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IN THE JANUARY ISSUE...
GOOGLE'S CLICK FRAUD RATE IS LESS THAN 2%
Andy Beal, Marketing Pilgrim, 12/11/06
UPDATE: Ghosemajumder has clarified that my assumptions of less than 2% should be based on “invalid clicks”, which means the actual number is more likely just a fraction of one percent!
Back in November, Google’s business product manager for trust and safety, Shuman Ghosemajumder, declared that click fraud invalid clicks at Google was “on average is in the single digits, quarter over quarter.” I recently sat down with Ghosemajumder to discuss exactly how large of a problem click fraud is at Google. Whether intentional or not, he gave me access to information and shared data never before seen outside of the walls of the Googleplex.
For those of you short on patience or time, here’s the revealing information gleaned from my conversation with Ghosemajumder:
The click fraud rate - as discovered by most AdWords advertisers - is on average, less than 2% of all clicks through Google’s system.
So why did Google break its silence to MarketingPilgrim.com on this touchy subject? How did we manage to get the real click fraud number out of Ghosemajumder? Read on.
Proof Google’s Click Fraud is Less than 2%
Ghosemajumder sat down with me during the recent Search Engine Strategies conference and went thru a PowerPoint presentation that he confirmed was previously shown only to employees of the world’s largest search engine. He explains how Google has a four-stage process in identifying and filtering what it calls “invalid clicks”. Google’s definition of invalid clicks includes non-fraudulent clicks (such as a visitor genuinely clicking an AdWords ad more than once) and “click fraud” (those clicks that are obviously not legitimate).
Ghosemajumder shared with me the following diagram* which explains the makeup of Google’s AdWords clicks.
As you can see, out of all clicks on the AdWords network, Google is able to filter out the majority of invalid clicks before reports a served to the advertiser. You’ll notice a small amount of “click fraud” that falls outside of Google’s invalid clicks filters. That small amount represents the click fraud often discovered by advertisers, through the AdWords console, and click fraud detection companies.
Here’s where it gets interesting. The blue “invalid clicks” circle you see above, represents the “single digits” number Ghosemajumder previously shared in November. By deduction, we can already estimate the actual percentage of click fraud that escapes Google’s rigorous filters and detection systems is barely 1-2%. However, Ghosemajumder then proceeded to share another graphic that more clearly describes Google’s filters and appears to confirm that undetected click fraud is less than 2%.
Google’s Four Layers of Click Fraud Filters
Google utilizes four layers of click fraud detection. The first layer is purely automatic and is used to filter clicks from both “search” and AdSense partners (contextual ads). This filter is able to detect invalid clicks in real-time, with the goal of removing them before they ever show up in the AdWords console.
The second and third layers are aimed at filtering only AdSense clicks. The second layer is what Google calls its “flagging system” and is an automatic process to remove invalid clicks from the AdWords system. The third layer of filtering is a “manual review” process with more than two dozen Google employees manually reviewing and removing any suspicious clicks.
Google’s goal is to have the first three layers of filtering identify 100% of all invalid and fraudulent clicks. Those clicks that manage to escape Google’s filters are what causes many advertisers to raise concerns and has spawned the growth of many so-called click fraud detection companies. The fourth layer of click fraud detection falls to these advertisers and detection companies and is what Google calls “requested investigations”.
Here’s a representation* of the slide shared by Ghosemajumder.
Ghosemajumder confirmed that the blocks representing each layer of filtering were to scale and that the internal version of the graphic includes the actual percentages. After studying the graphic, I asked Ghosemajumder to comment on my perception of the numbers each block represented.
If Ghosemajumder had already confirmed the total amount of invalid clicks represented a number in the “single digits”, which I assumed would be around the 8-9% mark, the amount of user-detected “requested investigations” looked to be a number in the 1-2% mark, at most. While Ghosemajumder would not reveal the exact number, he did confirm that my estimate was on track, “if not less”. Wow! A user-detected click fraud rate of less than 2% is a world away from the 20% number given by some click fraud detection companies.
This is an amazing revelation and clearly shows that Google is getting tired of speculation and rumor filling the void left by the lack of transparency Google has with regards to their click fraud numbers. Ghosemajumder confirmed that internal discussion are ongoing as to whether Google should reveal exact numbers and put an end to the inflated estimates often quoted, when discussing click fraud. The biggest reason Google has for being hesitant about revealing the exact numbers, is fear that Yahoo and Microsoft will be able to leverage the numbers to deduce more information about AdWords.
Not All Click Fraud is Click Fraud
So how does Google explain the 15-30% click fraud numbers that have surfaced over the past several months? Ghosemajumder described how they monitor hundreds and hundreds of different signals in its efforts to detect click fraud. These identifiers are a strictly guarded secret with only the “click quality” teams having access to the information. Many advertisers – and click fraud detection companies – are looking at the wrong signals and often class valid clicks as fraudulent, or request refunds for clicks that Google had already discounted.
