Google: Click fraud costs us $1 billion a year

Google today unveiled more details about the percentage of click fraud on its network and what it plans to do to combat it.

Overall, Google said on its Adwords blog that invalid clicks represent less than 10 percent of all clicks. However, that percentage can add up.

"At Google’s current revenue rate, every percentage point of invalid clicks we throw out represents over $100 million/year in potential revenue foregone," said Google. Add it up and Google forgoes roughly $1 billion in revenue due to click fraud.

In its blog, Google argues that its real time click fraud filters catch most abuses as a way to optimize ROI on ads. That means complaints from advertisers about click fraud are "misunderstandings" in many cases.

"In most cases where malicious activity is found, the clicks have already been filtered out (and not charged for) by our real-time filters. Because of the broad operation of our proactive detection, the relatively rare cases we find of advertisers being affected by undetected click fraud constitute less than 0.02% of all clicks."

Danny Sullivan raises an interesting question about the timing of the disclosure about click fraud: Why now? Transparency is commendable, but I'd guess that there was a little prodding involved. After all, Sullivan notes folks have wanted this data for a while.

So what's Google going to do to prevent click fraud?

It has a three-stage system to detect invalid clicks. "At a high level, we have a three stage-system for invalid click detection: (1) our real-time filters, (2) offline analysis, and (3) reactive investigations."

Google is also going to give advertisers more tools to monitor click fraud.

In the end, Google's message in the blog is clear. Trust us. We're filtering things in real time and are on top of the issue. Google's blog isn't the last word on the issue, but it is a good first step.

*ZDNet