Click-fraud — competitors and fraudsters using programs to click on online ads — will finally go mainstream this year. There are multiple class action suits seeking certification in the area, and at least one of them will obtain certification in 2006, bringing a whole new level of attention to the very big problem for Google (and others).
With some estimating that in certain categories click-fraud accounts for as much as 20% of fees, this is a stock-schwacking issue, one that threatens the core of Google’s advertising business.
The coming year will be the one when companies are forced to come public about how they are taking the issue seriously. There will be much mainstream chatter about mob tactics, protection rackets, and offshore click farms — and huge threatened penalties to search-ad companies that don’t police themselves more effectively than they have to date. Heck, you might even see 60 Minutes on the case.
[Update] And it’s happening already. Wired magazine just went live on its site with a sobering Charles Mann feature piece about click-fraud. It contains stories about categories in which click-fraud is alleged to be as high as 40-percent.
Here’s Mann on the consequences of rampant click-fraud:
If [click-fraud continues to grow], the consequences will be felt throughout the Net. By splitting revenue with the sites that host the ads, search engines have become, in effect, the Internet’s venture capitalists, funding the content that attracts people to the computer screen. Unlike the VCs who backed the boom-era Internet, search engines now provide revenue to thousands of wildly diverse sites at little up-front cost to them – PPC advertising is one of the few income sources available to bloggers, for instance. If rampant click fraud overwhelms the system, it will muffle the Internet’s fabulous cacophony of voices.