Google's Business Model by zbu58798


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									Click Fraud
 Presented By
 Kendall Lynch
CSC 540 - Ethics
 Importance
 Google’s advertising business model
 Types of Click Fraud
 How Click Fraud is done
 How Click Fraud can be detected
 Conclusion
 Click Fraud occurs when a par-per-click
  advertisement is clicked just to generate
  the pay-per-click charge.
 Different kinds of click fraud.
 Different ways it can be done.
 Fraudsters try to take advantage of the
  pay-per-click system for their own benefit.
 99%  of Google’s revenue comes from its
  advertising business model.
 Google’s advertising system supports the
  revenue of thousands and thousands of
  companies and web sites.
 Many publishers’ only means of support is
  advertising through a pay-per-click
 Online advertising revenue set a record of
  $12.5 billion in the year 2005.
 “Spending on Internet ads [is projected to]
  increase by 27%, surpassing magazines
  and the Yellow Pages” said Merrill Lynch
  & Co. media analyst Lauren Rich Fine.
 Unless click fraud ruins the system.
   Google’s Advertising Business
 Consists   of AdWords and AdSense
 Advertisers sign up so that they can
  advertise within the Google Network.
 The Google Network:
     Google claims that 80% of all internet users
      visit a site within the Google Network at least
      once in a 30-day period.
     Comprised of the search network and the
      content network.
     Describes the type of websites an advertiser’s
      ad will be placed.
 The   Google Network:
     The search network:
      • Ads appear along side or above the results page of
        a search.
      • Or “as part of a results page a user navigates to
        through a site's directory”.
      • Includes Google’s search pages, Froogle, Google
        Groups, AOL, Netscape Netcenter, EarthLink,,, and many others.
 The   Google Network:
     The content network:
       • Made up of websites that publish information.
       • Make up of any website that is enrolled in Google’s
         AdSense program.
       • Huge content network includes The New York
         Times,,,, and many others.
 The   advantage of AdWords:
     Keyword-targeted advertising scheme.
     Reaching users you know are already
      searching for what you hope you have to
     Following example is apart of Google’s search
   The advantage of AdWords:
       Contextual advertising.
 Each    time a user clicks on an ad in
  Google’s content network the advertiser is
  charged the cost-per-click value.
 Google receives the money and gives a
  certain amount of it to the website
  publisher who hosted the ad.
 Google gets all of the money when no
  affiliate website is used.
A   website publisher can enroll in Google’s
  AdSense program so that it can host ads
  on its website by advertisers who are
  enrolled in Google’s AdWords program.
 If a user clicks on an ad that is hosted on
  your website, Google gives you a share of
  the money.
 No cost or obligation.
          Types of Click Fraud
 Competitor    Click Fraud:
     Competitor of an advertiser clicks on their
      competitor’s ads.
     Advertiser can use up their competitor’s entire
      ad budget.
     Their competitor’s keywords become inactive
      and they can no longer run ads.
     Advertiser can bid for the same keywords and
      get a higher rank at a lower price.
          Types of Click Fraud
 Affiliate Click   Fraud:
     Publisher who signs up with Google’s
      AdSense program clicks on the ads that show
      up on their web pages.
     Therefore receiving the revenue from these
Taken from
          Types of Click Fraud
 Publisher   Framing Publisher:
     Publisher attempts to “frame” a competing
      publisher by making it look like the competing
      publisher repeatedly clicked on the ads
      hosted on their site.
     Publisher hopes that the advertising network
      (i.e. Google) will terminate their account,
      eliminating the swindler’s competition.
          Types of Click Fraud
 Impression    Fraud:
     A keyword is repeatedly searched but not
     Lowers the click-through-rate (CTR) of the
      advertisers who own the keyword.
     Therefore lowers an advertiser’s ad’s rank.
     If low enough, ad will no longer be run.
     Competitor achieves higher ad rank at lower
      bid while higher bidders’ ads are eliminated.
       How Click Fraud is Done
 Click   Farms:
     The Times of India reported the existence of
      “click farms” in India.
     These click farms are “facilities in which
      marginally employed people click on
      advertisements round the clock”
       How Click Fraud is Done
 Scripts,click-bots, or some other kind of
     One method is to randomly choose a proxy
      server, randomly pick a time interval to wait,
      and pick a random browser tag.
     Using anonymous proxy servers creates “the
      illusion that visitors are logging on from all
      over the place, masking the traffic's true
       How Click Fraud is Done
 Scripts,click-bots, or some other kind of
     These tactics have been known to be
      successful, having gotten through Google’s
      click fraud filtering system, as recent as
      December 2004.
       How Click Fraud is Done
 Botnets:
     A bot is a software robot that runs in the
      background of a computer without the user’s
