Google, Yahoo! et al take aim at click fraud

After numerous class-action lawsuits and criticism from advertisers, the major web search companies finally announced on Wednesday plans to work together with two industry groups to quantify click fraud.

Click fraud occurs when online ads are intentionally clicked on, either by websites which get paid for hosting the ads or by companies trying to deplete the ad budgets of rivals so they can buy the search keywords themselves and steal the business.

The Interactive Advertising Bureau (IAB) and the non-profit Media Rating Council said they are teaming up with Ask.com, Google, LookSmart, Microsoft, Yahoo! and others to form the Click Measurement Working Group.

The group's mission is to establish guidelines for what constitutes valid clicks and invalid clicks on ads. Guidelines can help the industry measure how prevalent click fraud really is. Third-parties which sell click-fraud combating services to advertisers claim click fraud rates are as high as 30 per cent. Google and Yahoo! counter that click fraud rates are minimal.

The IAB said the guidelines will outline an industry-driven auditing and certification recommendation for search engines, online ad networks, third-party ad servers and other companies that make money from clicks. For example, Google's pay-per-click ad system requires advertisers to pay a fee each time one of their online ads is clicked.

IAB chief Greg Stuart couldn't give a time frame for when guidelines might be set but said the group is hoping to hold its first meeting by the end of this month.

Stuart said: "It took us 14 months to do impression guidelines," referring to industry work that relates to audience measurement for online banner and display ads.

Shuman Ghosemajumder, Google's business product manager for trust and safety said: "We've been working to improve transparency about invalid clicks for our advertisers, and we're pleased to join an industry-wide effort with the same goal."

The newly formed group will "ensure that marketers of all sizes are provided the highest possible level of transparency around pay-per-click advertising," John Slade, senior director of Yahoo! Clickthrough Protection, said in a statement. Slade also said the guidelines "will be a game-changing step in measuring and fighting click fraud".

Brian Kabateck, an attorney who represents plaintiffs involved in lawsuits against Google, said he was "cautiously optimistic" when he heard about the new group. "Obviously, this is a significant issue that has to be addressed," he said.

Kabateck was one of a group of lawyers that challenged a $90m settlement Google reached to settle a click fraud class-action lawsuit. An Arkansas judge rejected that challenge last week. Kabateck said he would appeal that decision.

Clarence Briggs, chief executive of AIT, which has also sued Google over click fraud and plans to appeal the Arkansas ruling, was more sceptical.

Briggs said: "Do I think the fox should guard the hen house?" He further questioned if there can be "self-policing when all the incentive structure and the profit motive is there" for search engines to look the other way when it comes to click fraud.

Elinor Mills writes for CNET News.com