Thank you for taking the time to answer a few of our questions, Tom. Please tell us a little about your background and how you got involved with pay-per-click advertising and click fraud, in particular.
Click Forensics is a spin-out-of a-web analytics firm, Optimal iQ. I co-founded OiQ in 2000 after spending many years in business with a marketing emphasis. As the son of a PhD EE, I grew up around computers and was a very early adopter of the Internet. My fascination grew when I realized that the web would be a terrific way to reach consumers. We began noticing anomalous click behavior back in 2002, and that was the genesis of the rating engine and algorithm that powers Click Forensics today.
In your expert opinion, how serious of a threat does click fraud pose to the pay-per-click advertising model?
I think ita��s as serious as the lack of accountability that in early days used to plague other advertising media, such as newspapers, radio and television. Those industries are now carefully watched and monitored on an ongoing basis by third-party monitoring services such as Nielsen and Arbitron. We are doing the same for the PPC industry, and ita��s helping to keep advertisers from losing faith in one of the best of the new advertising media.
Does click fraud affect bigger companies more than smaller ones? Are bigger companies more proactive in tracking and fighting click fraud because they have more at stake? Are search engines more willing to work with the bigger ones?
Click fraud does not discriminate based on the size of the company. There are really two things that make a company vulnerable to click fraud.
1) They buy higher-priced search terms. Because fraudsters can make more money per click on those terms, theya��re likely to target them more often.
2) The more terms a company buys, the more vulnerable they are to fraud because the sheer volume of exposure has increased.
Many bigger companies do meet the above-mentioned criteria, and they are spending an enormous amount of money on PPC ads. Therefore ita��s in their best interest to watch click fraud more closely.
I think search engines, like other media companies, tend to pay more attention to the large advertisers. After all, large advertisers account for 80 percent of the PPC revenue generated by search engines.
What is the process of getting refunds from search engines? If a search engine says a�?noa�? to your refund request, should you just give up or is there something else that can be done?
The search providers have a responsibility to their clients to ensure they get what they pay for. Our role is to take an independent view of the activity and provide that information to our clients. The more accurate and complete that data is, the greater likelihood that reconciliation will occur. That is our role in the eco-system, and we feel our efforts improve the industry and will help the growth of PPC advertising by fostering trust.
What are the legal repercussions for someone who commits click fraud? Do you think search engines will be more aggressive in pursuing legal action against violators? If they will, would it serve as a deterrent to potential fraudsters?
Some states have laws that have criminalized click fraud, and the government is beginning to take a closer look at it. We believe both search engines and the government need to take strong action against those who perpetrate fraud. This will help make fraudsters think twice about their actions.
Do you think that Googlea��s $90 million settlement was a move to please investors and brush off advertisers or do you think it had any real value for advertisers?
Ita��s hard to say. Lawsuits certainly have been inevitable given the secrecy around this industry. Advertisers continue to be deeply concerned about click fraud. The better solution for the future will be to create an environment of shared success and open communication. I think we all agree that this is needed for advertisers to feel comfortable.
I know you are involved with the Click Fraud Network and more recently the Click Quality Council. CQC was launched recently to attempt to come up with industry-wide standards for click fraud. Please tell us a bit more about this initiative.
The Click Quality Council was developed to help ensure that the voice of the advertising community is heard as industry click quality standards are developed. Through the CQC, advertisers will be able to voice their opinions on the development of standards to industry organizations like the IAB and SEMPO. This ensures that they are included in these important initiatives.
Do you work with any search engines? If so, which search engines have you managed to get on board so far? If not, why not?
We have reached out and had discussions on an ongoing basis with all major search engines since we started tackling the problem of click fraud. Some search engines have been more cooperative than others. The goal with the providers is to create a process so advertisers can reconcile bad clicks. We have built this and are working to implement it today. The precedent exists with traditional media, and it is inevitable it will occur here as well. The first provider to embrace this will have a competitive advantage in the marketplace.
Why should search engines take the findings of the Click Fraud Network and the Click Quality Council seriously? What are some of the incentives for major search providers to implement the suggested changes?
The Click Quality Council is made up of some of the biggest clients the search engines have. Search engines are operating in a $6 billion industry, and they no longer can afford not to listen to what their clients have to say. That is exactly why we decided to work with major advertisers rather than with search engines directly.
On the other hand, search engines do have to keep in mind that they are a part of a larger community. Each search engine has its own objectives in mind, but all of them need to remember a�?the rules of the gamea�? in this industry. The last thing Google, Yahoo!, or MSN wants to do is to appear uncooperative, especially on such a sensitive topic.
Can you share your opinion regarding each of the major search engines a�� Google, Yahoo!, and Microsoft a�� and their perspectives on click fraud? How easy or difficult is each one to work with? How willing are they to address the problem?
The fact that all three have joined the IAB Click Measurement Working Group is a step in the right direction. Through the first half of the year we kept hearing them say that click fraud is a�?immaterial.a�? Those days are over and the advertising community now has their attention. Each search engine has a different corporate culture, and of course each holds a different place in the market. I am encouraged, though, that all three now seem more receptive to solving the problem.
A lot of the members of the CQC are competitors. Why are they willing to share their data with the network?
It is true that companies like Avenue A | Razorfish and Agency.com are fierce competitors. However, all of them realize that click fraud is becoming a real threat to their business, and in order to combat this threat, the industry needs standards. The click fraud problem cannot be solved by one company. This realization makes them partners in the common struggle against click fraud.
At the Click Quality Council, we make every effort to ensure that their cooperation does not interfere with any companya��s individual goals.
It seems somewhat hypocritical on the part of search engines to strive towards elimination of fraudulent clicks and improvement of the traffic quality while offering such services as AdSense for Parked Domains. What is your position on this?
Parked domain traffic is always going to be a part of the economy. And yes, the quality of traffic from parked domains is usually lower than that from other sources. The important thing here is for advertisers to be aware of where the traffic is coming from and of the costs associated with that traffic. Search engines like Google have already made a step in the right direction by letting advertisers choose between contextual ads that appear in their search results and ads that are displayed on their partner websites.
ClickForensics is also offering its clients the ability to segregate traffic coming from parked domains, as well as calculating any costs associated with that traffic. We are ideally positioned to monitor such traffic because we can analyze larger quantities of data from multiple sources (as opposed to a single search engine which may have a limited amount of data and just one source for that data).
If you succeed in developing click fraud measurement standards, would advertisers even need third-party click fraud monitoring services? Or would third-party tools and search engines simply track and rank the same data?
Absolutely. Just like newspaper, radio and television, there will always be a need for third-party monitoring services for advertisers. Once standards are developed, third-party monitoring services like ours will play a key role in ensuring compliance by search engine providers.