Cash Click Scams: Online Advertising's Dark Side

The rash of cash clicking deceptions in the web marketing sector is threatening to derail the ever-increasing world of corporate advertising on the internet. According this week's cover story at Business Week, "Click Fraud: The Dark Side of Online Advertising," as much as $300 to $500 million a year could be flowing to click fraud rings, who cheat the revenue-generating systems of the big web firms Google and Yahoo:

Martin Fleischmann put his faith in online advertising. He used it to build his Atlanta company, MostChoice.com, which offers consumers rate quotes and other information on insurance and mortgages. Last year he paid Yahoo! Inc. and Google Inc. a total of $2 million in advertising fees. The 40-year-old entrepreneur believed the celebrated promise of Internet marketing: You pay only when prospective customers click on your ads.

Now, Fleischmann's faith has been shaken. Over the past three years, he has noticed a growing number of puzzling clicks coming from such places as Botswana, Mongolia, and Syria. This seemed strange, since MostChoice steers customers to insurance and mortgage brokers only in the U.S. Fleischmann, who has an economics degree from Yale University and an MBA from Wharton, has used specially designed software to discover that the MostChoice ads being clicked from distant shores had appeared not on pages of Google or Yahoo but on curious Web sites with names like insurance1472.com and insurance060.com. He smelled a swindle, and he calculates it has cost his business more than $100,000 since 2003.

Fleischmann is a victim of click fraud: a dizzying collection of scams and deceptions that inflate advertising bills for thousands of companies of all sizes. The spreading scourge poses the single biggest threat to the Internet's advertising gold mine and is the most nettlesome question facing Google and Yahoo, whose digital empires depend on all that gold.

The growing ranks of businesspeople worried about click fraud typically have no complaint about versions of their ads that appear on actual Google or Yahoo Web pages, often next to search results. The trouble arises when the Internet giants boost their profits by recycling ads to millions of other sites, ranging from the familiar, such as cnn.com, to dummy Web addresses like insurance1472.com, which display lists of ads and little if anything else. When somebody clicks on these recycled ads, marketers such as MostChoice get billed, sometimes even if the clicks appear to come from Mongolia. Google or Yahoo then share the revenue with a daisy chain of Web site hosts and operators. A penny or so even trickles down to the lowly clickers. That means Google and Yahoo at times passively profit from click fraud and, in theory, have an incentive to tolerate it. So do smaller search engines and marketing networks that similarly recycle ads.

For the glossary of internet scam terminology, click here. For the "follow the money" slideshow on click fraud schemes, click here.

I'd never heard of click fraud before I started blogging. The use of Google Adsense is a major aspect of the the blogging experience, yet as I've read a number of blog posts on the heartbreak of losing the Adsense revenue stream, including some stories of malicious click sabotage, I've decided to hold off on running Adsense on my page.

I surf a lot of internet marketing exchanges, and many of those working in that realm make their entire fortune in the online advertising sector.

I imagine I could bring in a good little chunk of cash every month through advertising, but that's not why I blog. I laugh most of the time when I see all the otherwise interesting blogs loaded with all types Google ads across the top of the page -- it's more about the money than readership for bloggers like that. I'd obviously be running ads on my page if I was a high-powered elite blogger, some of whom make big bucks, though, as I've written on before, that revenue stream then becomes an obsession in itself, making it almost impossible for the blog publisher to take a vacation.