Author Archives: ghotchkiss

Year End Lists and the Stories They Tell

I was just putting a Search Insider column in the can for next week (it will run next Thursday) about the year end lists that are coming out of the various search engines and it brought up a few observations, together with a story that hit my desk about Google capturing 63% of searches.

First of all, the top ten lists. Here are the reported lists from each of the engines

Google Yahoo Microsoft
  1. Bebo
  2. Myspace
  3. World Cup
  4. Metacafe
  5. Radioblog
  6. Wikipedia
  7. Video
  8. Rebelde
  9. Mininova
  10. Wiki
  1. Britney Spears
  2. WWE
  3. Shakira
  4. Jessica Simpson
  5. Paris Hilton
  6. American Idol
  7. Beyonce Knowles
  8. Chris Brown
  9. Pamela Anderson
  10. Lindsay Lohan
  1. Ronaldinho
  2. Shakira
  3. Paris Hilton
  4. Britney Spears
  5. Harry Potter
  6. Eminem
  7. Pamela Anderson
  8. Hilary Duff
  9. Rebelde
  10. Angelina Jolie

First of all, I say reported because these aren’t actually the real top searches. Danny Sullivan had a good post pointing out the inconsistencies. These are filtered, sanitized and in Google’s case, apparently manipulated. The same could be true for the others, but unfortunately, they haven’t provided a tool like Google Trends that we can use to trip them up.

Be that as it may, it’s the comparison between them that holds the story that I touched on in the column, but would like to explore in greater depth.

Look at Google’s list. It’s obvious that people are using Google to interact with the web. They’re using it like a tool, to get to where they’re going. This becomes more apparent when we add the real top searches, the navigational queries that were filtered from the list.

googletrendsnav

People use Google to get to Yahoo, MSN..and even Google (okay, I’m still trying to figure that one out).

Look at Yahoo and Microsoft’s list. It’s the online equivalent of the trash tabloid section of the local magazine rack. These aren’t essential searches, these are fluff. It’s the searching you would do if you had time to kill. It’s the searching you would do if you had nothing better to do. It’s the searching you would do if you weren’t using Google for something useful.

I’m sure part of this comes from Yahoo and Microsoft’s portal roots. It speaks to a different philosophy towards search. Google aims to be the Web’s Swiss Army knife. It appears that Yahoo and Microsoft aspire to be the Entertainment Tonight of the Internet. When it comes to the Internet, Google is infrastructure, Yahoo and Microsoft are superstructure.

And that’s a fundamental issue for Yahoo and Microsoft. To win, or even hold their own in search, they have to offer tool-like utility. They have to live, breath and eat usability. They have to beat Google at Google’s own game. It’s not an easy task, and it’s getting harder every day. The latest numbers from Hitwise show they’re losing ground, not gaining it. According to the just released report, Google has a 62.79% share of searches for the 4 week period ending Dec. 16, compared to 21.9% for Yahoo and 9.28% for Microsoft. The number has been consistently trending up for Google, and trending down for the competition.

One last thing. Yahoo can say they focus on usability, but take a tour of the interface they put on their top 10. This would be enough to make Jakob Nielsen go postal. It’s one of the most irritating interfaces I’ve run into in a long time. It’s completely in Flash, launches with an irritating video clip, and makes you hunt around for the plain HTML version. I just know somewhere in Sunnyvale, there’s a team patting each other on the back for putting this thing together.

Stepping into the Did It/Web Guerrilla/Searchengineland Fray

I came in this morning, and what did I find? Another tempest stirring up in the blogosphere! Danny Sullivan, Kevin Lee and Greg Boyser have all waded in, so what the hell, I’ll dive in too.

First, a little history. Did It President David Pasternack started the whole deal sometime ago when he took a swipe at SEO, calling for it’s imminent death. I’m not going to elaborate, but for those of you interested, here are links to the original article, and a follow up article.

Now, Kevin Lee from Did It has written a ClickZ column, adding some clarity, but also predicting organic results being pushed below the fold because sponsored ads are more relevant. I’m going to set aside for a moment the SEO spamming question that Kevin raises. Greg and Danny do a pretty passionate job of defending SEO.

I’d like to speak from another perspective, the search user. There are a couple things that should be considered here.

First of all, contrary to Kevin’s point, just paying for an ad doesn’t make it relevant. That’s because the vast majority of marketers don’t consider the intent of the search user. They assume that everyone is ready to buy right now. That assumption is at least 85% wrong. Go ahead, do a search for any popular consumer product. I’ll bet the ads you see are talking about lowest prices, free shipping, guarantees and other hot button items that are aimed at a purchaser. But study after study shows that search engines are used primarily for product research, not purchase. The problem is that marketers have a very biased set of metrics they use to measure return. They measure ROI based on purchase, so when they test, these types of ads tend to pull the numbers they’re looking for. But the metrics aren’t capturing the full story. The 85% of users that are researching are basically ignored. No value is assigned to them. Until PPC marketers figure this out, they’re not doing the user any favors.

