What Schmidt Isn’t Saying About Click Fraud

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…

Schmid said:

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.

powered by performancing firefox

Comments

  1. I really want to see the source of this quote. No site listed it (do a Google search) and it’s from March.

    “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.”

  2. Chris Garrett says:

    Google does not contain the full text of everything ever said by anybody cia, I presume if this was a false quote then someone from Google will correct them. At the very least they would be pointing their lawyers at ZDNet right about now. If you read the article it doesn’t read like speculation.

  3. Maybe, but why no one noticed it then?

  4. Nick Wilson says:

    It was reported in march, see the other links in my post. It’s just been dragged out again due to renewed interest in CF..

  5. He only said it’s a non-issue, not that the system is self-correcting.

    Google search

  6. Chris Garrett says:

    There is a big difference between “Google can not find” and “didn’t say”

Speak Your Mind

*

Current ye@r *