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Google loses $1 billion a year to click fraud

CBC News has <a href="http://www.cbc.ca/news/story/2007/03/02/tech-googleclickfraud-20070302.html" target="_blank">a piece about Google's AdWords program</a>. Ever since it was launched years ago, AdWords has faced criticism from many quarters, including advertisers asking for a clear picture of the effectiveness of their ads. <br /><br /> Now, Google is saying that it loses about $1 billion U.S. a year to "click fraud" or other invalid clickthroughs on its ad service.

CBC News has a piece about Google's AdWords program. Ever since it was launched years ago, AdWords has faced criticism from many quarters, including advertisers asking for a clear picture of the effectiveness of their ads.

Now, Google is saying that it loses about $1 billion U.S. a year to "click fraud" or other invalid clickthroughs on its ad service.

In case you are not aware, Google's AdWords service allows advertisers to pay Google a fee to display their ads on paticipating Web sites. The fees payable are based on the number of clicks that an ad receives, of which site operators receive a commission.

However, special software can be used to click an ad repeatedly to inflate a rival's advertising cost or to fraudulently boast a site operator's own revenue.

According to Shuman Ghosemajumder, Google's business product manager for trust and safety:

Our invalid clicks rate — the activity rate — has remained in the range of less than 10 percent of all clicks every quarter since we launched AdWords in 2002. At Google's current revenue rate, every percentage point of invalid clicks we throw out represents over $100 million [U.S.] per year in potential revenue foregone.

To protect its advertisers, Google uses various way to detect and sieve out invalid clicks. Google does not charge its advertisers, nor pay site owners, for invalid clicks.

I was just pondering this... if the clicks are invalid (aka fraudulent), then it is hardly a loss, since Google doesn't pay for that either, correct?

What is your opinion on AdSense and Web advertising in general?

About

Paul Mah is a writer and blogger who lives in Singapore, where he has worked for a number of years in various capacities within the IT industry. Paul enjoys tinkering with tech gadgets, smartphones, and networking devices.

4 comments
pierdkk
pierdkk

I dont think they are loosing any MONEY at all.Every webmaster knows that you dont know how much you will earn from 1 click,sometimes 1 click 1 cent,sometimes 10 cent and sometimes 10 dollar. First Google must make their system reliable,forexample smartprice=low rate clicks.It happens to lots of webmaster and you earn 1-2 cents per click and you dont know how much Google is earning!!!

paulmah
paulmah

What is your opinion on AdSense and web advertising in general?

Inkling
Inkling

to keep their customers happy. They aren't "losing" money to the false clicks. The small commission they are paying the website is being paid, by Google, out of what their customers are paying them for each click. Even if the commission paid to the website is 50%, that's still an extra $1bn in Google's pocket thanks to false clicks. Blah, blah, blah, blah...

DadsPad
DadsPad

when they give missing sales losses. When it was figured that X amount of people would have bought CD's and only sold Y amount, that was lower, it must be due to people copying the CD not their sales at fault. It seems just playing with numbers to fool investors that revenue is really higher than it is.