Our research shows that a very interesting interaction takes place with the researcher versus the purchaser in that Golden Triangle real estate. Both users look at the top sponsored ads when they appear. They both look at the organic listings. Frankly, there’s not a lot of difference between the scan patterns. But it’s where they click that makes the difference. When they’re ready to buy, based on a recent eye tracking study, about 45% click on top sponsored, and about 55% clicked on the top 1 or 2 organic links. Almost a 50/50 split, FOR THOSE THAT ARE READY TO PURCHASE. But when we look at the other 85%, the ones doing research, EVERYONE OF THEM clicked on the organic link. And in the test, the same site appeared in both spots, so relevancy of the destination was equal. As long as users want organic links, organic optimization continues to be important.

Look, David Pasternack can ring the funeral bell for organic all he wants, but the fact is, it’s not his call. It’s the user’s. Yahoo has actually done exactly what he and Kevin are predicting. They’ve moved organic down the page, jamming more sponsored on the top. Based on Did It’s comments, this should be good for the user, right? It should be more relevant, pushing the “spam” down below the fold. Wrong. Google kicked Yahoo’s ass in user experience in our latest study by every metric we looked at. And they’re definitely winning in the big picture, including stock prices. The difference. About 14% of Yahoo’s screen real estate (at 1024 by 768 pixels) was reserved for top organic. 33% of Google’s real estate went for top organic. You want more proof? Ask, back in the Ask Jeeves days, pushed organic totally off the page, doing exactly what Kevin and David call for and filling the top with sponsored. Take a look at Ask now. Organic is back above the fold. Spend some time talking to Ask usability lead Michael Ferguson about how the absence of organic worked out for them.

And it’s not that sponsored links provide a bad experience. Our study proves Kevin somewhat right. Top sponsored links, for commercial queries, delivered the highest success rates. But those were in highly structured and commercially oriented scenarios. That doesn’t represent all searches. It’s not that we avoid sponsored links, but we do want a choice and we want relevance, ALIGNED TO OUR CURRENT INTENT. Google has recognized that to a much greater extent than their competitors, and they’re eating their lunch.

There’s a reason why 70% of users choose organic. We’ve done a number of studies over the past 3 years, and that number has remained fairly constant.  It can’t be because those results are filled with spam. I actually just chatted with Marissa Mayer at Google, and she continually emphasized the importance of organic on the page. It’s a cardinal rule there that at least one organic result will always appear at 800 by 600. It’s mandated by Larry and Sergey. And that’s because they know it’s important to the user. We want alternatives. And we will be the judge of relevancy. That’s why Google has stringent click through measures on their top sponsored ads. If they don’t get clicked, they don’t show. The top of the Golden Triangle is reserved for the most relevant results, period, and in more than 50% of the cases, those are organic (either through OneBox or traditional organic).

So we in this industry can debate sponsored versus organic. We can make predictions. We can post in blogs til the cows (or frogs) come home. But it’s not our call. It’s not even the engine’s call. It’s the user’s.

Yahoo’s Quiet Guy is Moving On

First published December 21, 2006 in Mediapost’s Search Insider

Last spring, I attended the Pubcon conference in Boston put on by Webmaster World. During one of the breaks between the sessions, I was tucked away in an empty room trying to keep up with the inevitable flood of e-mails.

Well, truth be told, the room wasn’t quite empty. There was another person, also hunched over a laptop, working at the table next to me. We were both pretty absorbed and quiet. It was one of those situations where you’re wondering whether it’s better to not introduce yourself and run the risk of looking like you’re ignoring the person, or break the silence and acknowledge the other person by way of a quick nod and hi. I eventually opted for the later, and I’m glad I did. This was the way I met Yahoo’s Tim Converse.

Tim posted on his blog earlier this week that he’s moving on from Yahoo. Knowing Tim, albeit not that well, I sat and thought about this for awhile. It brought up a number of interesting questions about our industry. I thought them worthy of comment.

Don’t Judge a Book…

Tim is a pretty quiet guy. In fact, many readers of this column probably don’t know who Tim is. He’s the head of Yahoo’s anti-spam patrol, so he’s a bit like the Matt Cutts of Yahoo. But not quite. While Tim came to Yahoo through the acquisition of Inktomi way back in 2003, he has generally let the spotlight shine on his counterpart at Yahoo, the more vocal Tim Mayer. In an industry notorious for flocking the algorithmic cops at the major engines (see my first encounter with Mr. Cutts) Tim Converse can walk through most shows unscathed and unrecognized. In fact, it’s only very recently that I’ve seen Tim participate on a panel at a show, at this fall’s Pubcon in Vegas. Tim is not as comfortable in the public eye as his counterparts; he doesn’t have the same practiced ease of the other Tim or the open charm of Matt, but it becomes quickly apparent that his brain is packed with algorithmic gold. This guy knows his stuff. And if you’ve ever had the chance to chat with Tim or read his blog, you’ll find a razor-sharp wit and some pretty deep thinking lies below that deceptively calm exterior.

