This ad hijacking, which the Adometry Malware Lab has tracked across many ad networks and publishers, employs malware that integrates itself into the rootkit of a computer via an ad impression or a page visit. That’s right — no user clicking or downloading required.

The malware redirects searches through a labyrinth of ad networks and arbitrage companies — searchers may end up at their intended destination, but after going through arbitrage networks and forcing advertisers to pay for nothing, or they could end up at a site they didn’t care to visit, leaving advertisers charged for invalid clicks. The latter is especially devious when searchers end up on pages with video ads around premium content, which can (command) CPMs of $30 to $50.

In addition, the malware can be programmed to click on ads on certain publishers — even if the browser session is inactive. The malware can also direct a browser to pages with display ads but hid the pages in the background so users fail to see the impressions… But they still register and advertisers pay.

The scale of the fraud is difficult to calculate, however Adometry has determined by the frequency with which its Lab machines were infected that tens or hundreds of thousands of computers are likely infected and generating millions of invalid clicks and advertising impressions per month. So far Adometry has only found a single antivirus program able to identify and prevent the installation of the scam’s malware.

Not freaked out enough? Here’s a video of the malware in action that will give you the willies.

Click Forensics has bought Adometry and the conjoined company will go by Adometry. Originally focused on deterring click fraud across channels for search marketers, Click Forensics has been shoving its way into the display space. With the addition of Adometry’s technology, it has updated its cross-channel ad analytics suite for display, enabling all players in the space to manage audience verification, attribution and campaign optimization via a single platf0rm.

In addition to a redesigned reporting tool, the upgrade allows publishers to backfill requests with ads from other company clients and increase revenue through quality traffic. Traffic Advisors eliminates fraudulent clicks before a client’s budget is spent.

eZanga CEO Rich Kahn, an insightful Adotas contributor, notes that the company has spent $5 million on research and development for Traffic Advisors during the last five years. In addition, the company gets a second opinion by comparing data with traffic management pro Click Forensics.

First, though, the big fish: location-based moso (mobile social) network Foursquare brought home $20 million, with venture capital firm Andreessen Horowitz joining existing investors O’Reilly AlphaTech Ventures and Union Square Ventures. Notably, the Andreessen of Andreessen Horowitz is none other than Netscape cofounder Marc Andreessen, who told The New York Times he saw vast potential in the company’s service.

Already the moso network has close to 2 million members and 10,000 signups daily. Fourquare cofounder Dennis Crowley said the funds would go toward building up infrastructure, expanding staff and finding a bigger office. The company is now valued at $95 million.

Audience verifier Click Forensics’ wallet is $6 million heavier as it exited a Series C funding round led by Austin Ventures, with Sierra Ventures and Shasta Ventures also giving to the cause. The company will invest the funds in development and marketing of new offerings aimed at assisting brands and agencies verify audiences.

Finally, integrated search marketing demand-side platform Chango has believers in Metamorphic Ventures as well as existing investors such as iNovia Capital and Extreme Venture Partners, who helped raise $1.4 million in a Series A funding round. Taking seats on Chango’s board will be Metamorphic Managing Partner Lewis Gersh and angel investor Geoff Judge, who you might recall is cofounder of 24/7 Real Media. Chango scans display exchanges for new customers and retargets their recent search activity on the major search engines.

Because the web offers a more effective way for people to find what they’re looking for, low-hanging fruit like classifieds and yellow pages have moved very quickly to their online counterparts like eBay, CraigsList, and local search. But in areas like brand advertising, it’s a much different story.

Nielsen recently reported that time spent online ranks a very close second to time spent watching TV and far outpaces newspaper and radio consumption time. However, online ad spend ranks a distant fourth place behind these traditional advertising mediums mainly because brand advertisers have not felt comfortable moving their budgets online.

A big reason is the lack of transparency and trust. The equivalent of a TV or magazine branding advertisement in the online world is a display or banner ad. While the search ad market (CPC) has grown by leaps and bounds in the past decade, the display ad market (CPM) has lagged.

