When I was a young man apprenticing at a literary agency, our boss sent me and several fellow staffers on a confidential mission to the offices of a prominent and flamboyant publisher. His company had just published a novel represented by our agency. The publisher handed us envelopes containing cash and instructed us to visit one of several large New York City bookstores and buy a copy of the book. We were then to bring our copy back to his offices, go to another store and do the same. And again and again until we had spent all the cash. The object, he explained, was to inflate sales figures and put the book on the bestseller list. The ploy succeeded.

This little piece of chicanery came to mind when I read a New York Times story by Stephanie Clifford that Microsoft had brought a civil lawsuit in the United States District Court in Seattle against a number of individuals and corporations that Microsoft alleged had manipulated clicks on an Internet ad. The corporation is seeking at least $750,000 in damages. What exactly did these folks purportedly do to incur MS’s wrath?

The offense is called click fraud. Fraud is broadly defined as deliberate deception committed either for personal gain or to damage someone else. It’s a serious tort (violation of civil law) for which one can be sued, or a serious crime for which one can go to jail, or both.

The Microsoft case has to do with the way companies measure their ads’ exposure to viewers who are potential buyers of the advertised products and services. The effectiveness is gauged in cost her click. Clifford cites an outfit called Click Forensics as asserting that “about one in every seven clicks on an advertisement is estimated to be fraudulent.” If the dodge is so commonplace, why would anyone spend a lot of money suing? “Microsoft is trying to make that kind of deception more expensive for perpetrators,” says Clifford. Making an example of click fraudsters, in other words.

Here’s how the reporter explains what happened.

“Advertisers bid on what they will pay to appear in the paid-search results for certain key words. The more an advertiser pays, the higher they are on the list, and advertisers usually pay for each click on their ad.

“In March 2008 several audo insurance advertisers began complaining to Microsoft that traffic to their ads was spiking suspiciously…And clicks to the advertisers appearing at the top of the paid-search results listings for those terms were high. Although traffic appeared to come from different computers, it was actually coming from two proxy servers, which mask the original address of a click.”

Clearly, if the charges stick they will show that this was not a bunch of students in a dorm room earning beer money for repeatedly stroking “Enter” on their keyboards, but rather powerful robot servers that MS investigators tracked to various accounts registered to the defendants. The complaint stated that one of them “directed traffic to competitors’ Web sites so [Microsoft}] would pay for those clicks and exhaust their advertising budgets quickly, which let the lower-ranking sites that he sponsored move up in the paid-search results,” writes Cliffor. You can read more about the investigation and lawsuit here.
Click fraud is as old as the Internet, according to Stefanie Olsen, writing in 2004 for CNET News. “The practice…began in the early days of the Internet’s mainstream popularity with programs that automatically surfed Web sites to increase traffic figures. This led companies to develop policing technololgies touted as antidotes to the problem.”

Nor is Microsoft the first company to take action over click fraud. “In one recent example of the problem,” Olsen wrote in 2004, “law enforcement officials say a California man created a software program that he claimed could let spammers bilk Google out of millions of dollars in fraudulent clicks. Authorities said he was arrested while trying to blackmail Google for $150,000 to hand over the program.” Considering that advertising is the foundation for Google’s fortunes, it will come as no surprise that the firm has taken the most stringent actions to protect itself. Olsen quotes a statement issued by Google that it has been “the target of individuals and entities using some of the most advanced spam techniques for years. We have applied what we have learned with search to the click fraud problem and employ a dedicated team and proprietary technology to analyze clicks.” Olsen called it the “Google Fraud Squad.”

Though click fraudsters are fiendishly clever and possess powerful tools and weapons, the good guys are well armed to combat them. You can visit the website of the Click Fraud Network, “a community of online advertisers, agencies and search providers working together to develop an industry solution to the click fraud problem. Network members that provide data to the network receive free access to online campaign and risk assessment reports.” Among other services the Network offers are a “Click Fraud Index™” tracking click fraud rates by quarter and even a “Click Fraud Heatmap.”

Though the commercial reasons for such aggressive warfare are plain, there’s another less obvious but extremely important one. As newspapers and magazines desperately fight for their lives, they are turning to online advertising as a possible key to salvation. If the metrics are unreliable, however, that door will be closed to those industries. Says Tom Cuthbert, president and CEO of Click Forensics, the company sponsoring the Click Fraud Network, “Click fraud activity continues to grow especially on made for ad sites, parked domains and on the content networks. Advertisers, publishers and search engines need to take notice because content networks are becoming the fastest growing source of click fraud. Ensuring their quality is essential for the pay per click advertising market to continue its growth.”

Looking back at that bit of skullduggery committed by the publisher years ago, I wonder if, today, we would have been asked to perpetrate some variety of click fraud to boost his book’s fortunes. Knowing what I’ve just learned about the consequences, I’m certain I’d think long and hard before I started clicking.

Richard Curtis

Every Blogger owes a debt of gratitude to newspapers and magazines. This posting relies on original research and reporting performed by the New York Times.