Moving On

The post went live on Tim’s blog on Monday. The well-wishers that commented made it clear that while many may not know Tim, those that do have a great deal of respect for him. Posters included Cutts and Danny Sullivan. While Tim’s announcement didn’t elicit the same type of response that Sullivan did when he dropped his bombshell that he was moving on from the Search Engine Strategies franchise (imagine what would happen if Cutts posted that he was leaving Google), one can’t help but wonder what the impact on an already battle-sore Yahoo might be. Certainly no one is irreplaceable, but Tim was a definite asset in the relevancy war staged by the big three. He’s looking forward to seeing the showdown continue, albeit from a distance: “Who is going to have the highest-quality general web search a year from now? I think it’s still going to be a brutal battle between the current top three (including MSN), and the winner will be whoever can innovate and execute the fastest. I’m sorry I’m going to watch that particular game from the sidelines, because it’s definitely not even halftime yet.”

Hot Property

My other thought that came from Tim’s departure is more a precursor to what will inevitably happen at all the major engines. The people who serve on the algorithmic side of the engines, like Tim, are privy to an extraordinary amount of proprietary information. Now with the introduction of quality scoring on the sponsored side, the same is true for these teams as well. At some point, all that knowledge is apt to walk out the front door and never return. I’m sure Yahoo’s corporate legal department has a sheath of nondisclosure and noncompete agreements, but those have always been relatively hard to enforce when put to the test.

This concern over trade secrets is certainly not unique to search, but with the importance of search for millions of marketers, it does put a universally recognized premium on the value of that knowledge. It’s inevitable that others from all the three engines will follow Tim’s lead and move along. When they do, they will suddenly find themselves hot properties–even if they tend to be quiet guys, a little on the shy side.

Google Pulls Back the Curtain on Quality Score – a Little

At the last few shows I’ve attended, an interesting theme emerged. Up to now, reverse engineering an algorithm was exclusively a preoccupation on the organic side. SEO’s would try to out wit and out guess Yahoo and Google’s black box. But with the introduction of quality score, that game suddenly moved to the sponsored side of the strategy table. Because the factors that went into the quality score weren’t disclosed, particularly by Google, it was a game of test and guess by advertisers. A lot of show attendees were expressing frustration that there wasn’t more transparency. Google has apparently heard the call, and yesterday issued a clarification.

Google’s advice?

  • Link to the page on your site that provides the most useful and accurate information about the product or service in your ad.
  • Ensure that your landing page is relevant to your keywords and your ad text.
  • Distinguish sponsored links from the rest of your site content.
  • Try to provide information without requiring users to register. Or, provide a preview of what users will get by registering.
  • In general, build pages that provide substantial and useful information to the end-user. If your ad does link to a page consisting of mostly ads or general search results (such as a directory or catalog page), provide additional information beyond what the user may have seen in your ad or on the page prior to clicking on your ad.
  • You should have unique content (should not be similar or nearly identical in appearance to another site). For more information, see our affiliate guidelines.

While a step forward, there’s still a lot hidden under the hood of this algorithm. Anytime you put algorithms in charge, it opens the door to reverse engineering, and you can bet the SEM community is going to launch a barrage of tests to try to determine the nuances that determine the quality of a landing page in the eyes of the quality score algorithm.

What this does do, however, is increase the complexity of the quality score substantially. There are now three seperate components, including user click through, ad quality and landing page quality. Each addition exponentially increases the complexity of the algorithm, making it a lot tougher to game. It harkens back to the original introduction of the Google PageRank algorithm, which went beyond on-the-page factors to introduce the whole concept of authority within the structure of the Web.

How important is the quality score? It’s vital. Moving up the ranks on the sponsored side is at least as important as on the algorithmic side, and if you can make the leap from the right rail to the top sponsored ads, you can expect a 3 to 10X increase in visibility and click throughs.

Our recent eye tracking study showed just how important relevancy is in these top spots. And Google has always been very aware of that importance. They have an obsession about providing relevancy above the fold, especially in the Golden Triangle, that is not matched by any of the other engines. I actually had a chance to chat with Marissa Mayer about this. The interview will be part of the Eye Tracking study (currently available, by the way, and you’ll get a free final version with Marissa’s interview when it’s available) but I’ll be including some tidbits in this blog as well.

I’ve Been Tagged

Matt Bailey tagged me over the weekend (here’s Matt’s response to being tagged), along with a not so subtle hint that I should get off my butt and do more posting. Thanks Matt. Jonathon Mendez gave me a similar message at SES in Chicago.

Here’s how the game seems to work. You tag 5 bloggers and they all have to share 5 things that people don’t know about them. I’m not really that deep, so I don’t know if there are any secrets hidden down there..but I’ll do my best.

