SAN FRANCISCO (Reuters) - A seller of online marketing tools said on Wednesday it sued Google Inc., charging that the Web search giant has failed to protect users of its advertising program from "click fraud," costing them at least $5 million. Click Defense Inc. filed its lawsuit, which also seeks class action status, on June 24 in U.S. District Court in San Jose, California.
Click fraud is not "fraud" as defined under the law. Rather, it is an industry term used to describe the deliberate clicking on Web search ads by users with no plans to do business with the advertiser. Rival companies might employ people or machines to do this because the advertiser has to pay the Web search provider for each click.
Users of Google's popular Web search advertising program pay a set amount -- varying from pennies to well over $1 -- for each click, though in rare instances, the payment is as much as $95.
Click fraud can run up thousands of dollars in advertiser costs or benefit a Web site operator that gets a cut of advertising revenue from Internet search providers.
"We believe the suit is without merit and we will defend ourselves against it vigorously," a Google spokesman said.
Google, which had first-quarter net revenue of $1.3 billion, makes virtually all of its money from search ads.
The company, whose stock earlier this week briefly topped $300 after debuting at $85 in August, has previously said that click fraud is not material to its results and that it has technology and teams working to prevent it.
Google (GOOG.O: Quote, Profile, Research) and its top rival, Yahoo Inc. (YHOO.O: Quote, Profile, Research) , have declined to say what percentage of clicks would fall under click fraud. The figure most cited by independent firms that track the practice is around 20 percent.
Scott Boyenger, chief executive of Colorado-based Click Defense, said in an e-mail that his company's tracking system has detected click fraud rates of as high as 38 percent. The company sells software to prevent click fraud.
Google and Yahoo, which is not named in the lawsuit, let advertisers set per-click pricing by allowing them to bid on key words that launch ads when Web users enter matching search queries.
For example, when Web users type "laptop computer" into Google.com, they will see search results as well as a section of ads from laptop makers or sellers.
Google has said it credits advertisers who have fallen prey to click fraud, but Click Defense charges that the company has not done enough to warn advertisers about the risks it presents or to protect them against it.
Click Defense, which advertises on Google.com, is among a new crop of companies that aim to help identify and stop click fraud. Its rivals include Alchemist Media and ClickDetective.
Digital marketing companies aQuantive Inc. (AQNT.O: Quote, Profile, Research) and DoubleClick Inc. (DCLK.O: Quote, Profile, Research) also have units that help advertisers tackle click fraud.
What exactly happens? How is a "payment" made?
Does the offending site steal through a paypal account? Does the user agree somehow to a transaction - implicitly?
confused.
Sorry.
I don't know if this is the same case, but I believe it's the Sokolove lawyer who placed the ads and is now suing Google. Heh. You can get sued doing business with lawyers...
Basically, they store bids on the keyword and then funds an amount into the keyword "bank". Each time the link is clicked, the bidded amount is removed until the balance is 0. The problem is a company that is a rival could have people click on the link and run down the funds quickly and cause a large payout.
I run banner ads on eBay for my eBay sales and hate been hit with this by other eBay sellers. Sue? HAHA! Just the thought of some old sour-puss sitting there going clicketyclicketyclickclickclick to make himself feel good is enough of a hoot that I don't miss the 18 cents or so they cost me before they get bored!
I believe that Google allows advertisers to set various limits on how much they will pay, both for a single click and for total amounts that an advertiser wants to spend. If so, then I don't see what leg these advertisers really have to stand on in suing Google.
Hopefully you affixed said business reply mail to a box full of bricks or lead pigs or something equally valuable to the recipient?
Abbie Hoffman said to paste those cards to a brick, then mail em! An early attempt at anti spam.
I don't know about suing, but Google needs to address this, and implement a way to prevent it. It is their system, and therefore their responsibility to prevent fraud, IMHO.
Keep in mind this is not in Google's interest since it will take away revenue, but if Google does not do it, advertisers like myself may not use them.
Why should we pay for 35 clicks from the same IP address within a minute or so, or even spread out over a few minutes.
If this suit forces implementation of a prevention scheme, then I will support it.
Regards,
Joe
No dog in this, as I don't do any Web advertsing, and rarely click on ads...but I DO participate in online polls.
Nearly all of them prevent multiple voting from the same computer. Wouldn't it be rather easy for Google to apply the same solution? That would allow legitimate "window shopping" and comparison, while defeating the 'fraud'.
You would think, but then that wouldn't bring in as much revenue now would it.
They do have some things in place, but from our end, it is somewhat difficult to analyze the real from the deliberate.
I believe that Google allows advertisers to set various limits on how much they will pay, both for a single click and for total amounts that an advertiser wants to spend. If so, then I don't see what leg these advertisers really have to stand on in suing Google.Well, if I have a website and I set a quota of $5.00 in payouts per day on a keyword that's going for $.10 per click, then my competitor could click on the ad 50 times and my ad would not be displayed anywhere on Google for the rest of the day.
dang....they got ahold of the Freeper playbook
Indeed, you are correct.
After reading another post that brought up the same point, though, it still didn't seem to me that Google is responsible for such behavior. Google offers such limits, which protect you from suffering too much loss; or you can elect to establish larger limits that might be damaging to your business.
While I believe that Google tries in good faith to limit the number of identifiable bad clicks (which should be easy enough for utterly amateurish behavior), I don't see how it could be Google's responsibility to do such perfectly since I don't believe that there is a perfect way to identify such bad clicks. I still think the advertiser has to take the risk that some of this goes on.
Does anyone else find it unseemly that a company that sells software to detect click fraud (and would LOVE to have Google buy that software, no doubt) claims to be a victim here and is suing.
I have to laugh at this trend, though, because I do it myself. Those lawfirms that troll for asbestos victims pay big bucks for "sponsored links" on Google. Just for fun, I run searches for mesothelioma, and click on the law firm links that pop up. I bet that on some of my good days, I can cost the lawyers about what they charge per hour.
We made the mistake of selling our previous home to a lawyer and got sued for supposedly not disclosing information about the pool. THEY failed to get the proper inspection during the correct time period before finalizing the sale. Needless to say, we won the case. But we still had to deal with the court costs.
Sounds like fun. Can they catch us?
While I believe that Google tries in good faith to limit the number of identifiable bad clicks (which should be easy enough for utterly amateurish behavior), I don't see how it could be Google's responsibility to do such perfectly since I don't believe that there is a perfect way to identify such bad clicks. I still think the advertiser has to take the risk that some of this goes on.Yes, I agree. I don't know what kind of anti-click-fraud measures Google takes, but I can't see how they could rationally argue that Google should be held liable for it when it happens.
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