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Mobile Security Industry News

[March 03, 2006]

Showdown for Google amid 'click fraud' row

(Evening Standard (London) (KRT) Via Thomson Dialog NewsEdge) Mar. 2--A squabble has broken out between Google and advertising marketers as the online search giant prepares to meet analysts who are pushing for guidance on where the company may be heading.

Executives will spend four hours talking to Wall Street at the annual analysts' meeting at the Googleplex in Mountain View, Santa Clara County, California, today as the company's share price goes through its most volatile patch since listing.

To add to Google's problems, anger erupted at a New York conference on search engine strategies this week, with vendors saying "click fraud" is costing $1 billion (570 million) a year, and Google and Yahoo are doing too little to stop it.

The search giants derive income each time an ad on their sites is clicked. The click fraud scam involves companies setting up an automated system to click repeatedly on their competitors' web ads. Vendors say Yahoo and Google massively underestimate fraudulent clicks.

The two companies have tracking systems and say they refund money to clients when they have detected fraudulent clicks. But the industry says they are not doing enough.

Search engines are saying they will protect their customers but also say they don't have enough data to do so, Jessie Stricchiola, founder of Alchemist Media, a search-engine marketing and optimisation company, told advertising industry magazine AdAge. "We've seen a pretty consistent downward trend in response to advertiser complaints," she said.

The furore comes at a bad time for Google. Since disappointing results in January, it is battling perceptions that growth has run out of steam.

It was this week forced to qualify statements by chief financial officer George Reyes that advertising growth revenue -- which drives more than 97 percent of the company's sales -- is bound to slow down. This year's analysts meeting is likely to be the most tense in the company's history, certainly since its listing in August 2004.

The stock rose more than 400 percent from then to a $475 high in mid-January, but has now lost more than 25 percent of its value this year. Google has always refused to provide explicit financial guidance but analysts say the company has taken that to extremes and provides too little information for meaningful analysis.

A Google spokesman said: "We look forward to welcoming financial analysts to the Googleplex again this year, and we're working very hard to make sure their time spent here is informative and useful."

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