1. I worked as a radio copywriter right out of college, doing stints at stations in Edmonton, Alberta, Regina, Saskatchewan, Fort McMurray, Alberta and Kelowna, BC. Yes, it was the not so famous tour of the lesser known hot spots in Western Canada. Here are the notable memories from each location. Edmonton is notable (or notorious?) primarily for its mall which is still the largest one in the world. If you had spent a winter in Edmonton, you’d understand the logic. My memories, however, are more around seeing the Oilers play through the seasons of 80 – 83, while they had Gretzky, Kurri, Messier, Coffey, Glenn Anderson and Andy Moog. It was perhaps the best team to ever hit the ice, and I wasn’t even a big hockey fan. I moved to Regina in the winter for my first real job in radio, and thought if I could hang on til summer, it would get better. I was wrong. We had a plague of grasshoppers that literally covered the streets and sidewalks. Fort McMurray, in northern Alberta, is the single largest known deposit of oil in the world. This one deposit has more oil than Saudi Arabia. So you’d better be nice to us Canadians! And finally, Kelowna, my current home. It’s a beautiful place, which could be why I’ve been here almost 20 years now.

2. I won the Canadian Radio Industry’s Equivalent of a Clio, a Crystal, back in 1991, for a commercial I wrote. It had no sound effects, other than a crinkled chip bag, and I did one of the voices. You have to understand that I was almost never allowed to do voice over work for any station and if you’ve heard me speak, you’ll probably understand why. I think we can agree that it’s usually what I talk about, not the quality of my voice, that lands me any speaking gigs that come my way. James Earl Jones has nothing to worry about.

3. I have no university degree. I do have a diploma in Radio and Television Arts from the Northern Alberta Institute of Technology, but there are no letters after my name. I’m one of the very few members of the Enquiro team without a degree. Somewhat ironic, because I know that there’s at least one academic paper that I’ve co-authored now.

4. I was raised in possibly the least liberal town in Canada. Sundre, where I grew up, is in the heart of rural, bible belt Alberta. And Alberta, for those who know the Canadian political landscape, is hardly a hot bed of liberal ideology. This is farming, ranching, oil country. Just to mix things up a bit, it was originally settled by Norwegians, so to put it in US analogous terms, if you took Garrison Keillor’s Lake Wobegon and moved it to Texas by way of Montana, you’d probably have Sundre.

5. You probably wouldn’t guess it to look at me (although I have lost 50 pounds in the last year..another little known fact), but I love road biking. I tend to head off for solo rides, I’m not really into racing or riding with groups. I’m trying to recruit someone interested in doing a 3 or 4 day road trip in the next year or two. Typically an average ride for me is 60 to 100 K’s (about 40 to 60 miles). Next year my goal is to do a one day 100 mile ride.

That’s it. Now..who do I tag? Well, it may be a easy way out, but we have 5 bloggers right here in Enquiro, so I think I’ll tag Manoj Jasra, Marina Garrison, Cory Bates, Jody Nimetz and Rick Tobin.

Interview with Shuman Ghosemajumder about Click Fraud

Had a chance to chat with Shuman Ghosemajumder regarding click fraud. Shuman is Google’s point person on the click fraud issue. This follows up on the post Andy Beal made on MarketingPilgrim earlier this week. Most of what we chatted about was in my Search Insider column this week. However, not all of it made it into the column, as there is a cut off which I routinely ignore (thanks to MediaPost editor Phyllis Fine for keeping me in line).

Here’s some tidbits that didn’t make it into the column:

First of all, I wanted to take the media to task for crying the sky is falling around this issue. I know that’s what journalists do, but the portrayal of the click fraud issue has been very one sided to this point. That’s why I wrote the column. I think it’s important we get balancing viewpoints. In the absence of numbers universally regarded as accurate, one has to poll the extremes and guess that the true answer lies somewhere in the middle. Up to this point, all we’ve heard are the negative estimates, and these are based on some studies with methodolgy that’s questionable at best (i.e. the Outsell study)

Secondly, I believe it’s unfair that everyone seems to be taking aim at Google, and to a lesser extent, Yahoo on this issue. I know they’re easy targets, because the targets are so damned big, but when the real numbers finally do come out, I’d bet my 89 Mazda 626 (the car that just won’t die!) that it’s the 2nd and 3rd tier networks that are the hotbeds of click fraud.

I dealt with it briefly in the column, but one of the main sources of misrepresentation seems to be this question of what click fraud is. For me, the definition is pretty simple, fraudulent clicks that leave the advertiser financially impacted. But when it comes to most of the media portrayals, there are a number of clicks that get lumped together under the label “click fraud”, the majority of which don’t meet this definition. And Google’s point of contention with reports of click fraud that come from the media and various 3rd party fraud detection tools comes from this aggregation of questionable numbers. There’s no distinction made between actual fraud, the clicks that cost the advertiser, and attempted fraud, the ones that got caught. And often more benign clicks, i.e. multiple legitimate clicks coming from the same IP address, get mistakenly labelled as click fraud.

Another positive move by Google was the inclusion of invalid clicks in the advertiser’s reporting dashboard. Every move that Google makes towards greater transparency is a very positive one. And the best know Google evangelist for communication, Matt Cutts, indicated so on a blog post. By the way, Shuman also has a blog, where he goes into greater depth on this issue.

I can only imagine how frustrating this must be for Shuman and the Google Click Fraud team. They sit and listen to numbers be bandied about in the 15% plus range, knowing from first hand experience that the real number is likely much much lower (in the column, using assumptions that are probably on the high side, the actual amount of click fraud that an advertiser would have to challenge Google on is less than 0.18%). Yet, their tongues are tied, both by Google’s legal and corporate communications department.

