The latest estimate for click fraud indicates taht more than $1.3 billion of keyword advertising sales are fake, according to a study released yesterday from researchers Outsell (the full study is $495).

Highlights (as reported by SFgate July 5, 2006):

–  14.6% of clicks are fake.
– 75% of advertisers have been impacted at least once (One wonders if those who say they haven’t probably are simply unaware of it).
– Nearly a third of advertisers have reduced or stopped spending on click-based advertising. An additional 10% intend to curtail spending.

"Outsell’s survey was based on the responses of 407 online advertisers representing a cross-section of U.S. business. Their spending ranged from several thousand dollars online annually to more than $10 million". SFgate.

Outsell cleverly heralds their reports as the beginning of the "Don’t ask, don’t tell" era in keyword advertising.  Its clear this issue is going to be a major headache for the search engines.

Mortablog readers are reminded of our post "BlackFoot calls time out on click fraud."

The opinions expressed in MortaBlog are not necessarily those of the author or anyone else at the Mortar
for that matter.  Just who owns them is kind of unclear really.  If you
do find someone who will own up to them for sure, let us know.

In ads out this week, Microsoft claims conversions from its  new adCenter search advertising system are 57% higher than Google.

MSN pulled the stat from this January press release from online analytics company WebSideStory. Further review of the release reveals:

• For the month of January, AOL Search generated the best conversion rate
  at business-to consumer e-commerce sites (6.17 %), followed by
  MSN (6.03 %), Yahoo (4.07 %) and Google (3.83 %).
• The study includes traffic from
  both organic and paid keywords.

Frequent readers of Mortablog will have noted that we criticized Google last week (See The Google Touch).

So, in the interests of evenhandness, let’s review the merits of Microsoft’s pitch for your search business:

MSN is talking  ratios not absolute numbers. MSN is not measuring the number or propensity of visitor’s clicking through to a site from organic (so-called natural) or paid links: they are calling our attention to visitors likelihood to buy once they land on the site. MSN claims that visitors from paid listings are more likely to buy if they came from MSN than if they originated at Google.

AOL Search took top honors, not MSN. What are we to make of the fact that despite MSN’s proud boast, WebSideStory gives the conversion crown to AOL Search and not Microsoft? Unsurprisingly, MSN is positioning itself against market leaders Google (who incidentally have the lowest conversion rate) and Yahoo! (the second worst converter). Savvy advertisers will remember that AOL Search draws its listings from Google and AOL itself. One wonders if we’ll see a riposte from AOL Time Warner?


Much has changed at MSN since January. WebSide’s research was conducted in January 2006 before the official launch of adCenter in May and subsequent recent changes to MSN Search. Back then, Yahoo! was still providing some of the paid search listings on MSN Search. The study also predates MSN’s planned summer test of contextual advertising (see here). These developments have the potential to impact the reaction of visitors to listings.

Mixing conversion rates from Paid and Organic search does my head in. Look, advertisers can’t purchase a Page One rank in Google or Yahoo! or MSN for that matter. Organic links are organized and displayed according to algorithm and bots. Placement is not influenced by ad spending. Armies of SEO consultants optimize organic search by manipulating page code and encouraging visits and links from other sites. 

On the other hand, Paid listings are actively managed by automated advertising systems on each search engine and by advertisers themselves. Poorly performing ads are dynamically pruned and adjusted; top performers are pushed to the limits of effectiveness.

ComScore studied conversions across paid and organic keywords in April 2004 and concluded that paid search was ten times more effective at driving conversions than organic. (Read more here).  But, then again, advertisers pay for each click on paid search–whereas organic clicks are free.

Consider that for the VAST MAJORITY of webmasters organic traffic will exceed paid by a significant margin. The bottom line: sites with ten times more organic traffic than paid will register the same number of sales even if the conversion percentage is lower: rendering the whole issue of conversion percentage kind of moot.

MSN searchers like to shop. A better study for MSN might have been iProspect’s May 2004 review of search engine traffic. It indicates that MSN visitors are more likely to click on paid links than organic listings. The broader implications of iProspects’s work is that MSN is more Shopping than Search–and that would harm Microsoft’s long term vision for MSN as a contender to Google. (It may also say a little something about how much users trust products from Redmond). 


The WebSideStory participants were using HITBOX optimization technology (from WebSideStory): The WebSideStory release continues "One other important consideration to note in this study… is that the conversion rates are likely higher than
industry averages because the sample sites are using best-of-class web
analytics to improve their search engine marketing and optimization". So, advertisers have to use WebSideStory’s HitBox system to get these numbers.

Microsoft’s ad certainly caught my eye. But it hardly stands up to serious scrutiny. Let’s hope that adCenter is not similarly flawed.

___________________________________

The opinions expressed in MortaBlog are not necessarily those of the author or anyone else at the Mortar
for that matter.  Just who owns them is kind of unclear really.  If you
do find someone who will own up to them for sure, let us know.

___________________________________

Update: Paul A. sent me this email:

Mark.  Sites with 10x more organic than paid ?   Sure.  There may be one or two in the universe.

But that’s not an argument against paying when you are not happy with your organic traffic.  In fact, why are you saying that conversion rate is a moot point.

Remember, conversion % relates to gross payout for clicks divided by gross sales.  It definitely matters and it matters most to the marketers with low organic traffic.

I think I have to concede this point to Paul. Paid conversion rates certainly matter to Webmasters of small or unindexed sites who received low levels of organic traffic — Mortarmark.

Those crazy Dane’s are up to their old tricks.

This unused crane in Santiago was hijacked for a promotion for a local Brickfest. 

Lego founder and great Dane Ole Kirk would be thrilled.

Thanks to Coolhunter.net for the image. ICB-FCB is the agency.

Wassup puzzler?

You are outside a hut. It is windowless and otherwise barren.  Not the kind of place to hang out really.

You are alone. Yes, you are a little sad.

There are 3 light switches outside the door. 

The switches are connected to 3 light bulbs inside the house.

You can enter the hut only once.

How can you tell which switch is connected to which light bulb?

First correct answer wins $10 in Fandango tickets. Email me here.

Update: 6.30.06: We have a winner. Mortar’s own Sarah Thompson is a lateral thinker to be feared:

Turn on switches 1 and 2; leave switch 3 off.

Turn off switch 1 and leave room.

Bulb that is lighted is switch 2.

Bulb that is off is switch 3.

Bulb that is off but warm to the touch is switch 1.

She will be receiving two Fandango gift certificates for her winning entry. Watch for the next puzzler next week. – Mortarmark