In February of 2006, Click Forensics was just getting off the ground.  We recognized the problem of click fraud was a big problem and that building a solution would be tough technical challenge.  We decided to bring in an expert in the field of data mining and anomaly detection in clickstream analysis.  That expert was Dr. Alex Tuzhilin.  Alex spent the day with us at our offices in San Antonio and provided us a roadmap for the evolution of our approach to indentifying invalid traffic. 

His contribution to us at that point was essential and provided tremendous insight.  After reviewing our approach he commented,

“Click Forensics has good data and this is a source of their advantage over the search engines. My role is to work with them to refine the scoring methodology to improve accuracy. Their approach is to incorporate as much data as possible to improve accuracy. The search providers simply don’t have enough data to have the most accurate approach.”

Shortly after Alex’s visit to Texas, I received a call from the lead attorney representing Lane’s Gifts in their lawsuit against Google.  He said, “Tom, I just hired your Ph.D!”  He told me that the judge in that case had mandated that an outside consultant review Google’s click fraud detection methods and publish a paper on the efficacy.  Alex spent many weeks at Google and wrote an insightful paper detailing their approach, ultimately describing it as “reasonable”.  The Lane’s Gift case was settled and Alex returned to his role as a professor at NYU.

Today we are thrilled to announce that Dr. Tuzhilin has joined the Click Forensics Advisory Board.  Few individuals have had more real-world and academic experience in the measurement of online traffic quality and its effect on advertisers.  His work has helped move the industry toward standards and cooperation.  After visiting us in Austin a few weeks ago and meeting with our technology team, Alex said,

“Having firsthand experience reviewing the state of the art in ad network traffic management, I was impressed with the level of technical sophistication the team exhibits and I was impressed with the directions they are going, Click Forensics has played a leadership role in helping the online advertising community to monitor quality of clicks on ads, including identification of invalid clicks. I look forward to continuing to work with the team.”

In addition to Dr. Tuzhilin, we have also added Dr. William Wright, the Chief Scientist at Paypal.  Dr.Wright, a Ph.D. in cognitive science, is an artificial intelligence expert who has built numerous analytical and predictive systems over the past twenty years, including the Falcon Credit Card Fraud Detection System at HNC, the Advanced Fraud Screen system at CyberSource, and numerous adversarial modeling systems for the U.S. military.  After spending time with our team, William concluded,

“Click Forensics has built a strong team of developers using very advanced machine learning and data mining techniques to detect fraud and measure traffic quality, they are pioneering a new area of fraud detection and I’m finding it satisfying to work closely with them on leveraging lessons from my past experience combating credit card and banking fraud.”

One out of every five employees at Click Forensics holds a Ph.D.  Adding the expertise of Alex and William dramatically enhances our ability to meet our goal of providing the state of the art approach to traffic quality management.  I appreciate their contributions and look forward to benefiting from their knowledge in the future.

While attendance at SES San Jose was definitely down this year, it was still a great show.  I enjoyed meeting people at our booth and appreciated the hard work of our team pulling that all together.  We met a lot of interesting folks and enjoyed hearing feedback on the new Click Forensics dashboard.

The big hit, of course, were the “Stress Einstein” squishys! Who wouldn’t want of these guys!  They reminded me of the bobble-heads in “Night at the Museum 2″  

I also enjoyed participating in a session titled, “Ads in a Quality Score World“.   Mike Grehan moderated the panel and both Yahoo (Tomaso Pozzi) and Google (Jonathan Alferness) participated.  WebProNews covered the session and wrote a nice recap. 

The other highlight of the week for me was our Click Quality Council dinner.  We had over 25 executives from ad networks, publishers, advertisers and search engines join us for a great dinner of conversation, networking and fun!

The conversation is always interesting when you have people representing all corners of the online advertising ecosystem.  It was the third year we have hosted the CQC dinner in San Jose and our 13th since the Council was formed in 2006.

Congratulations to the newlyweds… after a long, long courtship Microsoft and Yahoo finally managed to get together (the prenuptials are still being sorted out!).  I have been in favor of this union for sometime now.  Google owns a ridiculous share of the pay per click advertising market and desperately needs a competitor.  Microsoft + Yahoo = Competition.  As I have said for the last several years, the lens we look through at Click Forensics is that of the advertiser.  Competition is always good for the advertiser.  