Why is the media targeting click fraud and trying to scare the hell out of advertisers? In no other industry I can think of are reporters more prone to mix and match numbers without regard for accuracy. They do it, and get away with it, because there are no independent and reliable numbers to look at.

There are a number of reasons. Google is in the vanguard of disruptive change agents that are shaking the very ground of marketing. It’s somewhat defensive to look for an Achilles heel, and right now, click fraud seems to fit the bill. Google in particular is boldly stating they want to change everything. That scares people.

Part of it is that there is still a lot of people that would love to see Google be knocked down a few pegs. Much as we rever success, wildly successful companies or individuals generate jealousy and suspicion. Our society gets a nasty little thrill when the mighty fall.

But perhaps the biggest reason is the very strength of search and online marketing: it’s accountability. Nothing else is as measurable. So when something appears to be eating away at the cost effectiveness, we tend to go all forensic on it and analyze the hell out of it. Could you imagine the mainsteam press making a big deal out of a .18% hole in the accountability in television advertising, or radio, or print? Even a 10 to 15% hole? Of course not, because much bigger holes than that are accepted every day as being inherent in the channel. But search and online ad networks are apparently fair game.

Is click fraud happening? Absolutely. And if you switch the lens a bit, there are some sophisticated click fraud operations that are making a killing. In a response to my column, Chris Nielsen had this excellent observation:

The problem is not overt clicking on ads, competitors clicking on ads, or double-clicking on ads. The problem is with large-scale concerted efforts that are massive enough to to have enough variety of IP address, user agents, etc. and pose as “valid” user click activity.

Of course this activity varies some with the bid price of the clicks, but it’s really the old idea of stealing a penny from a million people. If anyone notices, who’s really going to care? The problem is that in some areas, there are hundreds or thousands of people stealing pennys, and it is noticible and it is a problem. The only real indication is the lack of bona fide conversions, and that’s hard to say for sure if it’s fraud or real factors with the marketing or web site.

But it comes down to which lens you look through. Do you look at those looking to profit from click fraud, some of them doing it very well? Or do you look at the scope of the problem over the big picture? The problem I have with the BusinessWeek report is that the reporting is trying to do both at the same time, and you can’t get a clear picture by doing so.

I just wanted to wrap up this post by mentioning some other initiatives on this front that Google is pursuing which didn’t make it into the original column. Obviously they’re working on proprietary techniques to filter out click fraud, but they’re also trying to attack the problem on an industry wide basis as well. They’re working with the IAB Click Measurement working group, in which SEMPO is also involved. And they’re calling for stringent and scientific independent auditing standards, so when we throw around terms like click fraud, we’re all dealing with a common reference framework. By the way, I also asked Shuman about impression fraud. We didn’t go into a lot of depth on the issue, but they feel they’re equally on top of that as well.

The Elusive Click Fraud Issue: Google’s Side of the Story

First published December 14, 2006 in Mediapost’s Search Insider

There are few issues in search marketing more thorny and convoluted than click fraud. It’s the elusive problem, the industry scourge that seems to defy definition. Everyone wants to know the extent of click fraud, but to date, there seems to be no credible numbers to attach to the problem. A recent BusinessWeek “investigation” called it the “dark underground” of the Internet, “a dizzying collection of scams and deceptions that inflate advertising bills for thousands of companies of all sizes.” The article pegged the occurrence of click fraud at “10% to 15% of ad clicks… representing roughly $1 billion in annual billings.” Unfortunately, the reporter used some questionable sources and math to come up with this number.

Even experienced search marketers can sometimes jump to wrong conclusions. Noted search marketer Andy Beal thought he had a scoop earlier this week when he did a little rough calculation on a presentation made by Google click fraud point person Shuman Ghosemajumder and pegged the actual occurrence of click fraud at 2% on Google. There was actually a little miscommunication between Beal and Ghosemajumder (since corrected on Andy’s blog). I chatted with Ghosemajumder this week and here’s Google’s side of the story, largely ignored by the mainstream press.

Where Do These Numbers Come From?

BusinessWeek‘s article said “most academics and consultants who study online advertising” agree with the 10% to 15% number. Yet there has been no independent study done with reliable methodology to accurately scope the size of the issue. The study most often cited is a particularly damning one done by Outsell in May of 2006. In the study, 407 companies were asked what percentage of their search buy they believed to be fraudulent. They then averaged the responses and extrapolated it across the industry. Many of these advertisers weren’t even tracking ROI, definitely a prerequisite for accurate identification of actual fraudulent behavior. As Ghosemajumder pointed out, “it’s like asking a random group of people what they estimate the average salary in the U.S. to be, when they have no numbers to judge it on, and they don’t even know what their own salary is.” Yet, this is the number that seems to be accepted as fact by reporters determined to blow the issue into cover story status.

What’s Fraud, and What’s Attempted Fraud?

