Yahoo, Click Forensics to fight click fraud together

If you can't beat 'em, join 'em.

Yahoo and Click Forensics announced on Monday that they will be working together to fight click fraud.

Click fraud has historically pitted advertisers, who claim they are charged for fraudulent clicks on paid search ads, against search engines, which claim they manage to catch most of the click fraud out there.

Then there are companies like Click Forensics, which tracks the rates people, or automated software bots, are "clicking" on ads (and also recently got $10 million in funding). Click Forensics also releases regular reports on the perceived click fraud rate, which it says grew by 15 percent in 2007 over the industry average rate the year before. The average click fraud rate of pay-per-click ads on search engine content networks, like Google AdSense and the Yahoo Publisher Network, was 28.3 percent in the fourth quarter of last year, the most recent report says.

Google dismisses those figures, contending that Click Forensics' methodology is faulty.

Instead, Google says its click fraud rate is in the single digits, while Yahoo claims its rate is a subset of the 12 percent to 15 percent of the clicks on its network that it does not bill customers for.

Regardless of what the actual click fraud rate is, the problem is large enough to have prompted class action lawsuits, which Yahoo and Google have settled.

There have been calls for an independent third party to oversee the business, but advertisers don't want to give up their server data to search engines and vice versa.

The Yahoo-Click Forensics relationship seems like a step in that direction. And it gives Yahoo a way to distinguish itself from Google, a company that is ultra-secretive about most things, not just click fraud numbers.

Asked for comment, a Google spokesman gave this statement: "We provide numerous tools and support for third parties so that they can learn from our data and experience, and we work with them every day to improve advertiser ROI, including investigating potential cases of click fraud. We've been sharing information and working with third parties ever since we launched AdWords, and we're constantly improving additional tools for third-party support."

Yahoo first stepped ahead of the search engine pack with regard to click fraud when it named Reggie Davis as its first click fraud czar (officially "vice president of marketplace quality") a year ago this week.

Davis says that at the time he knew "we needed to be much more forthcoming with our percentages."

Neither he nor Tom Cuthbert, president of Click Forensics, will say exactly what information they will be sharing, other than that Click Forensics will provide feedback from advertisers to Yahoo. My understanding is that Click Forensics will serve as a sort of clearinghouse for the click behavioral data that advertisers collect, and that the information will somehow be shared with Yahoo.

Meanwhile, Yahoo won't be sharing information on exactly how its 2,700 filters operate to detect fraud with advertisers because they could then figure out how to circumvent the filters and game the system, Davis says.

Yahoo's goal is to try to come up with a better consensus click fraud rate than the widely disparate figures now being reported, and to make advertisers more confident in the system, he says.

Since Davis took over the click fraud hot seat, the number of claims by advertisers alleging they were charges for fraudulent clicks or poor quality clicks has dropped from 800 claims a month to fewer than 80 claims a month, Davis says.

"It's a heated issue," he says. "It's all about advertiser trust and their confidence in us to deal with these issues."