Friday, January 20, 2006

Google's way to tackle Click Fraud and Suspicious Click Patterns &

The search giant Google has always offered its many services for nothing, but the threat of click fraud may change the way it does business. Now the Mountain View company is mulling over some new plans:

* A Plan to use technology to detect suspicious click patterns
* Plan to explore new revenue streams like paid video downloads

I came across this story 'Clicking hell: the Google way to bankrupt' It goes like this:

John Carreras was once a contented Google advertiser. He used text adverts that appeared alongside searches to bring people to his trade exhibition website. He happily paid Google a few cents for every referral, believing that anyone who clicked through to his site from Google was a likely customer. But then he attended a conference in Las Vegas, and he noticed something strange: the number of Google referrals he was getting dropped dramatically, only to rise again once the conference was over.

Mr. Carreras became convinced the "missing clicks" were not from customers, but from his competitors, who had all been in Vegas along with him. He believed his unscrupulous rivals whiled away their office hours clicking on his Google ads, knowing that every tap cost him money.

If you add in a second kind of scam, where people earn themselves a little money from Google by clicking on ads they are hosting on their own sites, you can see the potential for malice. Click fraud, as it is called, is acknowledged by Google as a problem: last year, Google chief financial officer George Reyes described it as "the biggest threat to the internet economy."

While Google Labs, as the company calls its development division, turns out new products at a cracking pace, Google remains largely dependent on just one source of income: advertising. Google would never admit to being uneasy about that reliance. Why should it? Advertising is doubling the company's revenue every year, and is expected to generate almost $10 billion this year. But for all the undoubted strengths of its pay-per-click system, some worrying vulnerabilities have emerged. At the same time as it tries to combat click fraud, Google is preparing to add a second string to its money-making bow, by charging users for video downloads. It may not sound earth-shattering, but if it works, it could represent the start of chapter two in the Google story.

The problem of click fraud remains. Marissa Mayer, the company's vice-president of search products, calls it "a serious problem for us, but also a very solvable problem." In principle, the company will not charge its advertisers for clicks that are not from genuine potential customers. Typically, Google is hoping to use technology to detect suspicious click patterns.

For the Mountain View company, click fraud has the potential to become the kind of technological arms race that has been a drag on Microsoft in its battle against ever-changing security threats. Nobody knows the exact extent of it. Right now, advertisers are getting such a good return on their investment that it doesn't matter to them whether click fraud is 5 per cent or 30 per cent. But as Google advertising becomes more competitive and the level of fraud grows. There is no question that Google's ad system is still a runaway success, as Nick Mudge points out, a business idea does not have to be perfect or fool proof to work on the Internet. A business idea doesn't have to make total sense. It just has to be workable enough... Workable enough for people to take it up.

With click fraud on the radar, it is a good time for Google to explore new revenue streams. Previously, Google Video (http://video., unveiled in January last year, only offered a chance to upload and view uncopyrighted videos free - creating a jungle of thousands of weird, searchable amateur videos (try "party," "family" or "vacation" to get the flavour).

But Google is now signing up professional broadcasters, and soon users will be asked to pay for downloads. But how will users take to paying a company that has so far offered them so much for nothing? "It will be a new experience for them," admits Jennifer Feikin, director of Google Video.

Google's new interest in selling is a worrying trend for the likes of Amazon, but Mr. Battelle believes online retail is only the start of Google's commercial ambitions: "They are changing the economic presumptions of a number of industries. You can start to tick the boxes of all the information-driven, intellectual property-driven businesses in the world. And it's a very, very big bundle of businesses - the biggest bundle one can imagine."

So far, Google has remained tight-lipped about whether its video payment system will be the basis for other services.

Read more about these stories:
Clicking hell: the Google way to bankrupt your rival
[ January 20, 2006, The Sydney Morning Herald ]

Fraud nags at Google's grand strategy
[ Charles Miller, Thursday January 19, 2006, The Guardian ]

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