According to class material, Web search was initially supposed to only help users find relevant and useful pages. However, due to the exponential growth of the Web, it is impossible to prevent search engines from turning into profitable money-making machines. For search sites like Google, this industry makes up most of its revenue.

To increase effectiveness, search engines use key-word based advertising; advertisers pay for results based on certain queries specific to their businesses. These ads are based on a cost-per-click model, where advertisers only pay when users click on their ads. Prices can range from $0.60 per click to over $50. These costs are determined by an auction procedure called Generalized Second Price auction, since sites have multiple slots for paid ads but these are valued at different prices.

Since this business is so lucrative and competitive, there will naturally be those who try to take advantage. These fraudulent clicks, which increase a Web publisher’s advertising revenue and “drain” a competing advertiser’s budget, are becoming more frequent. Interestingly, the larger search engines rebuff data that about these clicks. The following article describes the new partnership between one of the major search engines, Yahoo!, and a click-fraud auditing firm, Click Forensics. There have been tensions between Click Forensics and other search engines due to accusations that these search engines underestimate the frequency of fraudulent clicks. According to the firm, the overall click-fraud rate for the online advertising industry in the last quarter of 2007 was 16.6%, up from 14.2% a year ago. In terms of contextual advertising, Click Forensics estimated the volume to be 28.3%, a sharp increase from 10.2% in 2006.

Part of this increase comes from botnets, which are PCs that are infected with software. These number in the millions and are programmed to flood certain sites with clicks. The leader in search and advertising, Google, has repeatedly rejected these claims. Google already offers free clicks for the 10% of their clicks that are “questionable”, and state that fraudulent clicks number far less than that.

There is obviously a conflict in information because Google claims that Click Forensics has access to only 1% of their data, certainly not enough to make accurate reports, while Click Forensics believes their network of more than 4000 advertisers validates their information. Withholding of data between advertisers and search sites is the norm. Larger search engines like Google and Yahoo! avoid sharing this information with advertisers directly, because this would only lead to more fraud while advertisers want to prevent compromising their users’ privacy as well as high advertising rates. Nonetheless, Yahoo! believes their partnership will help reduce their own number of fraudulent clicks, which they estimate to be 12-15%.

http://www.forbes.com/technology/2008/03/17/click-fraud-yahoo-tech-security-cx_ag_0317click.html?boxes=relstories