Google Checkout, Click Fraud and PR

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This is a precarious time for Google. Sure, it seems to be opening up an even bigger lead in search. But it has also started to suffer something of a backlash among “insiders.” The public is largely unaware of all the drama: “Google is too powerful,” “Google is the Microsoft of the Internet,” “Run for your lives!”

Putting aside the competitive animus of certain rivals and would-be rivals, the concerns about Google surround questions of privacy, security and general consumer trust.

When company representatives say things like they won’t use consumer data collected from products like Google Checkout to affect search results or sponsored results — or otherwise use it mproperly — the question is: Do consumers (we) believe them?

This has reared its head recently with Google’s joint WiFi initiative with Earthlink. Google was asked to respond to privacy concerns raised by EPIC, EFF and the ACLU. While these organizations might have generically raised privacy if some other vendor was working on the project, the fact that one of the partners is Google raises a higher level of concern among some people.

I typically encounter skepticism bordering on outright sarcasm from Internet “insiders” when I report what Google has told me on this or that occasion during a briefing regarding their safeguarding of consumer privacy. There’s a danger that over time these skeptical attitudes will seep out into the popular mind and come back to “bite Google on the ass” (as some would say).

Microsoft’s former “e-wallet” initiative, similar to Google Checkout, under the aegis of Passport, was doomed by privacy and security fears. (Passport is now one of the sources of demographic information for adCenter.)

When I talk to Google media relations folks I often say, “You’re aware of the concern about privacy and some of the skepticism because of Google’s market position . . .?” The answer, to the extent we go down this path is “yes.” But I’m not sure there’s a complete understanding of the implications.

Google has been lax (so has Yahoo!) in communicating about click fraud and has gotten sued and criticized by advertisers and the press about not being “transparent” about its efforts to combat the problem and specifics related to its click fraud enforcement or refund policies. I have argued for a very long time (or what feels that way now) that Google, Yahoo!, MSN, et al needed to get out in front of the question of click fraud, be very open and mount a PR campaign that reassures advertisers.

Now comes a widely covered Outsell report that says: 1) it’s a huge ($800 mm) problem, 2) it’s widespread and 3) advertisers are reducing their paid search spending. Even more striking, 75% of advertisers said they were victims of click fraud.

Perception is reality in this case.

There are potential reasons to doubt some of the findings and conclusions of the report, or at the very least to scrutinize its methodology. To the extent Outsell was asking marketers largely about their perceptions and intentions (which it appears from the coverage they were) the reported findings could be very different from the underlying reality. However, the Outsell report does indicate an average click fraud rate of 14.6%, which seems to be higher but generally consistent with Click Forensics’ Click Fraud Index (13.7% on average).

I don’t believe the reality of click fraud is as stark as some of the findings of the Outsell document or some of the recent inflammatory coverage on the issue. My point is that there’s a perception problem now that might not have existed if Google, Yahoo! and others had been more proactive on the PR front. There’s now a sense among some people that these companies may be hiding something.

Back to Google Checkout.

My belief is that Google must assure the public that using Checkout is completely secure and that any information will not be exploited by the company. This could and should be part of a marketing effort to promote the product. However, if Google takes its usual “if the spaghetti sticks” approach (survival of the fittest products) Checkout may not get the reception it needs – and bad PR or inflated privacy concerns that take hold in consumers minds and could potentially fatally impact the product.

I’m not trying to be alarmist, I’m just pointing out that one must have a clear perception of the way the world sees you and respond or react accordingly. Google must be mindful of the wariness and growing concern surrounding its increasing dominance of search and not take its partners’ or users’ good will for granted.

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Related: Google’s CEO’s apparent attitude toward click fraud as a self-correcting problem. That may be a sophisticated economics theory way to regard the problem, but advertisers don’t share that same “sophistication.”

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