AdMoolah News and Views

Today, high profile software development blogger, Joel Spolsky, posted an entry Something Rotten in AdSense. In it he talks about the problems of click fraud and in particular, click fraud coming from splogs. He comes to this rather startling conclusion:

I predict that you’ll see a massive expulsion of smaller AdSense sites by Google, and it better happen soon, or AdSense will ruin Google’s reputation among advertisers, something which could be deadly.

If you are a small publisher this may worry you. Don’t be worried. I think this is a very hasty conclusion. I have been a small publisher with AdSense, and I am very familiar with both AdSense ( I run AdMoolah) and splog (I run FightSplog). I’m not worried.

There is no denying that click fraud does exist. People will always try to click on they own ads, encourage or pay others to click on them, and maybe even, as Joel suggests, use zombie PCs to generate clicks. But there are reasons why this won’t become the overwhelming problem Joel worries about

1. Click fraud is hard to pull off on a large scale. If you try to use any one method to produce a lot of fraudulent clicks, it becomes easy for Google to track these.
2. Advertisers accept some level of click fraud. Pay-per-click advertising has been shown to produce a good ROI for many advertisers. The advertisers recognize that some click fraud is going to happen, but as long as the overall ROI remains good, it is an acceptable problem.
3. If it really becomes a problem, Google can start to audit publisher web sites on a site by site basis. They could use automated filters to flag any suspicious sites and not allow them into the network. Of course there will need to be an appeal process to let legitimate sites into the network after human review, but this shouldn’t be a big deal for Google to take care of.
4. Smart pricing helps control costs. Any sites that get clicks that produce poor results for advertisers will be hit by smart pricing. This reduces the cost of clicks on poor quality sites, and helps mitigate the problem.
5. Advertisers don’t need to use small publishers. If an advertiser feels that the clicks from small publishers don’t have enough ROI to justify the ads, the advertiser simply won’t use the sites. Advertisers can use site-targeting to select just the sites that they want their ads to appear.

Don’t worry, Joel, the sky is not falling. Do you thing Yahoo! and MSN would both be trying to join in on this game if it was a doomed business model?