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Joel on AdSense

By - October 25, 2005

Joel Spolsky is a well known software guru, and the man can write, making him something of a hero for folks like me. But he rarely opines on Google. Today he takes on click fraud and spam blogs. Worth a read.

There might be a technical solution to this, although I can’t think of one offhand. The minute companies start cutting checks to “affiliates” at the end of the month that are based on nothing more than clicks, you’re bound to get the AllAdvantage phenomenon. AllAdvantage was probably one of the most spectacularly stupid business ideas to come out of the first Dot Com bubble: a company that paid you to look at ads. That’s because they fell victim to one of the better business ideas from the first Dot Com bubble: hiring armies of low-paid workers to look at AllAdvantage ads.

Eventually, it stops benefiting the advertiser, and the advertiser figures it out, and stops paying for the whole charade.

Google repeatedly says that clickfraud is not an issue, and we keep hearing from folks – advertisers, publishers, etc. – that it is. I wonder if this will ever go away?

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8 thoughts on “Joel on AdSense

  1. steve says:

    Can’t we humble observers take a guess at how big a problem click fraud is? To wit, take Google’s total traffic, divide by total clicks, and see if the click rate makes any kind of sense?

    Google’s revenues are about $1.5BN/quarter. They have publicly acknowledged (reluctantly, rarely) that their average revenue is $0.50/click. That would mean they are harvesting 3.0BN clicks per quarter. What’s their page view count? If the click rate is unnaturally high (even for a great search engine) then click fraud is the culprit. And I assume there are smarter, more fastidious folks out there who can parse the numbers less crudely than I have here.

    Also, in Web 1.0 page views and click rates were standard metrics for ad supported internet media companies. Interesting that Google never mentions them?

    Also, interesting that Google’s CFO sounded the alarm about click fraud back in Dec 2004… and literally has not been allowed to speak publicly since:

    http://money.cnn.com/2004/12/02/technology/google_fraud/?cnn=yes

  2. I disagree. The people that are claiming that clickfraud is a problem are more often than not the people who are trying to game AdSense vai clickfraud.

    I don’t know how many times, I’ve heard publishers claim they were the innocent bystander who’s AdSense account was closed. A quick search of their site and I can usually find them bragging that their CTR is 1000% or asking friends to click on ads or admitting they click their own ads.

  3. Nicholas says:

    Click fraud simply isn’t a problem. If it were, we’d be seeing huge bailouts of advertisers from online marketing. The truth is we are seeing the opposite.

    Why? Simple, pay-per-click advertising, even with all the click fraud in the world, works. You’re still getting tons of impressions for nothing, and the majority of those clicks are worth something (otherwise you’ll quit doing it and the price for that keyword will fall).

    The foul cries of click fraud would be the equivalent of complaining about consumers changing the channel or flipping past TV, radio, and print ads. “Hey, I paid for x number of people to see that ad and Joe just changed the channel.” It happens, but the worth of the people who are interested in the ad more than make up for the rest.

  4. steve says:

    Nicholas, comparisons to TV are not relevent. Compare to direct mail — pay per click is after all direct response advertising — and you will see that click fraud is a massive problem. Imagine buying a direct mail list and the discovering that a lrage percentage of your mail pieces went to bad addresses. You’d be outraged, clearly ripped off. That’s click fraud.

    And yes, the people who are genuine clickers have huge value, but its all relative. Direct marketers (smart ones anyway) build their models on real — direct — costs. And with click fraud, if nothing else, you think you are paying X dollars or cents for a click, but in fact you are paying a lot more, because of the nonsense clicks. (I know big smart companies which have been seriously seriously ripped off this way.)

    Finally, don’t just take my word for it. Check out
    the Times of India’s story “india’s Secret Army of Online Ad Clickers”:

    http://timesofindia.indiatimes.com/articleshow/msid-654822,curpg-1.cms

  5. Why wouldn’t click fraud be a problem? If the internet is anything at all its the biggest petri dish of human folly that exists. The simple fact is that if there is a way to make money with a given system, then someone will try and figure out how to rip that system off.