Brand advertisers are still uncertain about many aspects of online advertising. This uncertainty arises from concerns about transparency, which can be described in three parts:

Lack of Audience Verification: Online display advertising today still operates as a “black box.” Advertisers tell their agencies to reach a specific audience. Agencies utilize multiple channels (ad networks, DSPs, ad exchanges, direct publishers) to buy impressions and then report back to the advertiser when the impressions have been served.

Display advertisers, however, have no easy way to verify that they got what they paid for. They receive reports on click-through and/or conversion rates, but advertisers are provided with little information about where the ads were served, to whom, when, and in what context.

Brand Safety Concerns: Context is critically important for brand advertisers. A brand can be irreparably damaged if it becomes associated with inappropriate content.

In the offline world it is very easy to control the context in which a brand is viewed. Advertisers in The Wall Street Journal, for example, are comfortable with their ads appearing in a premier business publication, just as advertisers in Playboy magazine know exactly what they’re getting. There are no surprises.

But the online world is different. When ad inventory is offered for sale or re-sale through an exchange or ad network, there’s no telling in what context the ad will appear. Lots of content on the web today is user-generated (UGC) or blatantly inappropriate for major brands (e.g. adult oriented, hate speech).

Until brand advertisers can be assured that their brands are protected from appearing near inappropriate content, the flow of brand ad dollars online will remain a trickle.

Show Me the Money: Being able to measure the effectiveness of online display advertising is still a daunting and difficult task for brands. Many online marketers have been told that online ads are more measurable than offline because the click-through and conversion rates can be tracked to the one-hundredth percentage point and beyond.

While that’s helpful for direct marketers, brand advertisers are typically more concerned with the audiences viewing their ads. An advertiser in the U.S., for example, may find out that a banner was displayed one million times, but if 25% of those impressions were delivered in China and 15% of the impressions were “below the fold” (not viewed by a visitor) and 10% of the impressions were generated by bots or spiders, then fully one half of that ad spend was wasted.

Another challenge is determining whether the remaining half of the ad spend not wasted actually reached the target audience or just random web surfers.

The good news for brand advertisers is there are lots of companies developing new technologies and services designed to tackle these issues. There are at least a half a dozen companies focused solely on tracking and ensuring brand safety.

A few more are developing audience verification services and offerings to measure, monitor, and guarantee brand advertising effectiveness. But one thing is certain: until the online advertising community can solve these problems, brand advertisers will continue to hold back the billions of dollars they’re prepared to invest in display advertising.

The Search Quality Score, the latest function on Click Forensics platform, leverages the firm’s traffic monitoring tools — from determining what IPs are valid or invalid to the propensity for conversion — to instantly grade search queries on quality, thereby assisting clients in montetizing traffic, boosting click-through rates and improving feed management

“We’re essentially scoring one step earlier in the process,” said Click Forensics CEO Paul Pellman.

By giving a quality grade on an impression by impression basis, Search Quality Scores can help networks and pubs serve more relevant ads that and possibly increase the chances of a conversion.

Pellman sat down with me and expounded on the new feature:

According to Anchor Intelligence’s Traffic Quality 2009 report, attempted click fraud accounted for approximately one in every four clicks across Anchor’s network. The rate hovered between a low of 18.6% in the third quarter and 25.7% in fourth quarter. The invalid click rate hopped between 23.2% in the third quarter and 32.1% in the fourth.

Anchor attributed the increase in fourth-quarter fraud attempts to increased activity designed at taking advantage of increased holiday ad spend.

The largest sources for attempted click fraud across Anchor’s in 2009 Vietnam, U.S., Egypt, Canada and Australia. For fourth quarter, Egypt had the highest attempted click fraud rate at, 38.7%, closely followed by Australia at 38.4% and trailed by the U.S. at 29.8%.

However, Click Forensics found that while the industry average click fraud rate increased to 15.3% from 14.1% in the previous quarter, the rate decreased year over year — fourth quarter 2008 saw a rate of 17.1%. Fourth quarter 2009 actually recorded the lowest click fraud rate for the four years that Click Forensics has been tracking the data. The largest volumes of click fraud outside of North America included the Ukraine, Japan and the Czech Republic.

