"Either We Kill Click Fraud or Click Fraud is Going to Kill the Online Ad Business." Anchor Intelligence Launches ClearMark

There's an elephant in the online advertising room, and no, it's not the threat of Recession. The rate of click fraud is keeping up with, and in some cases exceeding the pace of online ad growth. In response to the challenges posed to the industry by rampant click fraud, a cottage industry in click forensics has cropped up in the past two years. Anchor Intelligence, which has raised $6 million in investment capital over two rounds of financing, is one of the leaders in this burgeoning field. Ken Miller, CEO of Anchor, spoke exclusively with JackMyers Media Business Report, and suggested the crux of the problem is that the online ad industry is still the Wild, Wild West.

"Ad Networks out there want to be aggressive about solving this because it's the right thing to do," commented Miller "But some are nervous about opening up the hood and taking a peek at what's under there. There's not a strong mindshare yet on whether to tackle the issue on one's own or to seek a partner. We're still at a point where they don't really want to talk about it."

To that end Anchor is today announcing the official debut of its ClearMark service, a real-time click "scoring" tool. "We can literally score clicks and impressions in a matter of milliseconds," Miller said. "This is a big deal if you're an ad network, integrating those scores and porting them into your billing system. Our belief is to report this in real time. You can't be looking back a month," he pointed out. "We see a lot of different data from large companies to long tail ones, from the selling side to the buying side, and we look at a lot of data around other malicious activity on the Net. We feed that all into our algorithms and scoring systems." Ad networks aggregate the clicks and impressions from multiple sites and distribute shares of ad revenues to those sites based on their traffic. Fraudulent clicks, often generated by offshore "click farms," can artificially boost traffic and cost both ad networks and their advertisers millions of dollars annually.

While the ClearMark product is live and is being actively used by partners, it hasn't been announced to the industry until today. Miller reports of its initial success: "Within the first two weeks of running ClearMark, partners were able to detect suspiciously high levels of collusion among clickers from over 150,000 IP addresses. We then identified and helped shut down what was a global fraud ring that had been actively generating artificial clicks on several partner sites prior to their implementation of ClearMark. As a result of our investigation, over 1,000 websites were suspended or rejected from their networks and the fraud ring was stopped."

JackMyers Media Business Report first addressed the issue of click fraud in March 2006. As online ad buys comprise an ever-larger piece of the overall ad pie, the issue can no longer be shunted aside for future discussion. Google's efforts to identify and reduce click fraud offer one explanation why the company's strong first quarter financial results defied Wall St. expectations that had been based on negative comScore data. While clicks may, in fact, have declined, the value per productive click remained intact or increased.

Miller elaborates, "It's definitely a slippery slope for anyone to report third party data. It gets much more dicey when the data is being used by others to project upcoming, measurable events. If the reporting is largely accurate, the company can shine and become a standard, but any discrepancies (real or perceived) can lead to the reporting company playing non-stop defense for awhile or worse yet, claims of hidden agendas. In our case it's embedded in our DNA to be overly thoughtful around any third party reporting we might do."

Miller joined Anchor (formerly FraudWall Technologies) sixteen months ago after an eight-year tenure at PayPal, where he was VP of risk management. In the intervening months since joining the company, Miller's primary focus has been on building infrastructure.

As to why click fraud has gathered steam, Miller has the following observations: "As an [ad network] expands its reach and gets into tier 3,4,5 level publisher networks, there's a potential degradation of quality there. If you're simultaneously trying to boost revenues and meet expectations there's an added challenge. Anyone who's growing rapidly will run up against that. You have ad and search networks who hoped this issue would go away, so they haven't thoughtfully cultivated or massaged their legacy systems and managed the need for better authentication of publishers," says Miller.

Asked if click fraud might be wrestled to the ground anytime soon, Miller is tentative. "We're a ways away from seeing the tide turning. There's still a lot of financial incentive and value for fraudsters to gain before we can push them off to another activity. As we learned at PayPal, there's an arms race element. As you get better and wiser and go at the fraudsters, they in turn do the same thing." Miller believes the strategy must be "to make it more and more difficult for fraudsters to exploit your system."

The industry has important economic reasons to attack click fraud. "Advertisers who've been online for several years have evolved and are hitting a point where online is a meaningful part of their ad spend. Due to an increase in accountability, plus some macroeconomic issues going on, there's an increasing lack of trust around the quality of traffic and the potential for click fraud," Miller explains. "There's a big unknown and uncertainty causing advertisers to take a second look. There is potentially a long-term mess. Either we kill click fraud or click fraud is going to kill the industry. It's potentially going to be that serious."

For further information, contact Anchor Intelligence Director of Product Marketing, Richard Sim via email at richard.sim@anchorintelligence.com.

This special report is underwritten by Teletrax, "the leader in digital watermarking for video media tracking, measurement and intelligence." For more information, contact: Maria DiMasi at mdimasi@teletrax.tv. The editorial content has been prepared by Myers Publishing with no involvement or approval of sponsors.