It took me a while to track down this comment from when Google CEO Eric Schmidt originally said that Click Fraud was a “non issue”. Now ZDNet are bringing up the Schmidt quote again in light of recent high profile Click Fraud cases, it’s worth pointing out what he’s not telling you…
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.
But back in March, noted Search marketing expert Greg Boser blew away Schmidts assertions by pointing out that this would depend on all Adwords advertisers tracking ROI on a direct CPA basis:
That doesn’t account for all the big spending advertisers who are bidding to generate leads that won’t produce revenue for quite some time, or advertisiers who are trying to acquire long-term customers. If you remove click fraud for those types of comapnies (who also happen to bid in many of the highest per click spaces) you will not see any of them raise their bids. That money will simply go back into their bank accounts.
And that to me sounds about right. I don’t claim ot be a click fraud expert, but to dismiss it as “self correcting”, whilst appearing to be very neat and clever (particulary as the GOOG biz model depends upon PPC), just doesn’t ring right, and Bosers arguments make a lot of sense in context.
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