Google is the leading Internet company. It's revenues have been soaring. In fact the first half of 2007 yeilded revenues of $4 Billion before the recession started. It has 40% market share of online US ad revenues. The majority of Google's revenues comes from adwords. Google faces a problem called the "Click Fraud" problem. In this article, we will discuss the problem, what is Google doing to combat it, and our recommendations.

What Is Google Adwords?

Adwords was Launched in 2000. It is Google's flagship product and the main source of revenue. It is mainly about pay-per-click and site-targeted advertising. It offers advertising for websites in search results and

Advertising based on keywords

How Google Ads Work?

If you search on google.com, you can see the 'sponsored links' displayed on the right side and on the top of the results. You can also see 'ads by google' on hundreds of websites. If you click on any ad, the advertiser is charged by google for your click as this is pay per click type of ad.

The Click Fraud Problem

What is click fraud? Google and the advertisers gain when genuine and interested surfers click on the ads and then browse the ad page. But if some one will mal-intentions start clicking on the ads, it is called as click fraud problem.

Why does someone do it? What are the types Of Click Fraud?

Someone commits click fraud when someone is unhappy about something. Or if someone is out to inflict bad on someone. Click fraud can be done by competition. A competitor could click on your ads so as to increase your ad spending without any gains. Political activists can indulge in clicking links of other political parties so as to increase their spend.

Disgruntled employees can click on their company ads to vent out their anger. Unsatisfied angry customers could do it to take revenge on any company. Why is click fraud important? It is very important because it causes loss of revenue to the advertiser. The advertiser does not get expected results from his ad campaign and may refrain from using adwords next time. This may in turn harm google. The 2 techniques of doing click fraud are manual and automated. Either some one can sit on his pc and start clicking anyone's ad randomly or someone may use an automatic bot to click on ads again and again. One can do it to harm the competition. Political activists can do it to harm another party's campaign or against any company.

What Is Google Doing?

Google has a click quality team to maintain quality control over the adsense and adwords programs. They ask advertisers to report click fraud if they feel it is happening and also submit data from their server logs. Internet Protocol (IP) address exclusion can be done so that users from a particular IP are not able to see the ads. Invalid click reporting from both ends can be done. Google can also inform advertisers if they find out that the fraud is taking place so that the advertiser can also take necessary steps. They sometimes offer refunds to advertisers so that they remain happy and feel safe about their investment in advertising.

My Recommendations

Cost per action type of ads can be used by google to reduce the problem. Only if someone performs some action after a click, will the advertiser be charged for the ad. There can be more transparency between Google & advertisers. Google can do development of more sophisticated tools to track fraud. They should report fraudulent IPs to service providers so that people are discouraged to indulge in mischief. They could measure duration of each click-visit to verify if it is genuine or not. Lastly, they should take legal action on the fraudsters and set an example.