ADOTAS –

Social commerce company Bazaarvoice has added three new country managers: Marc Rusing, a former Google account manager, will be launching Bazaarvoice in Germany; Google veteran Joel Kremer will open doors in Benelux (Belgium, the Netherlands and Luxembourg); and Graham Jackson, formerly of Skinkers, will be heading up operations in Australia.

As Pandora seeks to build relationships with its ever-increasing roster of advertisers, Tim Leedom has been appointed to the newly created position of director of national account sales. Pandora has also promoted several team members to regional sales directors: Priscilla Valls is the new director of northeastern sales; Rob Thiel scoots into the position of central region sales; and Meaghan Kessman takes a seat as director of central region sales.

Adknowledge and its subsidiary MIVA have partnered with Click Forensics to use the company’s audience verification tools and online traffic quality management.

Tremor Media has added Carrie Hamerslag as a regional sales manager. Hamerslag was previously an online media sales executive with online video network Nabbr.com.

Qwik Media has added Victoria Hansen as vice president of affiliate marketing.

To prove it’s in tip-top shape, ebay’s AdCommerce platform — which offers sellers the option of buying pay-per-click ads on eBay.com or a partner site — received the equivalent of a physical from ImServices Group. AdCommerce has passed a third-party audit marking its compliance with the Interactive Advertising Bureau’s Click Measurement Guidelines. Pulse 360 became the first ad network to pass the IAB’s rigorous standards last week — clean clicks are what all the kids are into these days.

But a sparkling bill of health isn’t enough: in addition to the audit, eBay signed up with Click Forensics to filter out low-quality and fraudulent traffic for eBay advertisers and improve conversion rates for sellers on AdCommerce.

If I was a click fraud ring, I’d go looking somewhere else….

Vitrue, a social marketing company, has rolled out the Vitrue SRM (Social Relationship Manager), a web-based application suite that allows brands to more efficiently and effectively manage, schedule and automatically publish across Facebook and Twitter. Vitrue SRM is comprised of three components: Social Publisher, Social Planner and Social Insights. The Vitrue SRM is now available to a limited set of marketers by invitation only with a full public release slated for September. To request an invite, please visit http://srm.vitrue.com

Tribal Fusion, a digital marketing solutions company, has hired Sean Crawford as Senior Director of International Strategy & Operations. Crawford is joining Tribal Fusion to lead the company’s international business including the roll-out of new services and expansion. He joins Tribal Fusion with over ten years experience in the online, mobile and image technology businesses. He was most recently CEO of Design About Town, a graphic design and internet services specialist. Previously, he was Director of Business Development at Adzilla where he was responsible for building international partnerships. Prior to that, he was Director of Consumer Product Development at Orange in San Francisco, where he worked with the company’s international teams to develop several micro-content, social media, video, advertising and search services.

LookSmart, the search advertising network and management company, today announced the launch of Optimal Pricing: a new initiative to deliver better performance to search advertisers by segmenting and pricing traffic according to that traffic’s value. Optimal Pricing aggregates keyword search traffic on the LookSmart Advertiser Network, and classifies performance data so that the full spectrum of that traffic is priced appropriately according to traffic type, quality, and volume. The model relies on information about advertiser campaign objectives and network structure to provide each advertiser a chance to bid on the most valuable traffic at all price points.

Click Forensics unveiled a new traffic quality dashboard that helps ad networks and publishers more easily pinpoint good and bad online advertising traffic sources. A feature of the Click Forensics traffic quality management platform, the new Click Forensics dashboard is accessible via web browser and can be used to identify, filter and block traffic that shouldn’t be billed or paid for. Ad networks use the tool to determine which publishers are reliable traffic sources. Publishers can leverage the dashboard to monitor traffic quality from affiliates and sub-publisher sites so they can deliver better results for advertisers.

NearbyNow, a digital personal shopping service, has added another channel for retailers and brands to reach consumers with the launch of the NearbyNow iPhone platform. Following on the heels of its “Lucky at your Service” iPhone application built for Lucky magazine, NearbyNow developed a platform that allows retailers, brands, and media companies to tap into the exponentially growing number of consumers who are using iPhone apps for online and local shopping. Runner’s World and Seventeen, both leading magazine titles in their categories, are the first two titles to launch iPhone applications using the platform, with more titles to be announced in the coming months.