Hedger Goes After Google Again, Is It Warranted?

Jim Hedger is on the rampage again, hitting Google’s click fraud problem square in the face – or at least clipping its jaw. In his latest column on SiteProNews, he has this to say:

The true numbers likely sit somewhere in between but when it comes to understanding click fraud by the numbers, Google tends to play the numbers down. Though Google is the world’s largest repository of information and a publicly traded company running the largest advertising system online, it is amazingly secretive about its data. Google has gone as far as balking at pursuing any legal action against cyber-criminals if such action might expose their systems in open court.

Google’s claim that its click fraud problem amounts to only about .02% of its overall click fraud business is what Hedger is addressing. Pay-per-click industry watchers who follow the story on click fraud put the number closer to 15% to 20%. Hedger says somewhere in the middle and I’ll have to say I agree.

I don’t have any hard evidence to go on. Just my understanding of human nature. Google has an interest in seeing the number lower. Advertisers have an interest in seeing it higher. It’s the three sides to the story defense: Yours, mine and the truth. The truth is usually nowhere to be found to third-party bystanders by the clues, but you can bet it’s somewhere in between yours and mine. So that’s what I’m guessing.

Hedger’s column in direct response to Google’s Inside AdWords blog post on February 28, 2007, where Google makes its .02% claim. Hedger is absolutely right about one thing, which is painfully obvious so is no real science: Google doesn’t give us any hard evidence that suggests we should believe their claims. We should just take their word for it. That’s what they want.

I’ve really got to hand it to Hedger. He effectively breaks down the numbered wall Google has erected for security. He points out that Google’s $10.6 billion of revenue comes mostly from PPC revenue – $10.5 annual billion to be exact.

Assuming that the rate of known invalid clicks is about 10%, Google expunges about $1.05 billion in suspicious click activity each year. 1% of Google’s PPC activity equals approximately $105 million, similar to the number Shuman Ghosemajumder cites.

Next, he goes on to tell us how big the PPC fraud industry is:

We also know of pay per read and pay to click schemes working around the world. While we recognize the seriousness with which Google takes the issue of click fraud, we find it very difficult to believe Google has successfully disempowered a criminal industry known to be employing the resources of tens of thousands of people and tens of millions of computers.

Again, he makes a salient point and we applaud him. Google would have us believe that it has single-handedly brought the online criminal industry to its knees. Yeah, right. And the Bush Administration has defeated terrorism.

Hedger had me at hello. Then he drew his awful conclusion:

Has Google really cut the charges associated with Click Fraud to 0.02%? I have no idea. Neither does the next speculator. Nobody except Google is able to substantiate the number and given its historic reluctance to share any proprietary information, that is not likely to happen without intervention from the courts or from Congress.

The 0.02% claim is patently ridiculous and awfully fun to ridicule. In making it, Google is not lying but it is not telling the whole story either. Google does not provide nearly enough data to prove their case, asking advertisers to take them on their word and look at their ROI against other forms of mass-marketing for further guidance.

To be serious, Google flirts with monopolistic status in every field they become interested in. They run the world’s information like nobody else’s business. Google is bigger and more important than most levels of government. Everything they say has to be held to strict account.

Granted, no one except Google truly knows the extent of the click fraud problem and it will likely not come to light until the courts get involved. But can Hedger tell us which court has jurisdiction over the issue? Can U.S. courts prosecute click frauders from third world countries who never step foot inside its borders? While Hedger’s premise may be correct, there is a philosophical-legal hurdle to jump when it comes to where prosecution should occur. No one has proper jurisdiction over cyberspace and there is a legitimate question as to whether anybody should.

While Google may be bigger than most levels of government, it isn’t more important. Google doesn’t run the world’s information. It does have a lot of power over the information but Yahoo still get more daily traffic than Google. That must account for something. Still, Google is a power to be reckoned with and to some people it may seem as if Google is a government unto itself.

But it’s not. It’s a business. And like any business, the only people to whom it is accountable are its customers. In Google’s case, customers are the people who use it to search for information. As long as Google gets the search part of its business right then it is fulfilling its function. Pay-per-click advertisers support Google’s main efforts. If advertisers are not happy with the service they get from the advertising then they can quit advertising. It’s not like Google is pointing a gun to anyone’s head. They are simply providing an avenue of approach for people who seek to do business online. And it isn’t the only game in town.

My conclusion is that Hedger and others involved in the pay-per-click controversy are making much ado about nothing. In any industry there are bad apples and most industries are effective in getting rid of their bad apples. The ones that aren’t end up being country clubs for scoundrels and scalawags. That’s when customers start walking out the door. Good thing PPC hasn’t reached that point yet. I hope it never does.

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