He gave a number of examples of how valid clicks could be misidentified. One included an advertiser seeing many clicks from the same IP address and surmising they must be fraudulent. Ghosemajumder described how many of these types of clicks are indeed valid, with so many people using corporate computers sharing the same IP, or ISPs assigning the same IP to more than one customer. Another common example of how click-fraud detection companies get it wrong is when counting reloads of an advertisers landing page. He described how a customer could click through to the landing page, view a product page, and then hit their “back” button, returning to the same landing page. Without correct tagging, Ghosemajumder said that one click and five page re-loads could easily be mislabeled as six clicks from the same visitor.
Google Becoming More Transparent
There is no doubt that we’ll see Google becoming more and more transparent in its efforts to share click fraud information. They have no reason to keep quiet for much longer, as Ghosemajumder explained. Google is already filtering more than 98% of invalid clicks, before they show-up in the AdWords console, their goal is to filter 100% and suggestions they are not doing enough are misguiding in their eyes.
GOOGLE SET TO EXPAND NEWSPAPER AD PROGRAM
Sara Kehaulani Goo, The Washington Post, 12/27/06
For some of the nation's newspapers, Google's offer was too good to pass up.
This fall, the search-engine company proposed to show how it could help newspapers sell print advertising to the hundreds of thousands of small merchants who buy Internet ads from Google. Advertisers would go online and bid on the excess ad inventory of daily newspapers, giving them a much-needed revenue boost.
Now, two months into a test with 100 advertisers and 66 newspapers, Google executives say that its pilot program has exceeded their expectations and that they will roll out an expanded version in the coming months. The top five participating newspapers are getting several bids a week from advertisers, the company said.
"The volume [of ads sold] is tripling where we thought it would be," said Tom Phillips, director of print ads at Google. "I think we'll have real impact next year" on newspapers' bottom lines, he said. "We open the medium to a whole new class of advertisers."
But to hear newspaper executives and analysts tell it, the outlook is more cautious. They said Google has brought in new advertisers, such as small companies outside their distribution areas looking to build more awareness for their products. But Google's online ad technology is so new that it remains unclear how much it will help newspapers, they said.
Todd Haskell, vice president of business development at the New York Times Co., which is participating, said that the product has the potential to drum up new business from small advertisers but that the Times does not foresee letting go of its direct relationships with its largest advertisers.
"We think it's a wonderful way to introduce advertisers to the New York Times and print overall," Haskell said. Once the program gets going, he added, "we'd look to up-sell and migrate those [smaller advertisers] to bigger programs and better positions [in the paper] and move them out of the Google system. And we've been very upfront with Google about that."
Google's newspaper project is part of its larger effort to transform advertising in traditional media. The company has launched a similar test selling ads on dozens of radio stations across the country. It also has experimented with ad sales for magazines, though after a couple of unsuccessful tries, the company indicated that the program was on the back burner. Google is also interested in selling TV ads.
In some ways, what Google is trying to do is similar to what other ad brokers and agencies have done for years -- buy unsold ad space in newspapers and resell it to last-minute buyers. In the newspaper experiment, for example, Google is selling only small display ads -- not color or full-page ads, which bring in the most money. In some cases, Google bundles a few small ads into one larger space. There is no indication to the reader that Google helped place the ad.
What differentiates Google is its large network of online advertisers, many of which have never purchased a newspaper ad but will be able to soon with one click. Most newspapers' ad sales teams have focused on their biggest and highest-paying customers in recent years, and Google's experience suggests that small advertisers could prove valuable, too, if their volume is high enough.
"Newspapers have priced a lot of small advertisers out of the newspaper," said John Morton, a newspaper industry analyst. Google's plan "might be a way to bring them in," he said. "But it's early. We just don't know how much or for sure whether it's going to work."
Google's online system allows advertisers to choose the newspaper and the section, such as Food or Sports or Business, and where they want the ad to run, and then place a bid for that space for a particular day or series of days. The newspaper reviews the bids online and decides which, if any, to accept.
Ed Peterson, executive vice president of sales and marketing for Intelius, a Web company in Bellevue, Wash., said his firm is placing ads through the program and has been pleased with the results. The company, which offers background checks for companies and consumers, has grown its business primarily using online advertising with Google. It sees newspapers as a way to expand further.
"They've taken the print world and allowed us to manage it in an Internet way," Peterson said. His firm is running several ads a week in the Seattle Times, the Chicago Tribune, the San Jose Mercury News and the New York Times. It is planning to run ads in The Washington Post, which also is participating.
The tricky part, he said, is that it has been a little more difficult to gauge the effectiveness of newspaper ads than Internet ads, which invite people to click on them. "The great thing about the online world is you know immediately" how effective your ad is, Peterson said. But since the newspaper ads have run, he said, Intelius's call volume has gone up and its Web site visitors are buying more frequently. "For us, that points to effectiveness," he said. "You can do some basic math, and you can point to: 'I ran this ad in this region on this day, and how do our numbers look?' -- those kinds of things."
