The 10% solution
Google announced that it was settling a class-action lawsuit over alleged click-fraud for $90 million. Click fraud is one of the dirty little secrets of advertising model-based online commerce. It is what it sounds like it is--fake clicks. Who would do such a dastardly thing, you ask? Competititors who want to increase ad costs and sometimes the hosting site themselves, because they get paid more for more clicks.
Google got off cheap, in my opinion. Experts say that at least 10% of click-throughs are fake. I suspect that number is closer to 20%. If advertisers understood how random this kind of thing was, they'd rebel against the pricing structure, which would hurt most of the big Internet companies, most of whom derive a substantial part of their revenue from click-throughs (Google's is close to 95%).
I predict that something better will come along and soon. This is a problem begging for a solution. With literally billions of dollars of ad money floating through these companies every quarter, effective ideas will be listened to.
Posted on March 09, 2006
