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What are we going to do about click fraud? Form a committee!

Save the Golden Goose

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Internet bigwigs are banging heads together to see if they can kill click fraud before it kills them. Ask.com, Google, LookSmart, Microsoft, Yahoo!, "and others" have formed a working group under the auspices of the Interactive Advertising Bureau to agree on standard ways of measuring a click.

The intention is to sort the good 'uns from the bad 'uns. This is hardly an academic exercise. Google and Yahoo! do not publish fraud stats yet, but they have ponyed up settlements on click fraud class actions, and they refund customers when they spot fraud.

Last month, ClickForensics estimated that click fraud accounted for 14 per cent of all search advertising click-throughs. Since advertisers pay per click-through, that is an awful lot of wasted money lining the pockets of guilty thieves and innocent advertising networks.

Fraudsters using automated software, or "bots", malevolent business people clicking on the adverts of their rivals, and corrupt websites all risk killing the advertising golden goose. And it is not just the Googles and MSNs who will suffer.

Online publishing and internet portals will also feel the pain, if disgruntled search advertisers turn into ex-search advertisers. This would affect websites big and small. For while advertising broking has made multi-billionaires of Google's founders, it has also contributed to the explosion of one- and few-man band publishing. The revenues can at very least subsidise bandwidth and hosting fees.

The stakes are higher for big companies. Yesterday, for instance, AOL US threw open the portal doors, sacrificing subscription revenues today for the promise of more readers tomorrow, which it can turn into more advertising revenue the day after tomorrow. In other words, the veteran ISP wants to become more like Yahoo! and less like Earthlink. AOL can do this because of advertising, underpinned by its search relationship with Google. AOL is probably Google's biggest AdWords affiliate - and it is certainly on the highest revenue split. It takes a tad under 80 per cent of search advertising revenues, compared with the web hoi polloi, which can expect more like 50 per cent.

Everywhere, newspapers are re-examining their own charge-able walled gardens. Last year, The Times abandoned charges for readers based outside the UK, because it calculated it could make more money from advertising to them. The FT is currently mulling over ways of becoming more relevant to the internet generation, although it is extremely unlikely to ditch its entrance price completely, we think. It is doing this because of soaring internet advertising revenues.

One last thing. The Register is an affiliate of Google AdWords - but you knew that already. Search advertising is a nice add-on for a website such as ours, which relies on the bulk of its revenues from display advertising sold direct. Google enables us to to monetise in some small way overseas visitors, who number three-quarters of our four million-plus readers a month.

So yes, we are not disinterested in this matter. We don't want to return the Ferraris just yet, so the sooner click fraud is brought under control the better for all of us, crooks excepted, naturally. ®

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