One fact that seems to be easily overlooked is what actually qualifies as click fraud. Fraud is only perpetrated when damage is done–in this case, if money passes hands. If no money changes hands, it’s attempted fraud. Yet this simple distinction seems to be overlooked by many “investigators” into the question of click fraud. Everything tends to be included in the same bucket, usually accompanied by a whopping percentage designed to scare the hell out of online advertisers.

The 2% number quoted on marketingpilgrim.com came from Andy Beal, not from Google. It was computed by looking at the relative size of some graphics on a slide deck that was prepared to show Google’s click fraud filtering systems.

Google has coined the term “invalid clicks” to refer to all those that advertisers are not charged for. This category also includes more benign examples, such as multiple clicks on the same ad that can happen when a visitor “pogo sticks,” or clicks on an ad, hits the back button, and then clicks through on the ad again. Ghosemajumder does confirm that the number of invalid clicks represents a “single digit” percentage of all clicks across the network,

The “vast majority” of these clicks are proactively filtered out by Google in real time before any money passes hands, he says. It’s as if the clicks didn’t happen. The advertisers don’t pay, and the publisher where the click originated doesn’t get paid. The invalid clicks that slip through the real time filter then go for offline analysis, primarily focused on the AdSense network. Advertisers here are affected, but get refunds from Google without their having to take any action. In this case, Google does have a procedure for going back to the sites where the clicks originated. If anyone is out of pocket for these clicks, it’s Google, not the advertiser.

Now we get to the 2% number. It refers to the clicks that make it through the proactive filters that the advertiser has to bring to Google’s attention. The official word from Google is that this number is a “negligible percentage” of the total number of invalid clicks. My sense is that it’s probably much less than 2%. Remember, this isn’t a negligible percentage of all clicks, but a negligible percentage of “invalid” clicks, which in turn is less than 10% of all the clicks happening on Google.

The Impact in Dollars and Cents

So, let’s talk about actual fraud, where the advertiser is the one out of pocket. Let’s assume there is an advertiser with a $100,000-per- month budget. Let’s further assume that the clicks this advertiser receives are representative of the total Google network.

Using the assumed 9% number as the number of invalid clicks, this means about $9000 of the budget falls into this category. From this, the “vast majority” are filtered out in real time, so there is no impact to the advertiser. A smaller percentage is refunded to the client without its having to take any action. Finally, there’s the percentage that slips through the proactive filters. Even if we go with 2%, that would make the amount that would impact the advertiser $180. If you’re doing your math, that’s 0.18% of the total monthly spend, a far cry from 10% to 15%.

But It’s Not that Simple

These are the estimates from Google, which has invested heavily in fighting click fraud. The same diligence in policing click fraud is probably not present in all advertising networks. Click fraud is definitely more prevalent in some sectors and on some networks than others. Finally, everyone acknowledges that we don’t know what we don’t know. If click fraud goes undetected through Google’s filters and the advertiser never challenges it, it won’t be identified. Google uses the ROI and conversion data that some of its advertisers share with it as an overall indicator of click fraud activity throughout its network. Its executives feel confident that there’s very little slipping through all of these cracks.

Yes, this is Google’s side of the story, but as the mainstream press seems to be more interested in focusing on a couple of egregious cases rather than providing a realistic picture of the issue across the entire network, I think it’s important to pass it along. In the absence of real numbers for the short term, shouldn’t you at least balance the numbers being touted by the press with those coming from the people fighting click fraud on a daily basis?

Search and the Winds of Change in Chicago

First published December 7, 2006 in Mediapost’s Search Insider

Things are changing in the SEM world. At the Search Engine Strategies Conference Chicago, it’s more than the ice-cold winds off Lake Michigan that are blowing. These are the winds of change. There is a palpable sense that we’re moving into a new era in search.

Dateline: Chicago

The word on the streets of Chicago (not that I’ve ventured on the streets that much) is that a huge consolidation juggernaut is about to steamroll the industry. We’ve seen the precursor to that in a few announcements timed with the show. But at the same time, we’re seeing the world of search fragment in another way, as search marketers now have to move their focus to include new worlds such as CRM platforms, ad networks, local, video, social tagging, analytics, usability and a host of other emerging developments. If we follow Google’s model, soon we’ll be dabbling in the world of print and radio. And I thought I had left those worlds behind in a previous life.

There’s a collective holding of our breath to see what’s next. One of the wonderful things about search, the fact that it’s the intersection of so much activity on the Internet, is also its biggest challenge. To truly leverage search, you have to have one foot in a lot of different worlds. And that’s tough to do as a small independent shop.

The Honeymoon’s Over

But the other topic of conversation I’m hearing is how the integration of traditional marketing and search is not going as swimmingly as some of the early marriages might have us believe. There’s a lot of drinking of one’s own Kool-Aid here. Search agencies position themselves as the keepers of the vaunted black box, the holders of arcane knowledge and assets essential to the truly enlightened marketer. That black box could be advanced algorithmic optimization knowledge and technology or sponsored search management technology and advanced campaign optimization tools. Whatever it is, the SEMs protect and promote it religiously, using it to drive up the price tag of their company.