The growth of online advertising, in particular pay per click advertising, has been meteoric. It is a great model and one that has proven hugely successful for hundreds of thousands of advertisers large and small.  It is a model that will continue to grow as large advertisers shift more dollars from unmeasureable and less effective traditional media.  It will grow because it uses context, targeting and relevancy to the highest level.  Yahoo’s audience enhanced by Microsoft’s technology will mean innovation and efficiency.  There is no doubt; Google will continue to have success.  But the new partnership will make the online world even more attractive for advertisers.

Today there are standards in place to help hold the search providers accountable.  There are better reporting, campaign management and keyword tools to add to the efficiency.  I see a world in the near future where display advertising will begin to make significant gains from the data that exists in search. Context, targeting and relevance can improve every medium and this partnership will leverage that data to a much higher level than before.

So congrats to you both for a new start.  The entire advertising community is pulling for you and expecting big things. I do need to warn you… expectations are high and the honeymoon is short.  

Over the past week four major players in the online media space have announced accreditation to the Interactive Advertising Bureau’s Click Measurement Guidelines.  This list includes Yahoo!, Google, Microsoft and Business.com.  I wanted to take a moment and explore why you should care about this development and what accreditation means for advertisers.

The IAB is a publisher-focused organization that has led the process to develop click measurement guidelines.  The task force is made up of thirty or so companies representing the online advertising community.  Click Forensics has been a member since day one and participated in every step of the process.

There are three main benefits for advertisers and conversely, three concerns advertisers need to keep in mind associated with the entire process.  First, the benefits;

IAB Accreditation Represents a Commitment
The process to become accredited to the IAB guidelines is time consuming and certainly not free.  At Click Forensics, we have first hand knowledge of this and can assure you that any company that takes time and spends the money to become accredited is committed to their customers.  The level of detail the auditors go into is amazing.  Our community is fortunate to have auditors that have demonstrated a deep commitment to both the development of the process and the implementation of the guidelines.

IAB Accreditation Demonstrates Leadership
The IAB established a gating period to allow member companies and others to become accredited to the guidelines.  The companies mentioned above were the first to announce compliance.  This is important because it represents a sense of urgency among these four that enhances the urgency for others.  As an advertiser, you should reward these leaders with business.  They were first out of the gate and in my book that demonstrates leadership.

IAB Accreditation Means Better Quality Traffic
The IAB Guidelines are a lengthy narrative of “best practices” and rules in delivering quality traffic to advertisers.  While it is not intended to be a complete list, it serves as a firm foundation and includes practical steps to help ensure advertisers get what they pay for.  By working with an accredited ad provider, advertisers will be assured that the clicks they are buying have met the guidelines established by the industry.  This is a good thing and an excellent first step.

While we applaud the efforts of the IAB, Media Rating Council and member companies who participated in this process, there are things advertisers need to keep in mind.  There was a great deal of discussion and debate during the nearly three years of meetings it took to develop these guidelines.  In that process, there were a lot of valuable and important items that fell to the floor.  This is a good start, not a perfect process.  Keep in mind the following;

IAB Accreditation is a “Moment in Time” Process
The process for an ad provider to become accredited is a long one.  The auditor is invited in for a pre-assessment then the actual audit begins.  At the end of the process accreditation is awarded.  The problem is there is no mechanism for ongoing compliance.  When we buy gas at the gas station there is a meter that is routinely calibrated to ensure that when we fill our tank with 20 gallons of gasoline, we get 20 gallons.  This approach is not taken nor addressed in the guidelines.  While an annual audit is suggested in the guidelines, it is still important for advertisers to be monitoring their campaigns and holding the ad providers feet to the fire for every click.

IAB Accreditation Does Not Cover Everything
The 27 page Guideline document is quite comprehensive.  Our task force worked hard to ensure that both the guidelines are made clear and that the standard for measurement is defined.  However, when you consider that the dominant constituency in this process was multibillion-dollar ad providers, you might imagine not everything met their liking.  A few examples of chaff that hit the threshing room floor included:

Click ID – Each click should have a unique identifier so investigations can be “apples to apples”
Persistent Cookie – It’s important that ad providers can identify unique visitors to ensure they are billed for only once.
Standards for Investigation – Advertisers deserve to feel confident that they get what they pay for.  By setting an investigation format and agreeing to a timeline, ad providers can build trust with customers.

