Tuesday, February 10, 2009

Do you want to know a secret?

Let's talk.

A-Rod no longer has a secret.
Ken Lay (RIP) took many secrets to the grave
Rating Agencies no longer have secrets...but why they still get paid is beyond me.
Banks and related financial institutions no longer have secrets.

In hindsight, maybe we should have known.

Do you want to know a secret
? I will share it with you if you promise to tell.

Click fraud is huge, it's getting larger, it's global, our leading industry participants have conflicts fighting it (I think of it as the equivalent to using steroids on their P&L's) and they won't share how they fight it (may be understandable). Not many mainstream folk are talking about the way click fraud growth is outstripping the internet's growth by nearly 2x. We have uninvited guests to our dinner, and that's a problem.

I am sure that executives at MSFT, Yahoo, Google, et al hate click fraud; though I suspect it's an unreported and unmonitored profit center for each of them. Grab a look at the Click Fraud Index from a company ClickForensics. They estimate click fraud grew to 17+% in Q4 '08. But it gets worse..." The average click fraud rate of PPC advertisements appearing on search engine content networks, including Google AdSense and the Yahoo Publisher Network, was 28.2%"

More than 28%!
. Hard to imagine, but this is a lower estimate than MarketingExperiments published.

It's going to get much worse. According to the Index, automated Botnet fraud is taking more share of the fraud pie. Unfortunately, these criminals take the 'permacheap' business model to a new level of refinement as they 'borrow' bandwidth and cpu's from unsuspecting innocents to purport their crimes. It's incredibly profitable, hard to detect, and when detected, hard to prosecute when the bad guys are resident in countries that don't have effective laws to combat this, or choose to ignore them.

Our industry has a little secret that's growing into a quiet big problem. Young industries, like small children, have little problems. Large industries, supporting market caps in the hundreds of billions of dollars, which experience fraud rates this high have BIG problems. At this rate of growth, clickfraud is going to kill PPC, if Congressional type hearings don't get there first.

It must be a big problem, clicking through on the key words 'click fraud' on Google, gave me 53 pages of paid Adwords and 539 displayed results. Many smart people are working on combating the problem. Someone is going to build a boatload of valuable equity when they devise a solution that becomes an industry standard at fighting it. Today, the industry's fragmentation is a sign that no one has a recognized superior solution.

That's a secret we don't want to share.

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