Do we have to fight Click Fraud? (yes)

I don’t know about you, but there are several blogs that I like to read to keep abreast of web/SEO/etc developments.  Amongst these, there is one that shouldn’t be missed: it is Stanford’s CS department blog. It has many assets: it is a blog written by a star team of researchers specialising in website algorithmics, and from which most Google, Yahoo (and others) brains emerge.  In short, their postings are always interesting and there’s no « useless-post-about-a-boring-life »… All this to say that, a few months ago, Bobji Mungamuru posted about a very interesting article in which he discusses about Click Fraud. The article was written in collaboration with several other people.

The article is very technical and uses arguments from the theory of games to reach this conclusion:  If we are an SEM actor, and we don’t combat click fraud, then a new competitor with a more aggressive filtering policy will pinch a significant share of the market quasi automatically.

I insist that this conclusion is reached after using a mathematical model to analyse contextual ads using bidding systems and the interactions between buyers, sellers and users.

This conclusion might seem trivial but it replies to something Eric Schmidt (for those of you living on another planet, he happens to be Google’s CEO) said in 2006: that the best response to click fraud is to leave it alone since the underlying economic system would restore the balance on its own. The idea being that if there are crooks, advertising space buyers take them into account and calculate their prices accordingly. As a result prices drop and the number of fraudsters drops also. So, in the worst case scenario the advertisers don’t end up spending more for their SEM positioning.

In short, this article shows that it was silly to say such a thing. One can notice that one of the authors of the article works for Google, so I hope that Eric Schmidt is not a bad loser. Moreover, Bobji Mungamuru provides a link to this very interesting book chapter.

PS:  By the way, Eric Schmidt explained that Google fights click fraud because: “the engineers find that fun”.