Venture capitalists turned on by click fraud
In 2006, there was a lot of smoke and fire about click fraud, the class action lawsuits and the settlements by Google & Yahoo. I have increasingly gotten the impression that this issue is being accepted by marketers as an unavoidable evil — an extra cost item that will just need to be factored in during budgeting / projections & ROI evaluations.
However, it looks like the issue has turned on venture capitalists who are putting their money in start-ups in this greenfield sector. Venturebeat reports that a new company Fraudwall has just received millions of dollars in VC funding to “stop advertising fraud online”.
According to the company website, “Fraudwall Technologies provides advertising networks and advertisers with a pioneering solution for identifying click fraud. Fraudwall combines cutting edge science with the aggregation of data and characteristics from networks, search engines, and advertisers into one complete scalable solution.”
On the face of it, the market for click fraud protection could be huge, even if we assume that search engines operating on the PPC model get only about 2% in fraudulent clicks. However, what is the value to the advertisers? Will the solutions offered by these new breed of companies prevent fraudulent clicks (which might be outrageously optimistic)? Or if they help detect fraudulent clicks, will the PPC networks accept those and refund the advertiser? What kind of advertisers can truly benefit from the tools & systems these companies develop?
We’d be watching the developments in this area with quite some interest (as would other high-volume affiliate marketers who use paid search advertisng extensively, I reckon).