      knowledge and can be remotely controlled.
     Bots are usually commanded and controlled
      through an IRC server.
     Once the bot is on a computer, it will try to
      connect to the IRC server it was programmed
       How Click Fraud is Done
 Botnets:
     Computers with these bots on them are called
      zombie computers.
     A “group” or “network” of these zombie
      computers controlled by the same botmaster
      is called a botnet.
     In October of 2005, “Dutch police charged
      three young men with controlling an incredible
      1.5 million computers”.
       How Click Fraud is Done
 Botnets:
     Botnets are being used to commit many
      different illegal activities.
     Distributed Denial of Service attacks (DDOS),
      extortion, installation of key loggers,
      spamming, phishing, and eBay fraud.
     And, of course, click fraud.
       How Click Fraud is Done
 Botnets:
     A botmaster will create a normal-looking
      website and sign up with Google’s AdSense
     Then the botmaster will command his bot
      army to click on the ads served on his
     Can generate a lot of revenue for the
       How Click Fraud is Done
 Botnets:
     With all of the clicks coming from real
      computers from all over the Internet, it can be
      very difficult for Google to detect, especially if
      the operation is done well.
     If a botmaster controlled just 5,000 zombies,
      which is a very low number, he could actually
      make $15,000 per month on click fraud.
How Click Fraud Can Be Detected
 For security reasons, neither Google nor
  Yahoo! release any information regarding
  how they detect click fraud.
 But there are some things advertisers can
  look at to help them discern whether or not
  they have been cheated.
How Click Fraud Can Be Detected
 Clicks by Country
 Repeat Visitors from the Same IP Address
 Page Depth
 Time on Site
 Acceptance of Cookies
 Clicks At Unusual Hours
   Should Google be Trusted?
 Google  and Yahoo! do not disclose their
  methods for dealing with click fraud.
 They do employ filtering technology.
 If an advertiser suspects they have been
  charged for fraudulent clicks, they can
  submit a case to Google who may give the
  advertiser a refund for those fraudulent
   Should Google be Trusted?
A   lot of advertisers have been hurt by click
 Lack of transparency of Google?
 Google and Yahoo! make money off of
  click fraud.
 Some people don’t know whether they
  should trust Google.
             Google Sued
 InFebruary of 2005, Lane’s Gifts and
  Collectibles from Arkansas filed a suit
  against Google.
 Claimed that they were charged for clicks
  that were fraudulent but Google never
  gave them a refund for these clicks.
             Google Sued
 Atthe time Google allowed advertisers to
  notify them if the advertiser believed they
  were charged for fraudulent clicks.
 Only clicks within a 60 day window prior to
  when Google was notified were
          Google Case Settled
 The   terms:
     Google will allow any of their advertisers to
      notify Google of fraudulent clicks they
      believed they were charged and Google will
      look at them “regardless of when the
      questionable clicks occurred”.
          Google Case Settled
 The   terms:
     “For all eligible invalid clicks, we will offer
      credits which can be used to purchase new
      advertising with Google. We do not know how
      many will apply and receive credits, but under
      the agreement, the total amount of credits,
      plus attorneys fees, will not exceed $90
      million” (Google).
              The Result?
 Might  help advertisers recoup some of their
  losses, but only in the form of ad credits.
 Let Google off the hook.
 Win for Google.
 No effect on click fraud.
 Didn’t even address the problem.
 It appears click fraud is a problem that can’t
  be solved in the courts.
   While Google profits from click fraud, they need
    advertisers to trust them with their ad money or
    else Google’s revenue goes through the floor.
   Advertisers will have to consider click fraud an
    inevitable cost of doing business.
   Google will be caught in the middle of a race
    against all of the fraudsters out there, continually
    trying to create better methods to detect click
    fraud and win over the trust of advertisers.
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   “Click Fraud - Nuisance Clicks - PPC fraud.” Retrieved May 1, 2006.

   “Expert: Botnets No. 1 emerging Internet threat.” CNN. Retrieved May 1, 2006.

   “Exposing Click Fraud.” Net Applications. Retrieved May 1, 2006.
   “Google AdWords Help Center.” Google. Retrieved May 1, 2006.

   “Google blows past estimates.” CNET. Retrieved May 1, 2006.

   “Google CFO: Fraud a big threat.” CNN. Retrieved May 1, 2006.

   “How Click Fraud Could Swallow the Internet.” Wired. Retrieved May 1, 2006.
   “Just What Is a Botnet?” DALnetizen. Retrieved May 3, 2006.

   “Official Google Blog: Update: Lane’s Gifts v. Google.” Google. Retrieved May 1, 2006.

   “Online Ad Revenue Reaches $12.5 Billion in 2005.” Los Angeles Times. Retrieved May 1,

   “The Botnet Trackers.” The Washington Post. Retrieved May 1, 2006.

   “Trojan horse (computing).” Wikipedia. Retrieved May 1, 2006.

   “Where will my ads appear?” Google. Retrieved May 1, 2006.

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