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Yahoo, Spyware and Click Fraud

Ben Edelman offers proof that Yahoo Publisher Network (Overture) pays spyware vendors to show network ads. Ben found relationships with 180solutions, Claria, Direct Revenue, eXact Advertising, IBIS, and SideFind, the companies that offer the most annoying spyware, malware and adware on the planet.

His earlier examples prove what he calls Syndication Fraud — the placing of ads into spyware ad slots and charging advertisers for the resulting clicks.

This time he documents examples of full-fledged Click Fraud, where the spyware actually fakes a click and the advertiser gets charged.

This is very serious. Here are some of Ben’s observations and allegations:

Click fraud. Through these improper ad displays, Yahoo charges advertisers for “clicks” that didn’t actually occur. This violates the core premise of pay-per-click advertising, i.e. that an advertiser only pays if a user affirmatively shows interest in the advertiser’s ad. Yahoo promises: “Pay only when a customer clicks on your listing.” But that’s just not true here. Instead, through click fraud, advertisers are asked to pay for spyware-delivered traffic, whether or not users actually click.

Untargeted traffic. Premium prices for PPC advertising reflect, in part, the extreme targeting of PPC leads: PPC ads are only supposed to be shown to users actively searching for the specified product, service, or term. Yahoo promises: “Advertise only to customers who are already interested in your products or services.” That’s also untrue in some of my examples. in fact spyware-delivered PPC results show Yahoo PPC ads to users with no interest in advertisers’ products or services.

Self-targeting traffic. Spyware-delivered PPC ads often target advertisers with their own ads. For example, in August I reported a user browsing the Dell site, then receiving spyware-delivered Yahoo PPC advertising promising “up to 1/3 off” if a user clicked a prominent link. But clicking that link didn’t actually provide any discounts or savings beyond Dell’s usual prices. However, each time a user clicked the link, Dell had to pay Yahoo a PPC advertising fee that I estimate at $3.30. That’s a bad deal for Dell: These users were already at Dell’s site, and there’s no reason why Dell should pay Yahoo or a spyware vendor just to keep them there. Same for self-targeting of SmartBargains, reported above.

Failure to label sponsored links as such. Through spyware syndication, Yahoo PPC ads often appear on users’ screens without appropriate labeling. When unlabeled ads appear in or adjacent to search engine results, these ads risk violating the FTC’s 2002 instructions for advertising disclosures at search engines. See my prior SideFind example, where SideFind justifies bona fide search results with Yahoo PPC ads, without labeling Yahoo’s ads as such. Unlabeled ads also prevent users from understanding the nature of the linked content: For example, recall my Qklinkserver example. Seeing unlabeled text links inserted into ordinary web pages, users reasonably expect that such links were chosen by the sites users were visiting, when in fact such links were unilaterally inserted by unrelated spyware installed without user consent.

Low-quality traffic. Advertisers pay Yahoo a premium to reach desirable users at Yahoo.com — sophisticated users, users who are actively engaged in search. In contrast, spyware sends advertisers low-quality users, including users who are less likely to make a purchase. This traffic is not worth the premium price Yahoo charges. Consider: 180solutions sells popups for as little as $0.015 (one and a half cents) per ad display. In contrast, Yahoo charges a minimum of $0.10 — more than six times as much. Yahoo harms advertisers when Yahoo charges advertisers its premium prices for ads ultimately shown through low-quality low-cost channels like 180solutions.

Unethical spyware-sourced traffic. Industry norms, litigation, and instructions from policy makers (1, 2) all tell advertisers to keep their ads out of spyware. Discomfort with spyware reflects concerns about installation methods (misleading and nonconsensual installations), privacy effects, other harms to consumers, and harms to other web sites. For these and other reasons, many advertisers make a serious good-faith effort to stay away from spyware. These same advertisers also buy PPC ads from Yahoo — a standard, reasonable practice for anyone buying online advertising. Unfortunately, these Yahoo PPC ad purchases inevitably and automatically put advertisers into notorious spyware, including the programs reported above. By allowing these improper ad placements, Yahoo endangers its advertisers’ good names, and risks putting them in violation of best practices and policy-makers’ guidance.

At the very least, Yahoo is guilty of choosing dishonest partners. At worst they are complicit in fraud. Read the article…the proof looks pretty solid.

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