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Tuesday, December 12, 2006

Click Fraud: Tail Between the legs

Adsence, Google’s arm of making money by putting advertisements on blogs, has come under fire from advertisers, yet again. Adsence, is based on the simple, ‘pay per click’ model: advertisers pay the blogger, only if someone clicks on an add placed by them on the blogger’s site. This revenue model has become especially popular, because it guarantees that a consumer has reacted to the advertisement, such a guarantee of ‘eye balls’ or possible consumer attention, is not possible on other forms of media, such as TV, radio or newspaper.

However there is a flaw in the system. The click by a possible consumer, generates revenue for the blogger, but it does not guarantee that the consumer will buy something form the advertiser. This is what has led to click fraud, the blogger (his/her friend, or a computer program) clicks advertisements on his own blog, generating revenue for himself, but no business for the advertiser. Also, certain advertisers place Adsence adds by paying Google a certain deposit amount. Each time someone clicks on their advertisement, a small part of the amount is deducted by google. Thus click fraud, can be done by repeatedly clicking on a competitors add, thus exhausting his deposit with Google. It’s obvious, why advertisers are angry: no one wants to pay for an advertisement that does not increase revenue.

The advertisers are now demanding that they are given information on the clicks on their ads. Google has announced that it will refund advertisers who can prove that their ads were ‘fraud’ clicked. Yet, if Google decides to share click information with advertisers, (Technocrati, a blog directory has already started such a process), the concept behind Adsence may take a beating. This is because; advertisers will only place ads on blogs that generate enough traffic to support their advertisement investment. The result, blogs that deal with ‘non mainstream’ or ‘non popular’ subjects will fall out of favour with advertisers. Revenue generated by blogging will get concentrated in the hands of the remaining mainstream blogs, those dealing with other popular media, such as popular music, books etc. Thus, it is probable (not just possible) that very soon, blogging will also be forced to adhere to market trends, that have already tamed other media.

So, what is the real issue? Adsence was supposed to make revenue from many blogs that catered to niche audiences (long tail audiences) and not a few blogs that catered to the ‘lowest common denominator’ content. The release of advertising click data will ensure that diverse blogs, with uncommon topics of interest, become bottled into already trusted interest areas: more blogging on what celebrities were wearing, instead of ‘hard’ matter.

A new model, ‘pay per purchase’ has been devised, it will generate revenue for the blogger only if the consumer buys the advertiser’s ware after clicking on the advertisement placed on the blog. However this model will not be profitable for majority of bloggers. Also, why must bloggers loose out, if the consumer does not buy? After all TV channels do not refund the advertiser’s money, if their ad campaign does not increase revenue for their company. Unless a new model, which takes the advertisers and the blogger’s concerns, is developed, the first war between Long Tail and conventional advertising will continue.

Link: The Biz of Coding

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