Google's test concludes at the end of January. After that, participating newspapers and Google will refine the program and decide how to go forward.
Owen Youngman, vice president of development at the Chicago Tribune, said Google's experiment has brought several new advertisers to his newspaper, although a few other Tribune Co.-owned papers haven't seen as much activity.
"We've been viewing it as a vehicle for small advertisers," Youngman said, calling it "an interesting research and development project."
For now, Google is taking no commission for brokering ad sales, though it intends to do so later. Such finer points of how a business relationship might work between newspapers and Google have yet to be worked out.
The participating newspapers and Google "have deferred the complicated negotiations," Youngman said.
WHO IS YAHOO'S NEW ALLY IN THE WAR AGAINST GOOGLE?
Chris Winfield, SEO Buzz Box, 12/13/06
Remember when Yahoo’s search engine was actually powered by Google? Those days are a distant memory and the bitter feud that we all saw coming now is an all out war. So what do you do in a war against a stronger opponent? You get allies. In the business world we call allies partners.
First it was Yahoo working with Microsoft to make their Instant Messengers interoperable. Then they formed a “strategic partnership to further expand their businesses in the U.S.” Now Yahoo is teaming up with IBM offering a new free enterprise search solution. Who is that other search engine company that offers an enterprise search solution? Google - with their Google Mini and Google Search Appliance products. The main difference between the Yahoo/IBM product and the Google is price. The Mini will cost you $1,995 and the GSA starts at $30,000 while Yahoo/IBM’s is free.
Perhaps Yahoo learned from Google that giving something away for free can work i.e. Gmail’s storage was more than Yahoo’s paid email product. Yahoo might have also learned from their recent mini-victory in the online answer department. Google was charging for answers - Yahoo was giving them away. The result: “Google Answers is no longer accepting questions.”
IBM is a powerhouse. Yahoo! is hurting right now. When you are hurting you align yourself with a stronger ally.
IBM’s existing search product, Omnifind, allows companies to search through internal documents. This new partnership will allow IBM to expand Omnifind to include related web searches powered by Yahoo!. They are going to give away a product called IBM’s OmniFind Yahoo edition (OYE).
“The free-to-download product offers basic search facilities using an interface already familiar to millions of Yahoo.com users. It will index up to 500,000 documents or web pages, supporting 200-plus document types and 30 different languages.”
One of the biggest selling points of the GSA has been the clean, slick Google look. This new product will have the same look as the Yahoo search interface - which is basically the same exact look as Google’s. The product is free but there will be add-ons and paid support upgrades but the question remains. For a similar product would you rather one that’s free or that costs $30,000+? Yahoo/IBM are betting they know the answer to this already.
BLOGGERS MUST DISCLOSE SPONSORED POSTS
Anick Jesdanun, Associated Press, 12/20/06
NEW YORK (AP) -- A company that helps advertisers connect with bloggers willing to write about their products for payment will now require disclosures amid criticism and a regulatory threat.
Before this week, advertisers were barred by PayPerPost Inc. from telling bloggers they can't disclose the sponsorship, but bloggers were able to decide on their own whether or not to do so. Under the new policy, bloggers must disclose that they are accepting payment, either in the write-up or in a general disclosure policy on the blogger's Web journal.
"Ever since we launched, there's been a lot of controversy about disclosure," said Ted Murphy, PayPerPost's chief executive.
Besides other bloggers questioning the ethics of receiving payments without disclosure, the Federal Trade Commission said in a Dec. 7 staff opinion that failure to disclose could, in some cases, violate consumer-protection laws on deception. The FTC did not single out PayPerPost or say whether it would launch any investigation.
David Sifry, founder of the blog search site Technorati, praised PayPerPost's move.
"Overall, this is an encouraging and long-awaited change," he said. "I think that people have learned that without trust, all posts become suspect. ... By encouraging honesty and transparency in sponsored posts, PayPerPost adds (some) clarity to the waters they muddied when they launched six months ago."
PayPerPost lets advertisers tell bloggers about word-of-mouth marketing opportunities such as a new gadget or shoe. Advertisers set a price of $5 or more per post, and willing bloggers respond. The better the price, the more quickly spots fill up. The Orlando, Fla., company brokers the payments.
Bloggers are free to trash products or write neutral reviews, but advertisers can specify whether they pay only for positive write-ups.
Advertisers include News Corp.'s Speed Channel and OfficeMax Inc., Murphy said.
PayPerPost may lose some advertisers with its new policy but believes the transparency will be better in the long term, Murphy said.
"Your bigger advertisers, clients that we really want to go after, the Fortune 500, the Fortune 1000, we saw they were requiring disclosure anyway," he said.