Can Click Fraud Create Opportunity? Exploring the Upside of Google’s Latest Settlement

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If you’re a Google AdWords advertiser, you should’ve received notice of settlement for click fraud claims. If you haven’t received this, check your spam filter–the sending e-mail address may be filtered as possible spam. Look for clicksettlement@xmr3.com.

So you’ve received and read the settlement notice, and perhaps even some of the outside news coverage. Now what? Well first, you’re going to have to decide which of the following three options you’re going to take:

1. Opt out of the settlement and try to make your own claim
2. Object to the current settlement being offered
3. Do nothing– in which case any claims for click fraud from January 2002 to May 2006 would fall under the terms of the settlement

Participating in the settlement, which is the default if you don’t respond, will entitle you to make claims for some of the $90M settlement, though it’s worth reading the fine print. Legal fees will come off the top, and the credits back to advertisers are likely to be pretty small.

Whether you decide to stay in, or opt out and make your own claims, you’re going to need historical data detailing possible click fraud along.

If You Do Nothing and Stay In

According to the settlement offer, companies who make claims against the current settlement will be able to request credits for ads going back through 2002. However, those who remain a member of the settlement give up the right to make future claims.

This gets even more interesting when you consider that the amount of a refund may not be appealing at all. Some reports calculate a possible $0.05 credit for every $1 spent on advertising. However, the wording in the settlement offer seems to indicate that the credit only applies to “affected ads”. From the Google notice:

“…For example, if the amounts that you paid to Google for the affected ads were 1% of Google’s revenues from online advertising since January 1, 2002, you would be eligible to receive 1% of the total available credits. You must certify in your claim form the percentage of your ads you believe were affected by “click fraud”…”

If the credit only applies to the amount you claim that you spent on the “affected ads” (i.e., the fraudulent clicks), you would get less than $0.0045 for every $1.00 you paid for fraudulent clicks–it’s a little tricky mathematically, so we’ve put together a concrete example for you in the side bar example. Regardless of which interpretation you choose, the amount of money you’d be refunded may not be worth the time.

3 COMMENTS

  1. Caveat Emptor – Let the Buyer Beware. Our CreditFederal.com network has on several occasions used Google’s AdWords/AdSense platform. Apparently; however, we are amongst the few who realize that a percentage of clicks will be fraudulent. It is amazing that so-called ‘Search Marketing Pros’ bid high-dollar values on keywords and are then astonished by the click-fraud. It’s just common sense… the higher you bid on keywords, the more likely you will be a victim of click-fraud and at greater loss. We absolutely do not condone click-fraud, but advertisers should have more common sense and expect a degree of fraudulent activity, particulary when paying $20 a click! One of the ways to deter or limit click-fraud loss is to deny ad delivery to ‘content matching’ web sites, which are affiliates of Google and the bulk of fraudulent activity. By denying ‘content matching’ sites, advertisers can get traffic directly via Google’s search results. If the product or service being advertised is not directed towards affiliates, we also suggest using Google’s ‘Negative’ keywords, and list words such as ‘affiliate’, ‘commission’, ‘revenue’, etc, so the ad will now show up if an affiliate is seeking; for example, a ‘credit card affiliate program’.

  2. Nice article that covers the topic well. I believe the issue of click fraud is a multidimensional problem that requires a multidimensional solution. One that encompasses open analytics, open relationships, education and community action. We have started an anti-click fraud community over at http://www.clicksentinel.com. We offer (among other things) free click fraud tracking software to community members. All the best.

  3. Interesting thoughts. Despite the fact that I suspect I have been a victim of click fraud, I have not yet done enough digging to validate my suspicions. And even if I do, will the time and effort be worth any credit I will recieve? I guess the best “next step” would be to start monitoring the now and moving forward. Here is a pretty good list of companies offering click fraud monitoring services http://www.advertisingopinions.com/f/43/. Though there are very few reivews.

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