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The Big Yahoo! Click Fraud Settlement

Kevin M. Ryan
The Big Yahoo! Click Fraud Settlement Kevin M. Ryan

The year 2006 will go down in search engine marketing history as the year of click fraud litigation. Only a few short weeks after the landmark class action settlement involving Google was announced, there comes a second and more robust settlement between Checkmate Strategic Group and Yahoo!.

The Lane's Gifts and Collectibles, et al. vs. Google settlement was criticized by many as a quick and easy one-sided settlement in Google's favor. Notifications sent to advertisers on the details were perceived as cryptic and ill-timed. Plaintiff's counsel was further criticized for earmarking over 30 percent of the 90 million dollar settlement for legal fees.

The Yahoo settlement differs greatly from the Google settlement, and while there are common issues that must be addressed, Yahoo has taken an entirely different approach to reaching out to advertisers and addressing industry concerns on click fraud.

Check and mate
The class action against Yahoo (formerly Overture; formerly GoTo.Com) began in June of 2005. In order to facilitate reaching the settlement, Yahoo invited experts and plaintiff's counsel -- including noted professor of information sciences at Pennsylvania State University Dr. Jim Jansen -- in to take a look at the Clickthrough Protection (CTP) system. 

According to documents released on the preliminary settlement, experts agreed that Yahoo was going above and beyond the requirements for preventing fraudulent clicks.

"We have been focusing on the click fraud problem since we invented the paid search advertising model," says John Slade, senior director of product management and head of Yahoo's click fraud protection team. "We invited plaintiff's counsel to study our system in numerous ways: such as the number of clicks that have been discarded. We have chosen to give away billions of suspicious clicks."

Among the definitions Yahoo maintains for discarded clicks are actions from blocked IP addresses, double-clicks and back browser clicks.

Dollars and sense
While there is no fixed dollar amount on the settlement, Yahoo has agreed to pay the plaintiffs legal bills, estimated at $4.95 million. Yahoo has also expressed a commitment to settle advertiser claims dating back to January 2004.

Another unprecedented move by Yahoo in this settlement is the commitment to provide cash refunds, not just advertiser credits, if it is proven that an advertiser was a victim of click fraud.

Yes, you read that correctly, full cash refunds.

Yahoo has agreed to extend amnesty in the form of cash refunds or full credits for future advertising. All submitted claims will receive status updates and will be overseen by a third-party mediation company and its appointee, retired federal judge Gary Taylor.

Open the kimono
Second only to timely refunds and disclosure, transparency is at the top of the list in advertiser demands. Revealing techniques used to uncover less than qualified or fraudulent clicks is a double-edged sword, and one that must be handled delicately.

In short, if you reveal known techniques and perpetrators it will make click fraud easier for a greater number of people to fight. On the other hand, doing so will also alert evil doers to your tactics and perhaps allow them to create new weapons of mass click destruction.

Slade was very clear about the need to avoid a scenario that would compromise the Clickthrough Protection (CTP) system but indicated that a balance was needed in future fraud developments with the desire for advertisers to see how click fraud is effectively squashed.

Continuing with the theme of going above and beyond the call of duty, Yahoo has expressed a series of commitments to advertisers.

In addition to Slade's leadership, a dedicated traffic quality advocate will be appointed to Yahoo that will address advertiser inquiries about fraud and traffic quality. Also, Yahoo will be providing access to the CTP team and supporting systems. Advertisers will be allowed to view these systems and discuss major issues with the click fraud team.

Without revealing tactics and technologies to the bad guys, it simply can't get any more transparent than that.

Filling the standards void
Yahoo has committed to working with third parties and industry organizations to establish industry standards. Yahoo will also invigorate industry efforts to help develop standards and disclose known perpetrators to a short list in the "must see" category.

Yahoo has also expressed an interest in giving back to the industry on a large scale. The search giant has dubbed the initiative "Industry-Wide Click Protection Efforts." Essentially, Yahoo has committed resources to working with a reputable third party toward building industry-wide efforts to combat click fraud, including development of industry-wide definitions of click fraud and a comprehensive lists of identified bots.

Yahoo will also be building a Traffic Quality Resource Center. The center will offer both technical and human resources to advertisers in the form of a forum to voice concerns. It will also publish best practices and guides. Marketers will now have a place to voice questions and get real answers.

Hats off to Yahoo
Hypothetically, one could make the argument that Yahoo is simply upstaging Google's recent settlement-- given the immense backlash that both Google and plaintiffs counsel received when the story broke. One could make that argument, if one hadn't the faintest idea as to how long a very complicated lawsuit can last.

Given the timing of the lawsuit -- over a year -- it would have been impossible to change the course of this action after seeing how the industry reacted about the last click fraud settlement. If the legal action had taken a bad turn, the best anyone at Yahoo could have hoped for was a solid spin with aggressive public relations efforts.

What the preliminary settlement and subsequent efforts put forth by Yahoo have proven is this: sometimes the best spin is no spin at all.

When I asked about the impetus for moving so aggressively in favor of advertisers, Slade responded with a very simple and succinct answer: "It's the right thing to do to protect advertisers and users."

And that's just about all anyone needs to hear. While "It's the right thing to do" doesn't have quite the simple charm of the other mantra in search ("Don't be evil"), defining what needs to be done as opposed to choosing to subjective definition of what to avoid is a very positive step forward.

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Kevin Ryan is the chief executive officer of Kinetic Results. .


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