Google’s Eric Schmidt on Click Fraud ‘Let It Happen’

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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.

Loren Baker
Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing strategy & development agency.
Loren Baker
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  • Harald

    Wall Street estimates that up to 35% of all click activity is fraudulent.
    Although I think that number is a little inflated Mr. Schmidt needs to be taken down a notch or two.

    A few years ago I was the victim of click fraud on two separate occasions.
    It was ugly and both Google and Yahoo tuened the other cheek and let their Public Relations Departments shine.
    The great equalizer in this debate will occur when people wake up and realize that the KINGDOM of “Do No Evil” is pure, unadulterated public relations.

    I have spoken with several leading click fraud companies on this issue and they will all tell you the same thing. The marketplace is slowly maturing but what needs to occur is that individual website owners need to hold the Pay Per Click Search engines accountable with statistical forensic software.

    Adsense is the crack cocaine of the internet. Thousands of marketers cannot get off the crack.

    My question is very simple. Who is more evil the crack dealer or the crack user? Crack is crack!
    Google is sitting on a $7 billion a year crack habit and when the CEO responds in this manner the entire company needs to be taken out to the woodshed and spanked!

    Nuff said!

  • Jim Trego

    Lets face facts! Even if Google wanted to track click fraud accurately (which they don’t) they can’t. All they see are the clicks related to their search engine. They don’t see the random clicks generated by “click farms” on Yahoo, Ask Jeeves, MSN or any of the other search engines the advertisers use. Using very sophisicated software it is still difficult to gather the data and make click fraud sense of it. Click Defense uses many filters to gather the data to prove PCF (PotentialClick Fraud). One client has submitted a claim for over a million dollars in fraudulent clicks. It will be interesting to see how it plays out. Click Defense partnered with a number of law firms eager to take on the search engine giants. Ck out

  • Search Engine WEB

    Eric Schmidt is biased towards seeing things from an ROI Business strategy perspective – he can’t empathize with the passions of the Engineers for attaining ALGOrithmic perfection.

    But even if the market DID in fact “balance itself” out…..


  • Robyn

    Many websites are set up for the sole purpose of running Google AdSense ads and have very little good content on them. If you look at the page rank for these sites, it’s zero. So, Google has the ability to quickly weed out the sites that are likely to be the cause of most of the click fraud out there. Simply require a higher than zero page rank for someone to run AdSense ads. In addition, Google can afford to hire a small group of people who randomly check sites with low page ranks to see if there’s any valuable content on them. If not, they shouldn’t be allowed to run ads.

    For Google to just sit back and wait for the advertisers to solve the problem, while they make money from us because of the problem is evil.

  • Dave Nofmeister

    The idea of this all correcting itself, also takes it’s toll on lagitamate publishers. I shouldn’t be penalyzed for the real traffic that I send through my site.

    Certainly, my expenses on server rental, and my time don’t go down, because a bunch of click-frauders has indirectly attacked my sites income!