Pay-per-click vs. rent-a-click

I don’t want to get into the whole debate over how big “click fraud” is — with some estimates as high as 14 per cent of all online pay-per-click advertising (in which Google and Yahoo are the leading players), and Eric Schmidt of Google arguing that the problem is self-correcting (something Mark Cuban takes issue with). Google is also trying to settle click-fraud related lawsuits.

I do think it’s interesting to watch the markets, including the black and grey markets, find ways of profiting despite Google’s restrictions on click fraud — which can involve either paying people to click on your ads (if you run a website), or paying people to click on your competitor’s ads (if you’re an advertiser who wants to drive up your competitor’s costs). When it comes to the former, there are stories popping up all over about offshore “click farms” where impoverished families in India make money by clicking ads — the 21st-century equivalent of stuffing envelopes.

And a reader named Mike just sent me a link to something he came across at the Blogging Stocks blog: auctions on eBay that sell the services of click-fraud artists. As the post describes it, there are half a dozen auctions with titles like “5 Google Adsense Ads Clicks Hits Each day for 5 Days” (Buy It Now for $1.99) that advertise how they “Don’t deal with worthless hits/clicks. These are real people clicking on your Adsense ads. Real money flowing into your Adsense account.”

They advertise how they arrange it so that multiple clicks don’t come from the same IP address in a 24-hour period, since that would trip Google’s fraud filters. No doubt some of them will be found out anyway, but others will spring up — it’s like Whack-A-Mole. And of course there’s always ClickMonkeys.

Could pay-per-click be on its way out, as my friend Scott Karp has argued? And if so, what replaces it — cost-per-action? No doubt fraudsters will find a way of gaming that too. For what it’s worth, my friend Markus from PlentyofFish, who knows a lot about online advertising, says there’s a lot of hype about click fraud, and security consultant Bruce Schneier has some thoughts at Wired News.

<update :

Google has responded on its official blog to the post about Eric Schmidt’s “let it happen” comments (hat tip to John Battelle).

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