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Yahoo Admits Problem Clicks Reach 15%, Appoints New VP to Tackle Click Fraud

Now that Yahoo CEO Terry Semel has gushed we expect to see “some very exciting numbers” in Q1 from Yahoo, in part due to the launch of Panama, the company has decided it’s time to tackle click fraud head-on.

Yahoo has today announced the promotion of Reggie Davis to a new position within the company – vice president of marketplace quality. Basically, his role will be to reduce the amount of click fraud on the Yahoo search network and improve relations with advertisers, or what CNET is calling a “click fraud czar.”

Along with the move comes details from Yahoo on the “discard rate” – similar to Google’s “invalid clicks” – it sees on the Yahoo Search Marketing platform.

Davis said the “discard rate,” or percentage of clicks that for some reason or another were problematic and thus the advertiser is not billed, averaged between 12 percent and 15 percent at Yahoo. The rate of fraudulent clicks, those designed only to run up charges to the advertiser, is a “subset” of that total discard rate, he said.

Assuming we’re comparing apples to apples, this puts Yahoo above Google’s “less than 10%” invalid click rate. If Yahoo wants to have any chance in catching Google, it needs a competitive platform – check – and it can’t afford to let Google convince the world they have click fraud under control, while Yahoo doesn’t. With today’s appointment, Yahoo’s somewhat following Google’s lead in their public efforts to reduce click fraud paranoia, now let’s see if they can actually bring the rate down.

  • http://www.exposureonline.com ExposureTim

    Maybe Yahoo is just being more honest about it? 15 vs 15%??

    I also appreciate that they aren’t trying to hide it or otherwise justify it by saying things like G has pushed on us in the past. We know better and I appreciate Yahoo for recognizing the problem rather than trying to hide behind the “trust us” statements that come out of Google.

    I fear some will now start writing blog posts and article that “Google is better” at fraud, now, based on these numbers. But the numbers that I have tell a different story.

  • http://www.apogee-web-consulting.com/blogger/blog.html Richard Ball

    Andy, what’s your opinion on the quality of traffic from Y!SM? I think it’s been decreasing over the past few months (years?). Y! seems to be too cheap to make the important ad deals (AOL, Facebook, MySpace, Youtube, etc) so is losing the ad distribution battle. There’s so much talk about Panama but an improved back-end doesn’t help fix the ad distribution problem on the front-end.

    I wonder if Y! is being cheap and has chosen to shun the big ad deals in favor of distribution deals using parked domains and second tier search engines. If that really is the case, this has got to hurt them in the long run. I find it amazing that there’s no option to run pure Y! ads (akin to search network off and content network off on Google).

  • http://www.marketingpilgrim.com Andy Beal

    Exposure – I think the perception of click fraud is the biggest battle to win, not the actual number. It will be interesting to see who wins. :-)

    Richard – I don’t think Yahoo is intentionally targeting cheap traffic. Panama was an improvement to the back-end and algorithm. That’s key in increasing the average earnings per search – then they’l get the bigger deals.

  • http://www.exposureonline.com ExposureTim

    Agreed, unfortunately this is not a battle that’ll be won via better ROI or etc… it’ll be won (or lost less) by which network appears to be being more proactive and forthcoming about the problem rather than hiding from it or claiming its no big deal. At least I hope, in leiu of 3rd-party oversight, that the above is a better alternative than it just coming down to who we trust more based on historical reputation.

  • http://www.apogee-web-consulting.com/tools/ Richard Ball

    Thanks for the response, Andy. I see your point. However, I’m not convinced copying the Google ad ranking algorithm is actually a better solution. The old algorithm that would display Standard matches before Advanced matches, IMHO, often resulted in more relevant ads than on Google. Because ads went through the cumbersome editorial review process, Standard match ads that were custom written for the precise search phrase were clearly relevant for the keyword search. That’s gone.

    Yes, the new back-end is less cumbersome. An infrastructure upgrade was necessary. I wonder, though, if the ads the new back-end spits out to the front-end are really that much better, if better at all?

    More importantly, where are those ads being shown? I’m more concerned about the quality of the ad distribution network than the quality of the ads themselves. Do you see a problem with their ad distribution network? Do you think the quality of traffic from Y!SM is as good as Adwords? (Let’s assume we’re talking about search ads only, i.e. AdWords content network off and Y!SM content match off.)

  • http://www.vineyardmart.com KevinG

    I have been caught in the ppc fraud problem. With all the big PPC companies Yahoo,Google,Miva,Kanoodle opening up their search experience we are all going to get over clicked, maybe not by fraud but the PPC’s company urge to drum up more traffic. For example, I had a search term of “boat equipment” on Miva. My ad is being shown anywhere anyone is looking for “equipment” including “exercise equipment” which was driving hundreds or thousands of clicks my way. This all makes money for the PPC’s but not a dime for me!!!

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