Experts say issue of click fraud not improving

InfoWorld - Companies like Google Inc. and Yahoo Inc. that control major online advertising networks have not met their pledge to aggressively ferret out click fraud among their affiliate partners, driving growth of the problem across the entire Web industry, according to new research estimates.

Click Forensics Inc. -- an independent click fraud monitoring and reporting service that markets itself as an online version of the TV industry's Nielsen ratings system -- released its latest statistics tracking Internet advertising trends on Friday. The group reported that the issue of fraudulent ad traffic continues to thrive on the Web.

According to the company, roughly 16.2% of all online ad clicks were derived via click fraud during the third quarter of 2007, compared to a rate of 13.8% for the same period during 2006, and up from 15.8% of all traffic during the second quarter of this year.

Even more concerning, Click Forensics leaders said, is the report's finding that the average rate of click fraud -- most often carried out by software programs designed to mimic legitimate traffic -- continues to rise on major search engine networks, including Google's AdSense and the Yahoo Publisher Network.

Fraudulent traffic accounted for 28.1% of all ad hits on such networks during the third quarter of 2007, compared to 25.6% for the second quarter of this year, and 21.9% for the first three months of the calendar, Click Forensics contends.

The research company also reported that more than 60% of all ad traffic coming from so-called parked domains -- typically used solely to funnel traffic to advertisers -- was observed as being fraudulent during the third quarter of 2007.

Click Forensics CEO Tom Cuthbert, said that as a result of the negative impact that click fraud is having on Web advertising as a whole -- in that it undermines the legitimacy of all Internet ad traffic -- both publishers and advertisers are feeling a pinch.

Ad publishers are seeing a diminishing of their network traffic quality, said Cuthbert, while advertisers are seeing their conversion rates "drop significantly" on content networks and are pulling back some of their spending as a result, he said.

"The issue of click fraud on these major networks is becoming a real problem for advertisers, and increasingly, they are choosing to stay away and look into other alternatives," Cuthbert said. "The big guys are not doing a better job of policing themselves; both Google and Yahoo have tools for advertisers to opt out of suspected click fraud sites, but the vast majority of advertisers are not doing so, and the tools are too hard to use."