What do YOU think about pay-per-click and click fraud?

Reader gregbo and I have been having a long discussion about click fraud and the viability of pay-per-click advertising in the comments to my posting Don't panic: what to do if Google suspends your AdSense account, but no one's bothered to jump into the discussion to offer their opinions. So I'm extracting the comments here and inviting others to post their followup comments. It's an interesting debate, one that I'm sure is happening internally at Google, Yahoo! and other pay-per-impression advertisers.

gregbo: Don't you think that it's ironic that what was supposed to be a simple
means of online advertising and publishing is turning into quite a
labor-intensive means of determining what is “illegitimate” web usage?

Eric Giguere: It is ironic, yes, but not unexpected if you think about it. My hope is that Google and other companies will continue to develop algorithms to automatically detect these things. Not that click fraud will go away completely, but perhaps it can be minimized and the detection can be mostly automated. Co-operating with Google (or other advertising services) and providing them with all the information you can helps them develop those algorithms.

Any kind of computer-based ad system is subject to attack in one form or another. Impression-based fraud is just as possible as click-based fraud. It may seem that click fraud is suddenly a problem, but that's only because companies like Google have managed to automate advertising delivery so much that the ads have reached the critical mass to attract fraudsters of all kind. In other words, I'm not convinced that pay-per-click advertising is doomed, because I'm sure fraud would hit whatever alternative would take its place.

gregbo: Yeah … I have always thought click fraud was inevitable. (Part of my interest in this topic is wondering whether Google thought it was inevitable.) Actually, click fraud has been a known problem since the birth of online performance-based advertising. However, I think the degree of fraud would be much less if fixed fees were used instead of performance (clicks, impressions, etc.). It would also scale better and be cheaper to administer at all ends (publisher, advertiser, SE). The only drawback I can think of is that people feel they're not getting any value if they pay up front for exposure but don't get clicks, etc.

Eric: I'm sure Google thought it was inevitable and planned to handle it somehow, though maybe the extent of the fraud has surprised them.

A fixed-fee approach doesn't solve the problem. Magazines and TV programs use that approach, but the rates are based on knowing how many readers/viewers the advertiser can reach. Counting that audience accurately is what led to the creation of things like the Audit Bureau of Circulation. You'd need some way to accurately measure traffic and reach in order to charge more, and fraudsters would just devote their energies to getting bogus traffic or otherwise gaming the system. The fraudsters follow the money, after all.

gregbo: I don't mean to suggest that fixed fees will solve the fraud problem completely. It is much more difficult to defraud the system using fixed fees; you have to compromise the servers that serve the ads, or the advertisers' accounts.

There is no reason that audiences for web sites can't be sampled the way they are for newspaper circulation, TV viewership, etc. The ad prices can be determined using circulation, or people can bid on price as they do now. The point is that the spend does not vary with traffic.

I would be surprised if Google did not think they would have as much click fraud as they do.

Eric: Maybe I'm just pessimistic, but I think fixed fees would just make the fraudsters shift gears to inflating the traffic rankings of the sites in question. Maybe that would be harder initially, but it could probably happen.

The difficulty in all of these things is that it's hard to accurately measure web traffic in general, especially when you're trying to identify unique visitors. Sampling will work well enough for large-traffic sites, but not for the small guys. I think Google's big innovation with pay-per-click was being able to open the advertising pool to small sites. These sites would probably not benefit from switching to a fixed-fee system, they'd probably be abandoned entirely. AdSense makes a lot of money from these sites, so I doubt Google is interested in abandoning them. I suspect they'll just keep working hard on the click fraud problem. Ultimately, it just may be that advertisers will have to factor in a certain amount of “wastage” in their ad plans, as I don't think all click fraud can be completely avoided. However, this is no different than what they have to swallow today with more traditional forms of advertising, including the fixed-fee system you're proposing…

gregbo: The fraudsters can't inflate the traffic rankings if the bid (or fixed fee) includes the ranking. It's not considered fraud if one pays more money to get a better ranking, similarly to how someone would pay more money to purchase something at an auction.