    CPC is a big money making machine and that guarantees it a spot in the radar of scam artists. Those people will always try and find new ways to beat the system and make a buck doing it.

    So now that we are all reminded of human nature, lets see the parties involved here: advertisers, publishers and Google.

    For many advertisers its a tough pill to swallow that they just paid Google $10,000 to drive 845 people to their site and 10 people “converted.” So where to point the finger? Well it must be fraud! Why else would someone get to our site and not buy our solar powered flashlights? Its never the sites fault right? We spent $$$ to redesign our site and we have flash!! I could go on but you get the idea. I think that a big part of this issue is that advertisers are driving people to very bad websites and can’t see the pink elephant in the room, nor do they want to see it.

    So is fraud the answer here? Are all those 845 clicks real people? I think most of them are but there is a percentage that are not. What that mix is I don’t know.

    From the publishers point of view the more fraud the better. Keep clicking! Be it a person, a script, or some poor soul in India working for 3 cents a day. They collect checks and have no legal or fiscal responsibility to their user base or to the advertisers that appear on their sites. If there was fraud, they can just turn around to Google and say “Hey take care of this.”

    So now Google’s point of view. Do we acknowledge this “click fraud” thing or push it off? They seem to be following the M.O. of our esteemed presidents. Deny it until someone has proof, then push blame somewhere else and maybe fire someone. Until there is proof of click fraud that Wall Street will pay any attention to, Google will not have to deal with that subject.

    CPC can work well, I’ve seen it over an over but to deny the issue of click fraud is denying the bigger human nature issue here. There are people scamming Google right now, what will they do about that?

  6. steve says:

    I’m with you, Brian, but I think you’re too harsh on advertisers. They may not be selling those flashlights, but they are calculating the cost of a lead, and those Google clicks are just too expensive. Sure, maybe nobody will buy the flashlights and the advertiser will go out of business. But until that happens, if that advertiser has a brain, they will shut off Google, because even if Google does drive sales, if the CPA — cost per acquisition (of a customer) — is too high, then who cares? And if Google honest, then c’est la guerre. But if its click fraud, then yuck, total horror for advertiser. And its disingenuous — if no downright dishonest — for Google to look the other way.

  7. Brad Geddes says:

    To define click fraud, first you have to define the programs.

    Google search has very little clickfraud.
    Google search network has some (shady partners).
    Google contextual has a lot in high paying industries. However, low paying industries see much less as publisher incentive doesn’t exist to make sites for these terms.

    Next, who is being hurt by the clickfruad?

    Not Google.
    Not click frauders.

    Legitimate Publishers.
    Advertisers.

    Legit publishers will see a decline in earnings as advertisers pull out of the system because of low returns.

    Eventually, this will hurt Google as well (who makes almost half it’s income from AdSense), and then we’ll see a change in the system.

  8. B-mann says:

    How many small websites have gotten the dreaded termination email from Google? AdSense is a very clever scam.

    Here’s how it works.

    Google never terminates anyone until they cross the threshold for payment. Each month Google targets a predetermined quota of websites for non-payment of funds that have been earned by those websites. They send out the standard termination notice knowing full well that the website owners have no recourse. They tell the website owners that the funds that they have accrued will be returned to the advertisers when, in fact, no such return of funds to the advertisers ever occurs. Google simply pockets the money AND they have enjoyed considerable free advertising on the “offending” websites. Since this is done on a regular monthly basis this is a very lucrative 100% PROFIT CENTER for them.

    This is why they only speak in vague generalities about why they have terminated a website. This is why they will never answer a specific request to explain specific reasons for a website termination.

    The Google AdSense program is a very slyly cloaked scam. But only for the unfortunate websites that make it onto this month’s quota list. Everyone else thinks the program is great. That is until they make it onto the monthly quota list. Remember, the monthly quota list is a 100% PROFIT CENTER for Google.

    I strongly urge all of you to find other more reputable firms to deal with. They’re out there!

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