While Google’s AdWords
program does have a process for click fraud refunds, “the protocol is
changing by the week,” according to Scott Boyenger, CEO of Click
Defense. “When you’re bringing in a billion dollars a quarter, you’re
going to protect that nut.”
Advertising is far and away Google’s main source of revenue. The company
reported revenue of $1.256 billion in the first quarter, including $462
million in traffic acquisition costs that it shares with its partners.
With Google’s service, and others like it, advertisers guarantee a
certain payment for each time a user clicks on an ad. Higher payments
win more prominent placement in response to a keyword search. The
average cost per click is $0.50, though individual payments for some
keywords top $100, according to the lawsuit.
Cottage industries of strategy and abuse have emerged around
pay-per-click ads. Rival businesses that want to decimate their
competitors’ ad budgets, as well as ad-hosting sites that get a cut of
Google’s revenue, use software and cheap labor to ratchet up
advertisers’ payments. Around 20 percent of clicks are fraudulent,
according to Click Defense.
Fort Collins, Colorado-based Click Defense analyzes the sources of
clicks on its customers’ ads to find patterns that might indicate fraud.
It cobbles together its tracking data without the help of Google’s
closely held records.
But Google knows, or should know, about instances of click fraud,
charges the suit, which was filed by the Los Angeles law firm Kabateck
Brown Kellner. It accused the Mountain View, California, search giant of
breach of contract, negligence, unfair enrichment, and unfair business
practices on behalf of all AdWords’ customers in the last five years.
Mr. Boyenger said his goal in filing the suit was to make Google open
its AdWords records to third-party auditing and establish a formal
process for click fraud complaints. As an AdWords advertiser, Click
Defense counts itself among the plaintiffs deserving damages.
In February, a similar class action suit was filed in Arkansas against
Yahoo, Time Warner (AOL), Ask Jeeves, Disney, Lycos, LookSmart, and
FindWhat, in addition to Google. The class would include all customers
of all eight search engines’ advertising services.
After some confusion about whether the appropriate venue was in state or
district court, the case is expected to continue in Arkansas state
Upon hearing of the Click Defense lawsuit, the Arkansas plaintiffs’
lawyer, Joel Fineberg, was skeptical, saying it seemed redundant. “Our
case is substantially broader in that there are more parties involved,”
he said. “We will be able to address many more individuals and
Kabateck Brown Kellner declined to comment on the merits of their case
versus the one in Arkansas. The suit’s jurisdiction would extend
throughout the United States due to the large sum sought and the
residence of the plaintiffs in other states.
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Education - Click Fraud