There are all sorts of tiny radio stations, magazines, etc. with small market penetration that seem to do ok with sampling. Plus, if these web sites are so little, how is it that they make so much money? How much money are the advertisers actually making from products advertised on the sites? Quite possibly, these sites have actual user populations that are larger than the actual user populations of the magazines, etc., which means an appropriately chosen sample could provide a reasonable indication of audience size. (But that's only if audience size is a factor in price; if advertisers bid for placement, they basically set the market, regardless of audience size.)

There's no reason for advertisers who pay fixed fees to abandon small sites. Why would they (assuming they're actually making money off of those sites)? Advertisers paid to reach tiny audiences that read computer hobbyist magazines way back in the 1970s, long before even the PC boom.

Don't you think that the degree of fraud that can be done via pay-per-performance advertising is far worse than through traditional advertising? Not that there are no problems with traditional advertising, but in my study of advertising models, I have never heard of anything that came anywhere close to the degree of fraud that can be perpretrated using pay-per-performance advertising. For example, it's far easier for someone to launch an attack on their rival causing them to be dropped from AdSense than it is for a traditional print publication to cause all of the advertisers to stop advertising in a rival's publication.

Eric: While the analogy with small radio stations and magazines works to some degree, it fails in some important respects. There are only a limited number of radio stations per market, since it's a regulated market. And there are a limited number of magazines. In contrast, there are hundreds of thousands of sites running PPC advertising.

The problem with PPC advertising when compared to traditional advertising is not the fact that it's PPC, in my opinion, but the fact that it's online advertising. Music piracy only became a huge issue when music went digital. Same deal here. We're still struggling to figure out the answer to the music question (I think part of it is charging less per song) and we're still struggling with the answer for online advertising piracy.

gregbo: Where Google went wrong, IMO, is that they didn't factor the economics of the Internet into their design of PPC advertising. They didn't take into account how easy it is to get Internet access, how easy it is to set up anonymous proxies, VPNs, etc., not to mention how easy it is to distribute malware that can be used to commit click fraud over a large number of computers.

But this isn't the first time Google has erred in this regard. Early in their existence, they made claims that PageRank was impervious to index spam, because no one could create a large enough link farm that could foil their anti-spam algorithms. They didn't take into account how easy it was to create web sites, and how for some queries, a link farm can be created that's approximately the same size and connectivity of an “organic” set of links. Basically, their algorithms could not discern the intent of linkers.

Regarding other media (radio, print, etc.), what is being sampled is the audience (the potential buyers of goods), not the media themselves. So it's not unreasonable to ask someone in a survey what web sites they usually visit, or the type of information they look for. If the vast majority of sites are never given as responses, this is not a flaw in the methodology. Also keep in mind that advertisers don't really need to know (from samples) how much to spend, because there is already some feedback present in the referrals they get from search queries or other sites that link to them. Thus, advertisers can bid for placement on search engines or publisher sites. If there is an issue with what the minimum bid should be, the web sites are hosted by ISPs who post the prices of bandwidth and disk space, so an advertiser can get a baseline figure of what costs the publisher bears. The marketplace will sort out the maximum bid prices.

Eric: Ah yes, the Doctrine of Google Infallibility is put into disrepute. Well, despite all the brain power at its disposal, there are times when Google will be wrong, and perhaps this indeed was one of them.

The problem is that their mission to boldy index where no one's indexed before can only be done by automated means, and of course that algorithmic approach pervades everything Google does, including its advertising. It seems to be necessary if you want to build truly complete indices. Look at the Yahoo! directory, the first successful attempt at categorizing the Web. It soon fell behind because the human editors simply couldn't keep up and they've had to resort to charging fees to get sites listed in their directory. While you can argue that it's the way they monetize their directory, it also serves nicely as a limiting mechanism to stem the flow of sites into the directory. The self-limiting nature of the directory can be adjusted at any time by raising or lowering the price of a listing, and without it the Yahoo! directory would sink under its own weight.

I doubt that surveying people as to what sites they visit will give you comprehensive sampling of the sites they truly visit. People forget the sites and they may also lie to avoid reporting certain surfing habits. This is why the TV guys moved to using technology to collect this information instead of relying on people writing things down. But surveying by automated means is as susceptible to being gamed as much as pay-per-click. What you're advocating is returning to the pre-Google days of advertising.

