Update: Google says click-fraud figures inflated

Google has published a report concluding that click-fraud incidence is lower than some auditing firms estimate.

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The 17-page document, prepared by Google engineers, is titled "How Fictitious Clicks Occur in Third-Party Click Fraud Audit Reports" and states that some methods commonly used to measure click fraud are flawed.

The study, published Tuesday, was prompted by concerns that click-fraud estimates of between 14 percent and 35 percent are causing among Google advertisers, some of which in turn are reducing their ad spending, the report states.

The most serious auditing problem detected by Google engineers is something they call "fictitious clicks," which involves supposed clicks on Google ads that never happened. "As an example, a single AdWords click may appear as five events in some reports, leading to the identification of these events as 'click fraud', and the reporting of five fraudulent clicks," the report reads.

Click fraud occurs when someone clicks on a pay-per-click ad with a malicious intent. For example, a company official may click on competitors' ads to increase the rival's ad spending. Or a publisher may click on his Web site's ads to increase his commissions. In either case, the advertiser is paying for a click that will not yield a legitimate business lead.

Click fraud is a big problem for the search advertising industry, and in particular for Google, whose revenue comes almost entirely from pay-per-click ads. Google recently settled for $90 million a class-action lawsuit brought against it by advertisers claiming click-fraud damages. However, several hundred advertisers opted out of the settlement and retained their right to sue Google separately in the future.

Fictitious clicks are detected as a result of counting Web page reloads on an advertiser's site as multiple clicks on its Google ad. These reloads can occur for various reasons, like when a user browses deeply into the advertiser's Web site and then hits the back button until reaching the original landing page, the report states. It can also happen if users hit the reload button on their browser while on the landing page, or if they open a new browser window, thus reloading the landing page.

Fictitious clicks can also occur due to what the Google engineers call "conflation across advertisers and ad networks." This refers to the counting of one advertiser's traffic in another advertiser's report, even if they are on different ad networks.

Having detected these problems, Google now wants to work more closely with these auditing firms, to help them reach more accurate estimates, the report states. So far, Google's attempts to collaborate with them have generally been met with deaf ears.

"These two problems are serious, and have resulted in significant inflation of click fraud estimates from each of the click fraud auditing firms we examined," the report reads.

Google singles out three auditing firms -- ClickFacts, Click Forensics, and MordComm's AdWatcher -- in the report as using flawed methodologies and approaches to identifying click fraud on behalf of Google advertisers.

ClickFacts Chief Strategy Officer Mikhail Ledvich said that Google correctly identified flaws in the report from his company included in the study. That report, from February, was done while ClickFacts' system was still in beta, or test, mode, he said. The system has since been fixed its system to avoid counting "fictitious clicks," he said.

Google's statement that it wants to work more closely with companies such as ClickFacts is very encouraging, he said. "We're very excited about that. This is a step in the right direction," Ledvich said.