IAB Accreditation is a Roadmap
There is a Japanese proverb that says, “Beginning is easy and continuing is hard”.  There is truth in this as it relates to the guidelines.  We have begun the process.  We have released guidelines that will make the world of online advertising a better place.  Now we should look to leadership to take the next step and continue what we have begun.  The current guidelines will serve as a roadmap to the future standards.  We need to examine the items removed, listen to the community and think of better ways to ensure advertisers get what they pay for in the future.  The roadmap has been built.  Now we need to move on.

In January of 2006 as Click Forensics was just beginning as a company, I wrote the following challenge to our industry:

“Define standards for what an unwanted click looks like. We believe that there are certain characteristics or attributes that are common to a large percentage of click fraud. We are working with publishers and advertisers to agree on common ground and work together to expose it. Once this is developed it should be published so that the entire community can benefit from it.”

Today, over three years later, we have the cooperation of community leaders, the foundation of technical standards and the desire to continue to improve on what we have built.  I invite you, to join us as we build a future of ongoing growth and improving effectiveness by enhancing the process of online advertising.  I can assure you that both the Click Quality Council and Click Forensics will continue to support the work of the IAB and other industry organizations to work together to make our community a better place.  Let’s not stop with the foundation.

From spyware to bots to viruses and other unimaginable hazards… the web can be a scary place.  As far back as Prodigy in the early days of the online world, scams have been a part of the party.  The Internet is simply a new way for the bad guys to rip off unsuspecting consumers.  The key difference though is that the reach is enormous and the damage can spread to more people, more quickly than ever before.

Enter scareware, new way to trick unsuspecting consumers into parting with their money.  USA Today recently had an article  about the tricks and tactics used to perpetrate this latest rip off.  Unfortunately, online advertising has become an accomplice to the crime.

Scareware is worthless software that allegedly removes viruses from your computer.  Anyone who has surfed the web knows how easy it can be to become infected with a virus.  The damage to the users computer is often measured in slowed performance, unwanted clicking and potentially even more nefarious things like key logging and password swiping.  Now, the bad guys are selling “scareware” to solve a problem that may not actually exist.

The first such program was called “SpySheriff,” built by a team of cyber crooks from Russia.  The Anti-Phishing Working Group recently reported that scareware infections rose 48% in the second half of 2008.  The growth is tied to the ease of distribution and weaknesses in online advertising and the web in general.

There are several ways these fake products are being distributed.  Phony pages are created using hot search key words such as “American Idol” or “iPhone” and drive the unsuspecting consumer to the infected page.  Recently the Facebook email scam was used to send people to a page by promoting things like “best video.”  Since these emails came from your friends, millions clicked.  Twitter has become a vehicle for distribution. Phony Twitter accounts are created and enticing titles of posts encourage people to click.
 
Additionally, the bad guys are simply buying display or search ads.  They rotate in infected pages to the landing page.  It is virtually impossible for an ad provider to scan every ad impression and linking page.  This loophole creates an opportunity for the bad guys to drive significant traffic to infected pages at a very low cost.  Microsoft reported finding 4.4M installations of one such program, so the scale is enormous.  Do the math… at $49 or $79, that is big business.

Once someone lands on the page, getting off is nearly impossible.  Immediately upon landing, a “system scan” begins.  The results are, of course, showing that your computer is infected with a number of viruses.  Conveniently you can buy the product at that point and they take your money and run.  If you try to move away from the page, or cancel, an endless number of scans take over your screen.  Essentially, users must “control/alt/delete” their way out or restart.

The danger in this scam is not limited to monetary damage to the consumer.  These type of pages and methods to attract clicks are the same methods used to install spyware, malware and perpetrate click fraud.  To their credit, USA Today has done a good job over the last few years of highlighting the dangers of the web to the average consumer.