I don't have a real solution here. (If I did, I'd be out raising some venture capital money!) In the end I suspect the marketplace will settle on a combination of different advertising models. Maybe AdSense and AdBrite will be the two dominant programs, for example, and the advertisers can choose the one that gets them the best return.

gregbo: It is true that people can lie about what sites they visit, but there is no incentive to do so, particularly when the surveys are used to determine who will advertise where. If people really want to see their “free” content remain “free,” they will fill out the surveys as accurately as possible. As to people forgetting, true, this happens, but it is not a problem with the methodology. I could make an argument for software that randomly downloads people's browser caches to a collection site as input to survey data (and such software actually does exist), but due to the spread of adware, spyware, etc., people are much less likely to allow it on their systems (and businesses even less so).

To be honest, I'm not anti-technology; I just want to see technology appropriately used. For example, I don't think reasonable people, once things like an IP address, or an IP packet are explained to them, have trouble with the type of statistics that are kept on them by routers or hosts. There are benchmarks that are used to judge which network devices are better at processing packets, and people can have some confidence that the benchmarks are verifiable.

However, the situation is much less clear when talking about things like page impressions, or stickiness, or most of the other statistics that are used as input to determine how valuable a site is, what prices should be for ads placed on them, etc. You cannot measure that which is not communicated to you, and which is not available to be communicated. But an infrastructure has been built which measures other things (such as the request of a page from a server) and calls that an impression. Then, people start arguing about whether it was requested by a caching server, etc., without perhaps stopping to consider if a human being actually looked at the page (which is really the most critical issue).

To get an idea of where I'm coming from in general, read the section of the analog documentation on how the web works, and follow the links at the bottom of the page for further discussion. I'm sure most of this is pretty obvious to you; the problem is that it's not obvious to people who are empowered to make critical business decisions that once made, are difficult to change. With a carefully conceived architecture for describing events that take place on the web, it might be possible to fully automate the collection of those events in a reliable, secure manner that advertisers, publishers, and users of web sites could all agree on. However, we are nowhere near that today.

Eric: Presumably the guys at Google understand all of this!

I'd argue, in fact, that what you (and those pages) say about Web stats being meaningless actually strengthen the argument for pay-per-click (as opposed to pay-per-impression) advertising when the PPC is implemented the way AdSense does it — a dynamically-generated link inserted via JavaScript. A click on such an ad is much more meaningful, because there is almost a one-to-one correspondence between it and a human-initiated action. No proxies/caches fooling the stats. If there was no click fraud, it would almost be ideal. And it was like that at the beginning.

I just don't think people will fill out survey data accurately and in a meaningful enough quantity to be statistically significant. Not without being rewarded, and I don't think “free content” is the right reward.

gregbo: But there is click fraud, and it has to be factored into the architecture and design of collecting statistics and charging appropriately.

I probably shouldn't have brought up sampling. AFAIAC, people can bid on ad prices if they feel more comfortable doing so. The point is that after the final bid, they pay the fixed price for the time period the ad runs, not on a per-some-web-action basis.

Actually, very soon after online advertising appeared, click fraud occurred. I remember reading articles during the mid-1990s about sites that experienced click fraud and how this was causing people to lose faith in online advertising. Then the bubble began, and people started going gung-ho with online advertising despite the warnings. When the bubble burst, a lot of the online advertising activity subsided, but since Google (and Overture) have had success, it's heated up again.

Readers, what do you think?

Free AdSense book! Exclusive content previews!

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Is pay-per-click viable in the long term?

My posting Don't panic: what to do if Google suspends your AdSense account has started a long conversation between Greg S. and myself on the long-term viability of pay-per-click (or, as Greg more accurately puts it, pay-per-performance) advertising in the face of rampant click fraud. I'd love to hear what others have to say about it, especially any advertisers out there, the ones who ultimately pay for click fraud in the end.

Some people have argued that a certain level of click fraud is normal and that the prices in the system adjust themselves automatically to handle fraud. In other words, if it's “known” that 10% of clicks are fradulent, advertisers bid less on the keywords so they spend the same money. Some have even argued that not all click fraud is wasted money, since if the click fraud is committed by human means (in other words, someone is clicking ads) then the ads are still making a fleeting impression. (I can't see how automated click fraud can be seen as anything but fraud, though.)

