Clicklab: Marketers Can Attack Click Fraud By Banning Users Who Block Cookies

Clicklab: Marketers Can Attack Click Fraud By Banning Users Who Block Cookies
By Wendy Davis
Tuesday, November 30, 2004

Advertisers who use pay-per-click marketing can move to protect themselves against fraud by monitoring basic facts about visits to their Web sites, such as the number of pages visited, the number of visits per Internet protocol address, and the geographic origin of visitors, according to a report released Monday by Clicklab, a Miami, Fla.-based Web analytics firm.

Clicklab also suggested that marketers go further than reviewing the data and actually blacklist certain Web visitors, such as those who block cookies. “Many marketers will tell you that . . . a user session without a cookie is a good cause for alarm. Others will say that it can’t be an accurate indicator because some privacy devotees do not accept cookies,” write authors Michael Block and Dmitri Eroshenko. “So, penalize or not? We think you should.”

By early next year, Clicklab intends to sell a monitoring service to detect click fraud–which generally happens when either a competitor or a marketing affiliate clicks on a link, with no interest in the product.

But not everyone thinks that such monitoring by marketers will end click fraud. JupiterResearch Analyst Niki Scevak said that monitoring visits to Web sites can give marketers valuable information, but won’t stop fraud. Instead, he said, stamping out fraud rests with paid listings providers such as Google and Overture, as opposed to individual advertisers.

Search engines have a clear incentive to squelch fraud because in the long term, their revenue depends on advertisers’ willingness to pay for listings, said Scevak. What’s more, Google and Overture already monitor sites to determine whether an abnormal number of clicks stem from the same Internet protocol address.

The extent of online click fraud remains unknown, but Google was concerned enough to mention the problem in a recent Securities and Exchange Commission filing that stated: “If we fail to detect click-through fraud, we could lose the confidence of our advertisers, thereby causing our business to suffer.” Google also noted in the report that it “regularly refunded revenue that our advertisers have paid to us and that was later attributed to click-through fraud.”

Earlier this month, Google filed a lawsuit relating to click fraud against the Houston-based company Auctions Expert International, which had participated in Google’s AdSense program. In the complaint, filed in Santa Clara County Superior Court in California, Google accused Auctions Expert of violating its AdSense contract by “artificially and/or fraudulently generating ad clicks.”

The AdSense agreement provided that Auctions Expert received a share of pay-per-click revenue when Web visitors clicked on certain ads on the Auctions Expert page. The lawsuit provides no details about how Auctions Expert allegedly caused clicks on those ads.

Google stated in an e-mail: “We are vigilant in protecting our advertisers and the integrity of our programs. We have sophisticated technology that detects and eliminates fraud. This lawsuit against Auctions Expert demonstrates the success of our anti-fraud system and that we will take legal action when appropriate.”