The FTC is cracking down.  They have identified products like WinFixer, DriveCleaner and XP AntiVirus as worthless and they are going after the owners.  The problem is that like the click fraud crooks, these guys are in remote locations and move their servers often. Tracking them is a full time job and extremely difficult.  The search engines are trying to help as well.  Bing has a neat feature that highlights “at risk” url’s.  Yahoo has similar product built with McAfee.

 
Trust is what keeps consumers clicking on ads.  Without stepped up industry efforts from organizations, like the Anti Phishing Working Groups and others, trust could be diminished.  Like click fraud, scareware is damaging trust.  It takes a community effort to stay after the problem and build solutions to take the scare out of the internet.

The New York Times ran a feature article this week on click fraud.  Why you ask?  Because, like spam, click fraud is still a big problem for advertisers. The article pointed out that as the economy tilts downward, advertisers cannot afford to waste dollars. This is a good news, bad news scenario for online advertising.

The good news is that online advertising is highly measurable.  Large advertisers that traditionally have been offline are now shifting dollars online.  This fact has contributed to online advertising continuing to grow as traditional media is in decline.

The bad news however, is that this window of opportunity is narrow.  The online advertising community must embrace measurability and enhance trust to gain share of spend from the big guys. 

There was a significant event this week that helped in that effort.  The Interactive Advertising Bureau (IAB) released from draft the Click Measurement Guidelines.  This document, three years in the making, is a great start for our community to come together around standards and enhance trust. Dozens of ad providers are busily working with third party audit firms to become accredited to the new guidelines.  Advertisers will have a way to gauge the level of commitment from ad provides when this list is made public.

Click Forensics was proud to represent advertisers in this process.  In fact, we were the only traffic quality management firm to participate and were quoted in the press release from the IAB.  Many thanks are in order for the 38 members of the working group for a job well done.

Now, we find ourselves at the beginning.  An opportunity exists to build on the foundation laid by the IAB member companies.  Click fraud is going to be a problem for a long time to come.  Progress is being made.  But in order to re-accelerate the growth of online advertising we need more than standards.  We need a community effort to work together to ensure advertisers have confidence that they get what they pay for.  Articles raise awareness, documents create a process and awareness builds urgency.  But ultimately it will take the effort of everyone in the community to get to the day where trust is commonplace and online advertising becomes the marvelous, measurable media it can be.  We look forward to continuing our efforts toward that goal.

A few weeks ago I spoke at the Search Engine Strategies conference in New York.  I was struck at the conference that people in our industry had their heads down.  I recognize the economy is tough and that jobs can be hard to find and keep.  But guess what… online advertising will win!  Like you, I have friends in traditional media.  Newspapers and print in general have been hammered.  Radio and outdoor is fading and television is showing signs of weakness.  The dollars are shifting to online and with good reason.

In my preparation for the presentation (which can be found here) I spoke to senior executives at digital agencies and leading online advertisers.  While the title of my presentation was, “Measurement Matters” the focus was change.  There is no doubt that the world of online advertising is at a crossroads.  According to a recent IBM survery, over 60% of all advertisers are cutting budgets… 80% of them are trimming more than 15% of the spending.  This urgency was clear in this quote from the report,

“Advertisers are aggressively shifting their spend to even more interactive, measurable formats, as providers struggle to move “beyond advertising” to new forms of communication that combine the ROI characteristics of direct marketing with the brand characteristics of traditional advertising.”

The tone I heard when speaking to advertisers and agencies was consistent… “Now more than ever, we need to be sure we get what we pay for.”  Jobs are on the line, performance is not optional and measurement matters.  Where can advertisers get better value and solid analytics for performance advertising?  Online of course!

I’ve identified five specific attitudes that need to be addressed to fully capitalize on the shifting dollars…

1. Stand on our strengths – Online advertising is measurable, has a growing reach and new and creative ways to deliver meaningful ad impressions to consumers.  These are meaningful strengths that need to be communicated.
2. Tout the targeting – Saying that television advertising can target is like saying you can tell what kind of fish are in the water from the boat.  Targeting (behavioral, demographic and geographic) are a strong suit of online advertising that is unmatched in traditional advertising.
3. Get creative with compensation – Advertisers need to (and will) hold agencies feet to the fire.  Agencies that embrace this and are open to new models of compensation, will win.
4. Measure, measure and measure – Performance standards, benchmarking and goals are critical for success.  The good news is that online holds that as a competitive advantage over traditional media.  More tools are available to help with this and insight into campaigns makes a major difference in success.
5. Look beyond the “Big Two” – Yahoo and Google hold a lot of the cards when it comes to online.  However, there is a growing community of quality ad networks and publishers that can deliver strong results.  I’ll talk more about how to find them in a future project.

