Click fraud costs Google $1bn

[Cage Rattler]

Google on Thursday made public more information about the extent of click fraud on its ad network to further clarify what it says are misperceptions about the issue.

Loosely-defined, click fraud occurs when an internet ad is clicked upon for nefarious reasons, such as driving up a business competitor's ad costs.

The practice takes advantage of how internet advertisers pay a small fee to Google and other internet ad providers each time one of their ads is clicked upon.

Some click-fraud-fighting companies believe the practice is rampant, forces advertisers to pay an extra $16bn a year, and that up to half of all ad clicks are fraudulent.

But according to Google, in the worst cases, on average 10% of all ad clicks are invalid. Typically, the amount is in the low-single-digit percentages. Google bases that figure on the average number of invalid clicks that it catches, and as a result, doesn't charge customers for.

That amounts to about $1bn a year in payments Google could have collected, but chose not to, it said.

The amount of click fraud Google doesn't catch, but is brought to its attention by advertisers, represents less than 0.02% of the times an ad's clicked upon, according to Google.

The information Google released on Thursday does not present a complete picture. What's missing is the number of fraudulent clicks that Google doesn't catch. But what Google released on Thursday is the most complete picture to date the company has offered.

Google also said on Thursday it will introduce a number of new click-fraud-fighting measures in coming weeks and months. They include letting advertisers notify Google about specific internet addresses from where they suspect click-fraud attacks are emanating.

Other new click-fraud initiatives include providing advertisers with a resource centre to address questions and for Google to make available a standard way for advertisers and others to report click fraud.

[2003m2003]

Interesting, thanks for information. Does it say how many publisher ban per day/month?

[aluke]

Originally Posted by 2003m2003

Does it say how many publisher ban per day/month?

Now that would be interesting to know!

[Imran]

interesting, thanks for sharing this news..

[frisby]

Can we get also original link of news?

[enQuira]

Google is very careful when it talks about its publishers network. I have seen this in the animated tutorials in their adwords learning center. They don't mention MFAs when they talk about their content network, they cite the NY times, Aol, ...
so last thing they will disclose is their banned publishers.

[8everything]

Originally Posted by aluke

Now that would be interesting to know!

A lot of them (theres a few that post here ).

Thanks for the article. Interesting read.. I can't believe click fraud came out to cost them $1 billion, that's a lot.. I wonder if the number will just keep increasing in the futur.. google is definitely going to come up with tougher TOS...

[Anita]

It didn't really cost them $1 Billion ... that makes it sound like they would have made more money if the fraud didn't happen. Their truthfulness in recognizing the fraud and returning the money cost them the $1 Billion, not the fraud itself.

Anita

[MattKNC]

I have a customer who saw $1500 charged to his account in 20 minutes time a few years back. At that time Google didn't do anything about it, but today they seem a bit more eager (read: lawsuits) to step up their monitoring of the situation.

Google lost a good customer over this issue; likely thousands more kissed the company good-bye too.

[john_nyc]

based on that you wouldn't think that soooo many people would get banned for it!

[Briant]

The say that about 10% of clicks are not charged to the advertiser due to fraud. If an advertiser spends $1,000. He spends $1,000. If it took a total of 1000 clicks or 1,100 (i.e. 100 disregarded) doesn't necessary matter. Of course the advertiser may have put more money into Google sooner if their clicks exhausted sooner, but this is not a sure thing. My point is this may well have cost Google must less in lost revenue than this claims. Of course if the true click fraud rate is much higher (or if they still paid the publisher (not likely), all bets are off.

[Freewebspace]

But why Google is not worrying about $1 billion?

It think they should improve Google adsense technical side more so only they can prevent frauds only to a certain account!

[monsterclips]

It doesnt cost google anything its the advertisers using adwords
thats gets robed out of their money. When someone gets banned then the money gets paid back to the advertiser.

[oseymour]

Originally Posted by Freewebspace

But why Google is not worrying about $1 billion?

It think they should improve Google adsense technical side more so only they can prevent frauds only to a certain account!

who says there are not worried about it. they are losing advertisers every day. why do you think they are so quick to ban publishers.

[soniqhost.com]

There is more to the issue then just click fraud, google and yahoo and publishers can't even come to terms on what is considered a click. For example if some clicks on the ad by mistake is it still considered a click.

[tlainevool]

I think the key point to remember is this paragraph from you original post:

The information Google released on Thursday does not present a complete picture. What's missing is the number of fraudulent clicks that Google doesn't catch. But what Google released on Thursday is the most complete picture to date the company has offered.

Lot's of people are reporting this story as "Google says click fraud is 0.02%". This simply isn't true. Google simply reported what number of click they count as invalid. This says nothing about actual click fraud levels.

[w3bmaster]

They have from where to lose money but it's to bad that in this "war" there are colateral victims ... (honest publishers geting ban)

[mNote]

I think google makes so much more that they don't care about 1 billion...

[Reprobate]

Originally Posted by Cage Rattler

That amounts to about $1bn a year in payments Google could have collected, but chose not to, it said.

So it's not a loss, it's not imbibing an ill gotten gain.

You can't lose something you're never meant to have.