Whether it's good for the advertisers or not, click fraud is not something I welcome myself. I now have to burn through $620 in chargebacks to my AdSense account due to click fraud before I see any further money from Google after this month's earnings cheque arrives. Google managed to shut the fraudsters down with the information they provided, but it still left me with a sour taste. But these are the things you face when you're running a business — and don't mistake it, you are running a business if you've got AdSense on your site.

Don't panic: what to do if Google suspends your AdSense account

Almost every day, regular readers of WebmasterWorld's AdSense forum see posts like this one railing against Google for arbitrarily suspending an AdSense publisher's account due to invalid clicks. One of my readers (who I won't identify) was recently in a similar position and asked for for advice on what to do. Here's my list of suggestions:

Many publishers who find themselves banned by Google complain that the banning is arbitrary and unfair. That may well be, but remember what you agreed to when you signed up for the AdSense program:

Google may at any time, in its sole discretion, terminate all or part of the Program, terminate this Agreement, or suspend or terminate the participation of any Site in all or part of the Program for any reason.AdSense Terms and Conditions

Google argues that immediately suspending an account when invalid clicks are detected is their way of protecting their advertisers from further fraud, and that part of the Terms and Conditions lets them do it without notice. This is why I've said before that AdSense publishers must be proactive in reporting click fraud and other irregularities to Google. Prevention is always the best cure.

The underlying commercial nature of the World Wide Web

In a recent blog entry about an advertising controversy on O'Reilly Media sites, Tim O'Reilly (publisher of many geek-adored books) talks about advertisers using links in ads to bump up the PageRank of their sites. While a commentator pointed out the obvious workaround is to not link directly to the advertiser's site but to go through a (non-indexed, no-PR) redirection script, underlying the controversy is a larger debate about the commercial nature of the Internet and the World Wide Web.

While I discuss this in some detail in chapter two of my book (in a section titled “Who Pays for the Web?”), the Web today is very different from what it was ten years ago. Those that advocate that the Web return to its non-commercial roots forget one thing: it costs real money to create and maintain Web sites and the associated Internet infrastructure. To quote Tim's blog entry:

Simply put, we pay O'Reilly Network contributors for content, and we pay our staff to develop and maintain the sites. The money to pay those people comes from advertisers. Readers get the content for free, and advertisers pay for the chance to get those readers' attention. It's expensive to create a quality website with original technology content… [emphasis added]

Obviously, not everyone is out on the Web to make a buck. Motivations vary from person to person, though in general I like to categorize them using one or more of the “Four F's”:

But even if you're doing it purely for fun or philanthropy, there are still costs to incur. Someone's got to pay to for the bandwidth, for the servers, for the infrastructure. The readers these days don't want to pay for the content they're reading, but TINSTAAFL — “there is no such thing as a free lunch” (a quote commonly attributed to economist Alvin Hansen). So most sites turn to advertising. (Or pay for things out of their own pockets, of course.) Hence the demand for advertising services like AdSense. The commercial nature of the Web may offend purists, but there's not much that can be done about it now. You might as well embrace it!

ScriptingMaster.com: New reader-built site

Another site from a Make Easy Money with Google reader: Rajwinder Singh is pleased to announce that ScriptingMaster.com is now live. It's a little rough around the edges still, but let's encourage Rajwinder on his new project!

AdSense E-Books

There are a number of “e-books” available on the Web with
more detailed or advanced information about AdSense. The two
most popular (and from what others have told me, the most
credible) e-books are:

Compared to Make Easy Money with Google (MEMWG), these e-books are
not cheap, but they're also aimed at a different audience. I know some of the reviews up on Amazon.com were expecting more “secrets” from MEMWG than what they got, but they probably bought the wrong book. (Aside: I would actually argue that there are no “AdSense secrets” anyhow, just hints and tips derived from experience, pretty much everything about AdSense can be derived directly or indirectly from the AdSense formula.) I'll leave it up to you to decide if they're worth buying or not, I can't really comment either way.

Finding Something to Say: Sample chapter from Make Easy Money with Google

Peachpit Press, publisher of my book Make Easy Money with Google, has just made Chapter 3 of the book available for free on their website. Titled Finding Something to Say, the chapter talks about:

You'll enjoy the discussion of the “Four F's” of publishing on the Web: fame, fortune, philanthropy, and fun. The chapter Finding Something to Say should give you a good feel for what my AdSense book is all about.