My presentation included the chart below highlighting a SWOT (strengths, weaknesses, opportunities, threats) analysis I did on our space.

The current economic conditions create an opportunity for those of us in the digital world.  Now is not the time to complain… it is the time to aggressively promote the benefits that online holds over traditional media.

The problem of botnets is getting worse, not better.  In fact, over 30% of all click fraud comes from botnets, maybe even YOUR computer!  Ever wonder how botnets work?  The BBC has acquired control of 22,000 computers and have been demonstrating how it works.  The videos are easy to understand and  very interesting.

Cyber crime risk exposed
How cyber criminals attack websites
Is your PC doing a hacker’s dirty work?

Click fraud is costing advertisers millions of dollars a year.  So how can you protect your computer from becoming a party to the crime?  Again the BBC site has an excellent article with practical steps called, “How to keep your computer secure“.  Take time to read it and be sure you are doing your part to reduce click fraud.

Last week I wrote about the Interactive Advertising Bureau’s release of the Click Measurement Guidelines. This document is extremely important for advertisers, agencies and ad providers. It defines the process that will be used to measure and deliver clicks to advertisers. The Click Quality Council is hosting a call to discuss the guidelines, describe the process used to develop them and the impact for the industry.

The call will be Wednesday March 18th at 4 PM ET/ 1 PM PT and is open to all members of the online advertising ecosystem. We will have George Ivie of the Media Rating Council as our speaker. George worked directly with the IAB in facilitating discussion and building the guidelines. Registration is available by clicking here.

On a recent trip to New York, I was asked by an ad provider executive, “Which side are you on?” At first I didn’t know what he meant, but he clarified it for me by saying that in the world of advertisers, ad networks, publishers, and ad providers, it’s important to know whose side you’re on.

When I told him that we are on the side of the advertiser he paused, thought about it and then the light bulb went off. What’s good for the advertiser is good for our entire industry. 100% of the over $22B spent on search advertising comes from advertisers. They pay the bills for search engines, ad providers, parked domain companies publishers as well as those of us that are working to provide tools to improve traffic quality.

Despite our diverse client base, the lens Click Forensics looks through for every decision we make is that of the advertiser. While Click Forensics works with a number of advertisers and agencies, we also have many clients that are ad providers. This list includes search engines, ad networks, publishers and even parked domain companies. The reason these companies choose to work with us is that we provide insight into the traffic quality they are selling to advertisers. They are able to use this information to route, block, price and value the traffic to help advertisers get a better return on their ad spend.

Smart sellers look through this lens too. Companies like Yahoo that asked advertisers how they could improve communication. The result was the cooperative development of the FACTr system enabling advertisers to communicate concerns to Yahoo. Companies like Lycos, who realized early on that “quality matters” and began working to enhance their quality using traffic insight tools. And industry organizations including the Click Quality Council, while made of all parts of the ecosystem, is always advertiser focused.

Advertisers drive our industry and that reality will become even clearer in the future as mobile grows more important and display begins to look like search. We are proud of our involvement and the work of the Click Quality Council. The CQC is an example of an industry organization that is not dominated by one constituency. The over 100 members include companies from every corner and every perspective of the eco-system. They sit around the virtual table as equals, all understanding it is the lens of the advertiser that matters.

So this week, as the IAB releases the Click Measurement Working Group Guidelines, it is important that they are reviewed through the lens that matters, that of the advertiser. We should be asking, are these guidelines fair? Do they have enough substance to improve traffic quality and help ensure advertisers get what they pay for? Do the guidelines improve transparency and enhance trust between buyers and sellers?

I attended the IAB’s annual conference in Orlando this week and have a clear picture of their lens. We applaud the IAB’s leadership and the work of the Media Rating Council and task force members who produced a foundational document. Our hope now is that we can work together to build on this foundation to build trust, enhance transparency and accelerate the growth of online advertising.