Google’s Eric Schmidt on Click Fraud ‘Let It Happen’
Google CEO Eric Schmidt will have some answering to do at Search Engine Strategies San Jose over this statement from a Stanford University event earlier in the year, as covered by ZDNet’s Donna Bogatin:
According to Schmidt, Google’s auction-based pay-per-click advertising model is inherently self-correcting. Schmidt’s scenario for what would happen if Google did not police click fraud and it was “rampant”:
“Eventually, the price that the advertiser is willing to pay for the conversion will decline, because the advertiser will realize that these are bad clicks, in other words, the value of the ad declines, so over some amount of time, the system is in-fact, self-correcting. In fact, there is a perfect economic solution which is to let it happen.”
…Schmidt indicates, however, that Google engineers think it is “great fun” to try and get ahead of click fraud:
“But because it is a bad thing, because we don’t like it, because it does, at least for the short-term, create some problems before the advertiser sees it, we go ahead and try to detect it and eliminate it.
Part of what we do is we try to decrease the time, and increase the rate, at which the auction automatically detects that this is a bad click, naturally.”
Aaron Wall of SEOBook lends his opinion on the matter at Threadwatch (some other nice opinions and responses in this thread):
With the level of tracking Google provides advertisers for their contextual ad targeting program (ie: next to none) that is a quite ignorant, selfish, and shortsighted position for Google to take. And how will that top down philosophy stand up in court?
Assuming that his efficient market theory works well for advertisers then at the very least with that philosophy they are letting the clickfraud publishers undermine the value of legitimate ads on content sites in the same marketplace. If you believe the advertisers will filter out the fraud then at least bake the ability to detect value on a per publisher level.
Pretty hard to make an efficient marketplace when the role of the central market maker is as an unconcerned being.
Yet another reason AdSense is on the decline.