Google ( GOOG), which has been criticized for providing too little information about how it fights click fraud, is starting to open up. Advertisers who buy keywords through Google's AdWords platform will now be able to get estimates on how often their ads have been fraudulently clicked. The move, which was reported earlier by The Wall Street Journal, was announced yesterday on an internal blog for AdWords clients. "It's definitely a good step toward addressing the concerns of marketers," said JupiterKagan analyst Sapna Satagopan, in an interview. "There are definitely some concerns about it." Whether these worries are resulting in cuts in search advertising spending is difficult to say. Satagopan says she sees no evidence that big advertisers are cutting back on search because of click fraud, a view that's backed by Google. She estimates that search spending will grow 24% this year to $6.5 billion and hit $7.6 billion in 2007. Click fraud is a problem for all search engines, since clients typically get charged based on the number of times an ad is clicked. Fraud sometimes takes place when a Web site owner tries to artificially drive up marketing costs of a rival. Publishers do this to boost their advertising revenue. The top search engine has repeatedly said that click fraud is a manageable problem that doesn't have a material impact on its bottom line. Google and its competitors have refused to provide specific data on click fraud out of concern that crooks would use it to their benefit. "One of the most controversial issues related to the topic of click fraud has been estimating how big the problem is," the company says on its
Inside AdWords blog. "Estimates from third-parties (usually from consultants who have a financial incentive to make the problem seem very large) have been both inconsistent and greatly exaggerated due to their methodologies." Google finds fault with a report released earlier this month by the market research Outsell that pegged click fraud as a $1.3 billion problem that affects both search engines and their advertisers, says Shuman Ghosemajumder, who oversees the company's anti-click fraud efforts. "What we have seen is that the vast majority of our most sophisticated advertisers have not had this as one of their top issues," he says. "They have seen that we have continued to provide outstanding" return on investment, he adds. Click fraud also gives investors, who are already skittish about Google, another reason to avoid the stock. Shares of the Mountain View, Calif.-based company have dropped 7% this year even though Google recently posted blowout second quarter earnings. Shares last traded at $386.28, down $3.08.