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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.

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