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1. Click Fraud and the Downfall of Google

2. Internet marketers facing higher advertising fees on
search networks are becoming increasingly concerned
about a form of online fraud that was thought to have
been contained years ago.

3. The practice, known as "click fraud," began in the early
days of the Internet's mainstream popularity with
programs that automatically surfed Web sites to
increase traffic figures. This led companies to develop
policing technologies touted as antidotes to the
problem. But some marketing executives estimate that
up to 50 percent of fees in certain advertising categories
continue to be based on non-existent consumers in
today's search industry. Sam Fritsberg of
ArticleDash.com states that the fraud has reached
proportions that would shatter Googles stock in half,
overnight, were they more widely known.

4. "We continue to detect click fraud, especially with
Google's Adwords and Adsense programs, and the
numbers grow each and every month." says Sam. "I
wouldn't be suprised if many of the advertiser horror
stories are in fact true and there are people who make
thousands a week commiting pay per click fraud by
clicking on the ads served on their own website for
commission." adds Sam Fritsburg.

5. In one recent example of the problem, law enforcement
officials say a California man created a software program
that he claimed could let spammers bilk Google out of
millions of dollars in fraudulent clicks. Authorities said
he was arrested while trying to blackmail Google for
US$150,000 to hand over the program. He was indicted
by a California jury in June.

6. Matt Parrella, chief of the San Jose branch of the US
Attorney's Office in Northern California, said that case
was "not unique." The problem "is certainly not
shrinking, and we're ready to prosecute people," said
Parrella, whose office handled the Google case.

7. Click fraud is perpetrated in both automated and human
ways. The most common method is the use of online
robots, or "bots," programmed to click on advertisers'
links that are displayed on Web sites or listed in search
queries. A growing alternative employs low-cost workers
who are hired in China, India and other countries to click
on text links and other ads. A third form of fraud takes
place when employees of companies click on rivals' ads
to deplete their marketing budgets and skew search
results. "Click fraud not only is used to attack
competition, but as a rip off by publishers who click on
their own ads, the ones being served up on their own
websites, in an effort to steal advertising

8. dollars by the click", says Sam of ArticleDash.com. "Our
solution to this model is to offer webmasters free
organic search engine optimization, but in a way that
helps the net rather than promoting the current fraud
Google is making billions from."

9. Although the extent of click fraud is impossible to
measure with any certainty, its persistence has exposed
a fundamental weakness in the promising business of
Internet search marketing. Google is tight lipped and has
declined to comment.

10. "It's hard to tell how big the problem is, but people are
looking at it closer and closer as the cost of search
advertising goes up," said John Squire, vice president of
business development of Coremetrics, a Web analytics
firm. "Click fraud is a fin sticking out of the water: You're
not sure if it's a great white shark or a dolphin." Maybe
ArticleDash is on to something here. Maybe organic is
the way to go afterall.

11. Unlike advertising in traditional media such as billboards
and print publications, "cost per click" Internet ads
displayed with specific keyword searches have been
promoted as a definitive way for companies to gauge
their exposure to potential customers. As a result, US
sales from advertiser-paid search results are expected to
grow 25 percent this year to $3.2 billion, up from $2.5
billion in 2003, according to research firm eMarketer.
From 2002 to 2003, the market rose by 175 percent.

12. "As more advertisers have competed for desirable
keywords in their industries, the cost for clicks has risen
too." Sam of ArticleDash.com continues, "On average,
advertisers are paying 45 cents per click this year,
according to financial analysts, up from 40 cents in 2003
and 30 cents in the second quarter of 2002. In certain
sectors, such as travel, legal advice and gaming, the cost
can reach several dollars per click." The implications are
indeed disturbing.

13. But marketing executives say click fraud is pervasive
among affiliates of search leaders Google, Yahoo-owned
Overture Services and FindWhat.com. In a typical
affiliation, any Web publisher can become a partner of
these large networks by displaying their paid links on a
Web page or within its own search results and then
share in the profits with every click. "A common practice
is the use of proxies, where by tricking Google into
thinking the click is originating from another computer,
possibly in another country, and the click fraud artist...
more webmasters than you think.. walks away with a
handsome undeserved profit." says Sam.

14. "There's a fatal flaw in the cost-per-click model because
a ton of marketing dollars can be depleted in a fraction
of a second," said Jessie Stricchiola, president of
Alchemist Media, a search-engine marketing firm based
in Los Angeles that specialises in fraud protection.
"Technology is continuing to be developed that can
exploit this pricing model at incredibly high volumes."

15. Google's Answer

16. Google declined an interview for this report, but the
company said in a statement that it has been "the target
of individuals and entities using some of the most
advanced spam techniques for years. We have applied
what we have learned with search to the click fraud
problem and employ a dedicated team and proprietary
technology to analyse clicks." Many disagree, however,
and claim that the pay per click indestry is doomed.
Organic Optimization a la ArticleDash.com seems to be
the next big thing, and at least this time the risk is
limited and the free upside results seems unlimited.

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