Nothing neutral about search fraud

According to Investors Business Daily, a new study by Click Forensics said that 14.2% of all clicks to paid search ads, or one of every seven ad clicks, are fraudulent. Google and Yahoo are disputing the study.

• Click Forensics CEO, Tom Cuthbert said: "Click fraud is getting more prevalent, easier to commit and more difficult to catch and identify."

It seems the dominant search gatekeepers, Google with 47% share and Yahoo with 28% share, have a serious integrity issue at the heart of the search engine advertising business model.

• What is particulary problematic here is that while Google and Yahoo represent themselves as working for the consumer, most all of their revenues come from advertisers, who according to this study, are being ripped off on one out of seven ad clicks.
• Since Google and Yahoo's business model is click driven, they actually profit handsomely from this pervasive fraud. It would be as if a retailer charged you for an extra purchase that you did not receive. What a deal -- buy seven and get six!
• What do you think would be the response if one out of every seven credit card transactions were fraudulent? How much trust would there be in e-commerce?
• The article also reports that Google and Yahoo have paid out millions of dollars in legal settlements with their advertisers.
• It appears to be cheaper to pay off those that complain than fix the systematic fraud that these companies benefit from.
• To put this in perspective, if one in seven clicks are fraudulent, about $1b of Google's $7b in 2006 annual revenue is from illicit activity. In other words, close to half of Google's profits may be from click fraud.
• But click fraud is not the only fraud that is affecting the integrity of the search results that consumers believe are neutral and accurate.
• The Washington Post today had an article "Google Moves to disarm Search bombs" and had an interesting comment:
•  "Despite the growth of fake results, Google was inititially reluctant to intervene claiming that most relevant results could still be found."
• In other words, Google's attitude was what's the big deal if some of our search results are "fake" -- Google still gets paid. 
• The New York Times also wrote today that Google has "neutralized" a "favored online tactic to neutralize the President." 
• Interesting that the NYT used the verb "neutralize" in describing Google.
• In my post last Friday I connected the dots of several Google actions that highlighted that Google was not neutral.

It's the height of hypocrisy that companies that tolerate pervasive fraud of advertisers and the public in their every day business, are so pervasive that one out of seven ad clicks fraudulently bias search results -- are leading the call for net neutrality to address the POTENTIAL for future discrimination.

• The unmitigated gall of dominant search gatekeepers who profit directly from rampant fraud, to ask for special protection from broadband competitors under the guise of "neutrality!"
• Google and Yahoo should get their own houses in order before attacking broadband businesses who have not done anything wrong.