Google finally came out with some solid numbers around the click fraud issue. Here's one dude's take on them.
The number of invalid clicks across the Google network? Less than 10%. The total amount of undetected click fraud that advertisers have reported and asked for a refund for? .02% I was briefed by Google little while ago about their plans around click fraud and so I had some time to digest the numbers and think about them. Google also passed my name along as an expert third-party that the media could contact to get more commentary about the numbers and Google's product roadmap for dealing with click fraud. If you're interested in what the numbers actually mean, I would suggest going to Danny Sullivan's post this morning on Searchengineland. Danny does his usual thorough job of making sense of the announcement.
One question that I got from a couple reporters yesterday was, did I believe Google's numbers? Although I should have anticipated this question, I was somewhat surprised. So last night I thought about. What would Google gain by fudging the numbers at this point? I think there's a few points you have to consider when looking for the answer to this question. Based on the fact that I've already been asked it three times, by three different reporters. I believe it is a valid question and one that a number of people will probably be asking.
Maybe I'm naïve, after all, I am an Alberta farm boy at heart, but in all my interactions with Google I have to say, Google just doesn't work this way. Google is a very cautious company when it comes to divulging information. I would think one of the biggest frustrations that Shuman Ghosemajumder has had in the past is having to keep his mouth shut while various inflated numbers around click fraud were thrown about. My belief is that it's been Shuman lobbying inside of Google that finally convinced them to open the box a little bit on the scope of click fraud in the Google advertising network. Maybe the "don't be evil" motto of Google sounds trite to some, but people at Google believe it and take it to heart.
What would Google have to gain by releasing false numbers about click fraud? The only possible motivation would be to; one, artificially inflate their stock price, and two; encourage more advertising revenue by falsely reducing the sensitivity around the click fraud issue.
Let's deal with the first point. I talk to financial analysts all the time and frankly, it's been a long time since any of them asked me about click fraud. As far as a sensitive issue, there are a lot of other factors that financial analysts are looking at much closer when it comes to making recommendations on buying or selling Google stock. I believe click fraud has been already factored into the valuation and analysts have moved on.
When it comes to advertisers, there still is sensitivity around the click fraud issue, but it has lessened in the last year. The recent SEMPO study shows that as a concern for advertisers it actually trended down from 2005 to 2006. Certainly it's something we should be aware of and keeping our eye on, but I really don't believe it's preventing advertising revenue from flowing into Google at this particular point. So any short-term gain that might come to Google from falsely announcing numbers could potentially be a bit of a spike in their stock price. But within a day or a week other factors would smooth that out and it would basically become a nonissue. I really don't believe it would have any impact on advertisers at all. Short-term gain would be minimal at best.
But, the long-term cost to Google could be tremendous if they were caught releasing false numbers around click fraud. It would just be a really, really dumb thing to do, and you can say what you want about Google, but one thing they're not is dumb. So do I believe the numbers? Yes, I have no reason not to.
http://www.webpronews.com/blogtalk/2007/03/01/believing-googles-click-fraud-numbers
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