The potential buyers seem content to cede this small area of expertise to the SEMs, because they lay claim to pretty much everything else. The entire brand relationship that lies outside the search silo is where they play, and the only reason they’re looking at search at all is because they’re being forced to by their clients. Reluctantly, they have to look at building or buying, and the lack of available talent is forcing their hand towards the second option. It’s a shotgun marriage, and in many cases, the results will be predictable. Search marketers are mavericks, and they won’t place nice in the corrals that are currently being set up for them.

We Don’t Know What We Don’t Know

The problem is that in both cases, the egos on both sides of the table don’t allow us to know what we don’t know. The trick here is not to be territorial about your area of expertise, but to acknowledge that the rules of the game are changing incredibly quickly, are being changed not by the agencies, not by the search engines, certainly not by the SEMs–but by the consumers, and we’d better all work together to figure out what’s happening.

I believe in integrated, or convergent, service offerings. I think it’s essential. But the simple fact is that there is no search silo. It sits at the center of a tremendous amount of consumer activity. But the firms that are positioning themselves to provide these convergent (or integrated, or 360 degree–you pick the buzzword)  better reacquaint themselves with the meaning of the words integrated and convergent, because unless they truly get it, admit they don’t know everything and are willing to work with new partners to effectively understand this new consumer control, they won’t be able to keep up. Passion is the price of entry, but please, everyone, check your egos at the door.

Living in a Quality Score World

Another point of interest that emerged in Chicago is the new reality of quality scoring being introduced by the engines. Suddenly, search marketers have to tweak a lot more campaign factors to determine position on the page. We have to look at not only the quality of the ad but also the quality of the landing page and the subsequent on site experience. To make matters murkier, the engines aren’t really sharing the criteria or methodology they’ll be using in these new quality algorithms. So once again, search marketers will be working in the dark, trying to reverse engineer the inner algo workings that will hopefully vault their page up into the top of the Golden Triangle, but this time on the sponsored side. I think search marketers will be well suited to the task, but the challenge is that this requires them to step into a lot of new areas, and in some cases, they’ll be stepping on toes in doing so, both on the client side and the agency side. Without exception, the biggest challenge we’ve had in delivering effective results has been in getting the buy-in of the various groups required to take a holistic approach to search. The introduction of a quality score means this will be happening with greater frequency.

New Madison Avenue Mavens?

One dinner conversation I had circled around the potential future of SEM agencies. Apparently, a representative from a major engine told a room full of SEMs that we’re the new Madison Avenue. We embrace accountable marketing in a way that much of the rest of the advertising world is struggling with. We’re not afraid of consumer-empowering technology, because we’ve cut our teeth on such technology. And we’ve learned to adapt and survive in a fluid marketplace, where things change daily. To me, these three things are the true value that SEMs bring to the table, and as traditional agencies look for potential partners, I’d be looking very hard at those three criteria. To be honest, most of the rest of our “black magic” boils down to simple common sense and a willingness to do the dirty work that’s required to optimize search campaigns, whether they’re on the organic or sponsored side.

It’s been a cold week in Chicago, but one would never guess–based on the heat being generated in the Chicago Hilton Convention Center. Hang on, it’s going to be a bumpy ride.

SEMPO’s Snapshot of Search

First published November 30, 2006 in Mediapost’s Search Insider

If you haven’t heard, or received your invite, the annual SEMPO State of the Market survey is currently looking for search marketers to give us this year’s snapshot of the industry. You can find a link to the survey at the SEMPO site. Now in its third year, this survey has become the definitive year-over-year look at search marketing.

Knowing that we’re in Chicago next week for Search Engine Strategies, we paused long enough to take some on the fly data points which we’ll be sharing at a special SEMPO meeting on Monday night. I can share one of them with you in this column.

Why the Survey?

First, why do we do this? Simple. In something as dynamic as search, it’s tough to keep your bearings. Obviously, year-over-year sizing of the markets is one yardstick, but there are a lot of other factors that we like to keep an eye on. We track advertiser’s acceptance of different strategies, including paid placement (or sponsored search), paid inclusion and organic optimization. Late- breaking info on this in a moment. This year, we’ll also be asking more questions about local search and what other marketing channels advertisers use.

We also check in with advertisers on issues like click fraud and how prevalent they feel it is, as well as use of search marketing technology and contextually targeted ads. Of course, we’re very interested in where those search engine budgets are being placed and where those budgets are coming from. Is search poaching from other budgets, or has it established itself as its own line item?

We try to determine the maturity of search by asking how much executive participation there is in search marketing decisions. We can also look at the different groups that answer the survey (advertisers, agencies and affiliate marketers) to see if there are variations in attitudes toward search amongst them.

Wake-Up Call for SEM Agencies

Last year, a key finding was the attitude of advertisers toward search marketing agencies. It was clear that there was a trust disconnect, with a full 65% looking to bring both paid and organic search capabilities in-house. For SEM agencies, it was a clear signal to up the ante in terms of measurable results.

We spend a fair amount of time in the survey digging into how companies conduct their search campaigns, the percentage that’s done in-house versus outsourced, whether this is a growth strategy for them, and trying to determine some of the hidden costs, such as the expense of internal staff to conduct the campaigns.

