Ben Edelman's report on syndicated click fraud

I was privileged to meet and listen to Ben Edelman at the Affiliate Summit in Las Vegas in January 2006. His presentations are technical - where the audience needs to know what is a packet sniffer, for example. His recent report has made small waves in various online communities. He accuses Yahoo of being complicit in syndicated click fraud. He says:

In my August syndication fraud examples, an advertiser only pays Yahoo if a user clicks the advertiser's ad. Not so for three of today's examples. Here, spyware completely fakes a click -- causing Yahoo to charge an advertiser a "pay-per-click" fee, even though no user actually clicked on any pay-per-click link. This is "click fraud."
This document offer four fully-documented examples of improper ad displays (1, 2, 3, 4), including three separate examples showing click fraud. I then develop a taxonomy of the problem and suggest strategies for improvement.

Ben shows [quote]"video, screenshot, and packet log proof of how spyware vendors and advertisement syndicators defraud Yahoo's advertisers".[unquote]

Rivetting reading!

In Game of Click and Mouse, Advertisers Come Up Empty

Leslie Walker reported in the Washington Post last month:

Google has repeatedly pooh-poohed click fraud, contending that it is a minor annoyance that it has under control with automated detection technology. At a meeting with analysts two weeks ago, chief executive Eric Schmidt said click fraud "is not a material issue." Co-founder Sergey Brin said such cases amount to "a small fraction" of Google's ad clicks.
But six days later, Google surprised analysts when it agreed to settle an Arkansas class-action lawsuit by setting aside $90 million worth of ad credits to advertisers that can show invalid click charges dating to 2002.

The article is about Radiator.com whose click fraud auditor [quote] "ClickFacts Inc. estimated that 35 percent of the referrals that Radiator paid Google for stemmed from bogus traffic. Likewise, 17 percent of the leads that came from Yahoo search results were illegitimate." [unquote]

As reported in previous posts, click fraud thrives, as seen in the projects commissioned at the freelance sites, and it was probably very easy to perpetrate back in 2002. I look forward to hearing more reports of how bad it is in 2006. Would any click fraudsters care to comment?

Who wins from click fraud?

Jason Lee Miller has written an interesting article in WebProNews as a follow up to the class-action lawsuit filed by Lane's Gifts and Collectibles in Arkansas against Google. The plaintiffs' lawyers will apparently receive $30M! The preliminary settlement awards advertisers covered by the suit just 0.5%.

Click Fraud Less Than Expected

The average click-fraud rate across search-advertising industries is 13.7 percent, according to Click Forensics.

This is an interesting statistic and confirms my suspicion that the major PPCSEs are fairly good at keeping advertisers happy.

While you wait for them to ready their free click fraud detector, you can use the free click fraud service at Visitlab

Click fraud with only a $150 investment?

Here is an interesting customer looking for a programmer to build a click fraud tool (I think):

I need a VERy VERY strong/expert custom click fraud program. This program should work, undetectable and pure random.

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It would be a good project for someone working for Google AdWords/Yahoo Search Marketing or MSN AdCenter to monitor.