Google Sued Over 'Click Fraud' in Adwords

On June 24, 2005, a lawsuit was filed against Google for alleged click fraud on the Adwords pay-per-click program. The Plaintiff, Click Defense, claims Google failed to enact appropriate measures to guard against fraudulent clicks resulting in unwarranted marketing fees. Click Defense claims it has lost over $5 million to click fraud.

Click Fraud

“Click fraud” is a term with a unique meaning on the Internet. It refers to the deliberate clicking of pay-per-click advertisements by users that have no intent of actually making a purchase. It is common knowledge that unethical companies will set up click centers oversees where individuals are paid nominal wages to click on certain ads. Alternatively, companies will use programs called “click bots” that automatically search out ads and do the same thing. The end result, of course, is a bevy of clicks that drain advertising budgets.

Google claims it takes appropriate precautionary measures. This claim, however, is often met with a snicker since the sole source of revenues for Google is advertising. This causes an inherent conflict of interest since Google needs to maximize clicks to generate revenues. As a publicly traded company, Google is under pressure to continually show increased profits. Taking all of this into account, one must wonder how hard Google works to limit fraudulent clicks. If you have used the “content search” aspect of Google Adwords, the incredible poor conversion rates certainly must raise doubts in your mind.

Click Fraud Percentages

Neither Google, Overture nor any other search engine has been willing to publish click fraud rates for their paid advertising program. Hints have been provided regarding a rate of 20 percent. Active advertisers know, however, the percentages can be much higher depending on the competitiveness of the keywords in question. Click Defense, the Plaintiff in the lawsuit, is claiming a click fraud rate of 38 percent.

Will This Impact PPC?

The lawsuit against Google was inevitable. Every site using Adwords is aware of the problem with click fraud. Frankly, it is a problem with every pay-per-click search engine although our experience has been better with Overture.

So, will this lawsuit force the search engines to clean up their act? It’s hard to say, but there should be one definite benefit. As part of the lawsuit, Google may be forced to reveal the true click fraud percentages occurring in Adwords. If Google moves to quickly settle the case, you should take it as an indication it wants to keep the rates confidential. This, of course, will mean the click fraud percentages are high.

You should watch the progress of this lawsuit if you use pay-per-click search engines to promote your site. Some very interesting information should be revealed. Regardless of the outcome, click fraud is just another reason to pursue search engine optimization strategies.

Halstatt Pires is with MarketingTitan.com- an Internet marketing and advertising company. To read more marketing articles, visit MarketingTitan.com.