And of Course, There are Those Click Costs

One of the hottest data points from the survey tends to be around acceptance of current bid prices. Again, we get quite granular in determining the extent of price elasticity on paid placement. Last year, we saw a flattening out, with 21% of advertisers saying they were maxed out on bid prices, and another 37% saying they could go as high as 10 to 20% more.

If you want to find out more about the 2005 findings, make sure you visit the Learning Center at http://www.SEMPO.org.

Hot Off the Spreadsheet

So, how is the data shaping up this year? Well, I just pinged our number crunchers–and based on the results in so far, it looks like organic optimization is holding the lead as the most popular strategy when it comes to search. Last year, it barely edged out paid placement, with 80% of respondents saying they were using it, compared to 76% of respondents using paid placement. This year, adoption of both strategies increased, with 83% of respondents using organic optimization, and 80% using paid placement. Remember, this is very preliminary data, and will likely change a bit as we get more survey completions. We have a few other preliminary data points that we’ll be sharing in Chicago next week at Search Engine Strategies. Look for the SEMPO event, Monday, Dec. 4t at 6 p.m.

Call to Action

If you’re working in search, we need your participation. The more respondents, the better the data. Everyone will have access to a summary of the report, and SEMPO members can download the full report. Once again, you can take the survey at http://www.sempo.org/learning_center/research/sempo_research/sempo_2006_state.

Search Gets Passionate in Vegas

First published November 16, 2006 in Mediapost’s Search Insider

I’m a huge fan of passion. Curb the urge to snigger. When I say passion, I refer to it in the ideological way, not the sensual one (although I’m pretty fond of that as well). I believe passion trumps everything else: intelligence, education, money, social connections. Look at times when people have really moved the world in a meaningful way, and you’ll always find passion.

3 Degrees of Passion

In the past week, passion has manifested itself to me in three very different ways.

First of all, I sat for two hours while former President Bill Clinton talked about his Foundation, his view of the world as an interdependent global village and the unsustainable inequities between North America and everywhere else that must be addressed. The presentation was smooth and friendly, but the passion was palpable. This was a man on a mission. Clinton’s got some burning issues on his agenda, and I have to believe he’s going to move the world and make them happen.

This morning, I was at Webmaster World’s PubCon in Las Vegas and Guy Kawasaki took the stage. Kawasaki has passion. In fact, it was the subject of one of his 10 takeaways: “Make Meaning. Do something that matters. Be passionate.”

Later in the day, I met with a product manager in charge of a new search platform. He was supposed to give me a feature run-through, and I was supposed to give user feedback. Try as we did to stick to that agenda, we kept getting sidetracked talking about how search is changing everything. We became more animated as we talked. Passion snuck in and kept hijacking the conversation. We ran about an hour over what we had scheduled.

Search: Passion to Spare

That’s what I love about search, especially where it sits today. It breeds passion. It demands passion. It grabs you by the throat and makes you realize that it could change everything. I suspect there was a time when Wired ex-editor John Battelle didn’t let search keep him up at night. But at some point, he looked at what was happening, and more importantly, what could happen and said, “Damn, [if you know John, I suspect this wasn’t the exact word he used], this is changing the world!” He became passionate about search. That’s probably why he’s also here, in Vegas with a bunch of Web-heads, as one of the keynotes.

When you walk down the halls of a show like this, people are talking about search. We’re ravenous about this topic. That’s why there are back-to-back events filling the calendar from January to December. Just this week, I wanted to be at the Search Insider Summit, but unfortunately it coincided with PubCon and I had a previous commitment.

Talk to the people at Google, or Yahoo. They know they’re the cusp of the future. They know the import of what they do. They’re fired with passion. Why didn’t I include Microsoft? To me, the passion for search isn’t seared into the corporate DNA at Microsoft to the same extent it is at its rivals. They’ve said the right things about search. I’ve met a lot of people at Microsoft who get search, and many of them are passionate. But at the other two major engines, the passion for search is pervasive. At Microsoft, it still feels more like a corporate initiative.

Late to the Party? Look for Passion

When you look at the people who make this industry tick, they are absolutely infatuated with search. It borders on obsession. It’s not to make a buck, because believe me, there are easier ways. We’ve been slogging it out in the trenches for years, going from show to show, spreading the gospel, educating clients and bit by bit, building best practices and pushing the industry forward. There are not a lot of rich search marketers, but there are bushels of passionate ones.

So, for those of you waking up to search, here’s a tip. If you’re an agency or a large organization that wants to build search capabilities, look for passion. Don’t just look for someone competent, look for someone who can become passionate about search. Because that’s what it will take. Here’s why.

Search is just beginning. The rules are constantly going to change. What you do today is not what you’re going to do tomorrow. This is not a 9-to-5 job. The only way you can keep up with the pace of change that’s inevitable is to live, eat and breathe search. You have to be constantly looking at the horizon to see what’s coming–not just because you have to, but because you can’t imagine doing anything else. As search continues to define itself, it will be the passionate people who do it. As I sit here in Vegas, that’s probably the safest bet in town.