New AdSense feature: marking relevant (or irrelevant) content

One of the problems that AdSense publishers face is getting Google's crawlers to concentrate on the “right” part of a page in order to choose relevant advertisements. Things like navigation bars can sometimes throw off the relevancy, requiring layout tricks (typically using CSS to “push” the real content up to the top of the page when read by a browser) to ensure that the right ads are chosen. As it happens, Google's new content marking feature makes it easy to tell the AdSense crawler what parts of a page it should concentrate on. This is going to be a boon for pretty much every publisher, and it's really easy to implement — just add a couple of HTML comments to your page and you can immediately highlight the real content. You can also use the feature to hide content from the crawler without affecting the HTML. Check it out!

New AdSense features: more channels, more reports, optimized ad formats

Well, I was away on vacation last week but the busy bees at Google weren't slacking off. New features for AdSense publishers are now public:

You can read the official AdSense new feature announcement for more details. Let's keep those features coming!

Make Easy Money with Google reviewed on Blogcritics

There's a review of Make Easy Money with Google up on Blogcritics.

Inside AdSense: Google's official AdSense blog debuts

Since I'm on vacation this week, my postings are pretty sparse, but I thought it was important to inform my readers about Google's new blog, Inside AdSense. Run by the AdSense team, this blog will provide publishers with inside information about the AdSense program and whatever else the AdSense team wants to talk about. Be sure to check it out!

In the meantime, if you're a reader of Make Easy Money with Google, don't forget to post a review up on Amazon! I need some more 4-star or 5-star reviews :-)

Side-by-side ads: an AdSense trick

There's a debate going on right now on WebmasterWorld about using side-by-side ads with different colors. Interesting trick, the idea is that you place two or more ads side-by-side so that they look like they're one ad (albeit with two or more “Ads by Google” messages) but with different colors. The idea is to draw attention to one or more of the ads.

Proactively reporting possible AdSense click fraud to avoid getting kicked out of AdSense

Although I discussed click fraud quite extensively in my AdSense book, I don't think I spent enough time discussing click fraud warning signs and what to do about it. One of my readers just had his AdSense account suspended by Google due to click fraud and is trying to get re-instated. Now, I don't know the specifics of this person's earnings, but here are some things to be suspicious about:

The key thing with click fraud is to be proactive about reporting it to Google. If I suspect something, I tell Google about it and I do my best to stop the fraud from continuing, even if I have to shut down ads on certain pages for a while. While the AdSense terms and conditions don't require you to report possible click fraud, in my mind it's an implicit duty. If it doesn't look like you're helping to avoid the problem, Google may consider you to be part of the problem and shut you out of their program. No AdSense publisher wants to be suspended or terminated. Isn't it better to get the “all clear” from Google instead?

Not everyone's done it, you know!

If you haven't taken a look at the reviews of Make Easy Money with Google up on Amazon.com, follow the link and take a look now. It's interesting to see what others are saying about the book, though I wish I had a way to rebut some of them. For example, the latest review takes issue with the fact that my book describes in some detail how to go about getting a domain name and setting up a website. “Most of us have done that ages ago, so it's redundant” she says. But she's wrong. Yes, a lot of people have done that already. But most haven't, and most think it's hard, when it really isn't. If you don't believe me, try talking to a few average computer users. This is why I addressed these issues in the book.

Images above AdSense ads

One technique that's been gaining popularity lately is to strategically position images above an AdSense ad or link unit. See the Wolf-Howl blog for examples of this technique.

Some AdSense publishers go to great lengths to make their images blend quite well with the ads in order to deceive users into clicking on ads without realizing that they're ads. This is bad practice, of course, and the blog entry Images above ad units and complying with the AdSense terms has a good discussion of how it should be done in order to avoid displeasing Google.

Note, however, that Google keeps experimenting with different ad types and sometimes instead of showing a set of small text ads you'll see a single large text ad in one of those ad units, and those images you've lined up so nicely with the individual ads won't look as good anymore. You're still better off to focus your energies on writing good content, in my opinion.

