High-Priced Search Terms Vulnerable To Click Fraud - InformationWeek

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High-Priced Search Terms Vulnerable To Click Fraud

Click fraud is often used by competitors to drive up the online advertising costs of rivals. It's also used by some Web site operators to increase revenues.

The average click-fraud rate among search engines was up slightly in the second quarter, with high-priced search terms the most likely targets, an analytics firm said Monday.

The average click-fraud rate for the five industries studied was 14.1 percent in the quarter, compared with 13.7 percent for the first quarter, Click Forensics LLC said. The San Antonio company's Click Fraud Index for high-priced search terms was well above the average at 20.2.

The higher rate is an indication of the financial benefit of perpetrating click fraud against buyers of the highest-priced search terms, which Click Forensics classifies as those that cost $2 or more per click.

"Clearly, there's a financial incentive," Tom Cuthbert, president and chief executive of Click Forensics, said.

Click fraud is often used by competitors to drive up the online advertising costs of rivals. It's also used by some Web site operators to increase revenues. The activity is often automated through the use of computers.

The practice has caused tension between advertisers and publishers. Advertisers claim it's a bigger problem than search engines are willing to admit. Click Forensics hopes to establish itself as a neutral third party that can provide industry data to reconcile disagreements over reimbursements demanded by advertisers.

In its quarterly report, Click Forensics also found that so-called tier-one search engines, such as Google Inc. and Yahoo Inc., had the lowest click-fraud rate of 12.8 percent in the second quarter. The number, however, was higher than the 12.1 percent recorded in the previous quarter.

Tier-two and tier-three search providers had rates of 20.3 percent and 27.1 percent, respectively, in the second quarter. Those numbers were less than in the first quarter, when the rates were 21.3 percent for tier-two providers and 29.8 percent for the smaller companies.

The greatest percentage of click fraud, more than 88 percent, originated within the United States and Canada, Click Forensics said. Outside North America, the greatest amount came from within India, which saw a 26 percent increase in the second quarter.

The top key search terms in retail, financial services, health and fitness, technology and entertainment cost an average of $4.51 percent, down from $4.75 per click in the first quarter, the analytics firm said.

Click Forensics claims to have more than 1,300 advertisers and agencies contributing data and using its service. The company's network includes Fortune 500 companies and some of the largest retailers, travel sites, financial services firms and pharmaceutical companies, Click Forensics said.

Google, Yahoo and other search engines use their own technology to determine fraud. The practice has caused some resentment among advertisers, who usually don't have full access to publishers' technology and data, Cuthbert said.

"We feel the problem of click fraud will never be resolved unless there's an industry-wide solution," Cuthbert said. "Our view is that this is inevitable."

The tension between search engines and advertisers has led to legal action. In March, Google reached a $90 million settlement in an Arkansas lawsuit filed by online gift company Lane's Gifts & Collectibles and Caulfield Investigations, a private investigation firm. The suit accused the search-engine giant of failing to reimburse advertisers for fraudulent clicks. The plaintiffs also sued Yahoo and America Online Inc., which is now called AOL.

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