Google Slapped with Click Fraud Lawsuit - A Closer Look
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Google itself has admitted that it makes 99 percent of its income from advertising. It may have all of its eggs in one basket, but so far it has proven to be a very profitable basket, and Wall Street seems to approve. The search engine’s stock has risen from $85 per share at its initial public offering in August of last year to over $300 more recently.
At one time, Google used to say that click fraud did not have a material effect on its results. The company has put some effort into preventing click fraud, with teams of people working to prevent it. Its technology aimed at addressing the problem evaluates clicks based on up to fifty data points. And yet, it would seem that this is not enough.
In November of 2004, Google sued Auctions Expert International, accusing it of engaging in systematic click fraud. The following month, Google chief financial officer George Reyes admitted that the problem was growing. “I think something has to be done about this really, really quickly, because I think, potentially, it threatens our business model,” he said. It seems clear, then, that Google can’t try to claim that the problem doesn’t exist – or even that they have it completely under control.
But Click Defense may not be a mere victim in this case. It makes its money by identifying click fraud and getting money back for its customers. The kind of publicity produced by such a high-profile lawsuit couldn’t be bought for love or money; the story was picked up by Reuters, which all but guaranteed that the major news outlets would be buzzing about it. How many potential clients read the news?
To be fair, though, Click Defense is simply fanning a flame that already exists. The Search Engine Marketing Professionals Organization (SEMPO) discovered in a survey it conducted recently that 45 percent of advertisers were concerned about click fraud. Only about a quarter thought it wasn’t a significant issue. Here is the interesting point: only six percent stated that click fraud was a serious problem that they had tracked. This leaves companies such as Click Defense with a huge potential market of worried advertisers who have not yet dared to take a look at the problem. Perhaps Click Defense is hoping the lawsuit against Google will work as a wake up call.
Next: So What’s Really Going on Here? >>
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