Using AlternateURL.com to avoid Public Service Ads (PSAs)

Just the other day I received a notice from a new service called AlternateURL.com that offers advertisements that are specifically tailored to be used by AdSense publishers looking to replace Google's public service advertisements (PSAs).

I talk briefly about using the AdSense “alternate URL” feature in Make Easy Money with Google, but I don't spend a lot of time on it. Ideally, you should target your content carefully so that PSAs never show up. It may not be possible to do this, however, and in that case it makes sense to investigate alternate advertising services like this one to show paying ads instead of non-paying PSAs. Take a look at AlternateURL.com (or use this alternate link with no referral code embedded in it).

Oh the irony of it all: RAID corrupted by UPS power spike

My regular readers may have noticed that the MakeEasyMoneyWithGoogle.com (memwg.com) site was down for a couple of days. There was a problem with my hosting service. The techies should find this amusing: a UPS power spike corrupted the RAID array hosting memwg.com. For the non-techies, here's the English translation:

So, one of the two subsystems responsible for keeping the computer system running went and skewered the other, causing the whole thing to fail. It's one of those things that are funny in retrospect. At the time, of course, the people running the hosting service didn't find it very funny. At least my personal site was still up (it's on a different system).

This incident demonstrates it's good to use a hosting service. “Shit happens”, as the saying goes, and if you're using a hosting service then it's up to them to fix it. Spend your time on content, let others worry about the techie stuff.

By the way, if you're looking to get a .com domain name, GoDaddy is offering .com domains for $6.95 instead of the regular $8.95 per year. Just enter the coupon code “gdg0804b” when you get to the checkout. (No, I don't get any kickbacks for this, I just use GoDaddy myself.)

Fads for fame and profit

A couple of fad-related articles in today's Globe and Mail make for interesting reading. The first is the news that Atkins Nutritionals Inc. has filed for bankruptcy protection. The second is an article describing Sudoku as the 'crack-cocaine' of games. Both the Atkins diet and the Sudoku craze are good examples of recent fads (note that the article claims that Sudoku still has a few years left before it fades away) that have been profitable for many Internet entrepreneurs because of advertisers desiring to reach the people participating in those fads.

The trick with fads, however, is to get there early. The Internet is no different from other businesses in this regard, but the low startup costs and (relatively) small investment in time to get a website or blog going — especially if you're one of the early fans — make it less of a gamble than bringing a fad-related product to market. On the other hand, the ease with which you can setup a site or blog means you'll face that much more competition, which is why good search engine optimization techniques are going to be critical to the success of your venture — a lot of fad-related sites and blogs get found through search engine queries.

Do you think you see a fad coming over the horizon? Now's the time to get started on your website or blog — don't wait, it's too late once the fad reaches mainstream. Build today for tomorrow's (or next year's) hot topics!

Yahoo! Publisher Network now in beta

The Yahoo! Publisher Network (Y!PN), Yahoo!'s answer to Google's AdSense program, is officially in beta according to the following announcement:

Today, Yahoo! Publisher Network launched a new self-serve platform that will provide small- and medium-sized web publishers with easy access to Yahoo! advertising and content. We're very excited about our new offering, not only because it will enable a broader set of publishers to generate revenue from their sites, but also because it can offer publishers access to many of Yahoo!'s other products and properties.

The Yahoo! Publisher Network self-serve platform is currently available as an invitation-only beta. If you haven't received an invitation yet, please be assured that we will be extending additional invitations over the course of the coming weeks and months. Our goal is to learn from the feedback we receive during the initial beta period, refine the platform and add new features, then open the program up to the general publishing community before the end of the year.

I speculated about Y!PN back in March and it's going to be interesting to see how many AdSense publishers switch over to using Y!PN. You won't be able to use the two simultaneously on the same pages. It would be possible to run sites in parallel with the same content and use a different ad program on each site. The trick would be to do it so that you don't get penalized for duplicate content. You could use the robots.txt file on each site to exclude one of the search engines and maybe redirect the crawlers to the correct site. I'm sure someone is going to try this out and run some numbers to see which program works the best. With a book titled Make Easy Money with Google, though, I kind of have to stick with AdSense! I'm sure Google will work hard to keep AdSense competitive with Y!PN.

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