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Internet Con-Artists Are Growing and the Search Engine Police Are Finally Waking Up

Posted on: Wednesday, 2 August 2006, 12:00 CDT

ST. PETERSBURG, Fla., Aug. 2 /PRNewswire/ -- Because of click fraud, millions of search engine users are wasting time and effort, trying to find their way through irrelevant sites or scams that pull consumers into advertising traps. Advertisers and companies with high-quality relevant sites are losing the paid search rankings they deserve to these arguably fraudulent sites. Few consumers are aware of what constitutes click fraud, and before they can detect the scam, consumers have already wasted their valuable time and the advertiser's money looking for the relevant information they need.

Tim Daly, Senior Vice President of Marketing at SendTec(TM), Inc., a direct marketing services organization specializing in search engine marketing says, "Until recently, these internet con-artists have been able to manipulate not just consumers, but also search engines across the board. Click fraud has become so sophisticated that it has taken on other forms such as 'Click Pimping.' A negative version of 'Search Arbitrage,' click pimping is the latest and most subtle form of click fraud and leads unsuspecting web searchers to unexpected and undesired content."

Search arbitrage is a tactic that is gaining new attention on the web. It occurs when a host site makes money by spending less on search ads on one Pay- per-Click(1) search engine to attract traffic than they earn from carrying nothing more than search ads from a competing Pay-per-Click search engine. Some host sites that engage in search arbitrage do provide objective content that is helpful for consumers, so it is not fair to place all in the same bucket. However, a new breed of internet con-artists have taken advantage of this practice by using advertisers to provide the sole content of their site and intentionally directing traffic against the advertiser's original plan.

These search arbitragers have recently been accepted into the distribution network of major pay-per-click search engine providers, making it less detectable. In click pimping, the phony sites "appear" to be acceptable web sites and partner themselves with search engines as distributors of Pay-per- Click ad listings rather than content listings. Unable to tell the difference, consumers are left confused and often misled when searching the web. Rather than finding the information they want on the first click, a consumer will have to click on the paid listing from the search arbitrager, referred to as double-click scenario, in order to get back on track with their search. And more often than not, the consumer is duped into clicking on an irrelevant link, as the arbitrager's goal is not relevancy, but redirection to a higher priced ad.

In a landmark development, Google recently announced on its "Inside AdWords" blog that it will begin to weed-out sites with off-topic and irrelevant content. Officially, Google has changed its "landing page quality" portion of the scoring algorithm - which means that web sites will have to pass stricter quality tests to show up on Google search results. We can construe from this that the click pimpers will be deterred from their practices, as they will now be forced to pay higher minimum Cost-Per-Click (CPC), thus eating into their huge profit margins and making their practice less lucrative. This change comes close on the heels of Google agreeing to a $90 million settlement in a click fraud case.

Daly adds, "Informed companies and consumers are slowly but surely waking up to this practice and Google's latest action is good news. We are now watching other search engines to see if they follow suit." Daly, a leading authority on the subject of search arbitrage and click pimping will be featured together on a panel with a top level executive at Google to speak about this issue at the upcoming Search Engine Strategies 2006 Conference in San Jose, CA on August 8th.

Not addressing these issues can obviously have serious repercussions. SendTec offers some recommendations to marketers to proactively protect themselves. Online marketers must document web logs on a daily basis and keep tabs on who is sending traffic to their site and from what URL. Conversion performance from each of these sites should be evaluated and if results are substandard, they can submit a request for click fraud refunds.

"Industry watchers believe that to some extent the actions taken by Google are directed at Yahoo's distribution network partners. With millions of dollars at stake, this potentially could be one of the most significant changes Google has made in years to its AdWords program and the ramifications are vast," says Daly.

For further information on Click Fraud, visit http://www.sendtec.com/.

Tim Daly is Senior Vice President of Marketing for SendTec. He is a subject matter expert on Search Engine Marketing and is the author of numerous whitepapers and articles related to the industry. Tim oversees the Search Engine Marketing team at SendTec and has developed the technical framework for the proprietary bid management tool, SearchFactz. Tim holds a master's degree in marketing from the Lowry Mays School of Business at Texas A&M University and a bachelor's degree in business economics from the State University of New York at Oneonta.

About SendTec, Inc.

SendTec, a future-focused, direct-marketing organization, offers next generation Search Engine Marketing (SEM) services aimed at dramatically increasing ROI. SendTec's expertise in direct marketing gives them a strong edge in the booming SEM industry. Since their founding in 2000, SendTec has expanded their services based on clients' needs to include Direct Response Television (DRTV) consulting, production, and media planning/buying; Internet Pay Per Performance; Direct Response Advertising; Online Direct Marketing; and Response Optimization and Tracking. SendTec is headquartered in St. Petersburg, Florida with offices in New York City. SEM clients include Intuit, uBid and Extra Space Storage. SendTec also works with Home Depot, TiVo, Blackberry, Avon, Columbia House and NetFlix on other direct-marketing campaigns.

Safe Harbor

To the extent that any statements made in this release contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as "expects,""plans,""will,""may,""anticipates," believes,""should,""intends,""estimates," and other words of similar meaning. These statements are subject to risks and uncertainties that cannot be predicted or quantified and consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, the effectiveness, profitability, and marketability of such products, the ability to protect proprietary information, the impact of current, pending, or future legislation and regulation on the electronic marketing industry, the impact of competitive products or pricing, technological changes, the effect of general economic and business conditions and other risks and uncertainties detailed from time to time in our filings with the Securities and Exchange Commission. We do not undertake any obligation to publicly update any forward-looking statements. As a result, you should not place undue reliance on these forward-looking statements.

(1) Pay-per-Click or PPC is an advertising technique used on websites, especially search engines. Pay-per-Click advertisements are usually text ads placed near search results; when a site visitor clicks on the advertisement, the advertiser is charged a small amount. Variants include pay for placement and pay for ranking. Pay-per-Click is also sometimes known as Cost-per-Click or CPC (http://www.wikipedia.org/).

SendTec, Inc.

CONTACT: Huma Gruaz for SendTec, +1-312-245-9805 ext. 101, orHuma@alpaytac.com

Web site: http://www.sendtec.com/http://www.wikipedia.org/

Source: PRNewswire

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