May 28, 2008
Citysearch Sued for Click Fraud--Lambotte v. IAC
By Eric Goldman
Lambotte v. IAC/InterActiveCorp. (Cal. Superior Ct. complaint dated May 27, 2008) [warning: 1.9MB file]
Ever since the Google and Yahoo click fraud settlements in 2006, it's been fairly quiet on the click fraud front. See my most recent click fraud recap from February 2008.
This lawsuit launches an interesting new battlefront in the click fraud war. Instead of going after yet another search engine (of which there are only so many to sue!), the plaintiffs are suing a web publisher for running its own PPC ad program--something many web publishers have done. This means lots of new potential defendants for class action lawyers. Ca-ching!
The allegations are fairly straightforward. Citysearch sells PPC ads as part of a package of services for small business owners. It promises to proactively screen out invalid clicks in its contract/documentation, but the plaintiffs believe Citysearch isn't doing that job well. The plaintiffs claim this failure constitutes breach of contract, negligence and 17200 unfair practices.
The plaintiffs repeatedly hammer on the allegation that Citysearch compensates its salespeople based on the number of clicks delivered for their advertisers, which provides an incentve for salespeople to boost clicks fraudulently. At first, the argument really resonated with me--how slimy to incent salespeople to manufacture clicks! But then I realized that simply commissioning salespeople for advertiser revenue--a very, very common practice in the ad sales industry--would have the same effect; just like commission-driven salespeople would have incentives to manufacture pageviews for any advertiser paying on a CPM basis. So the argument sounds scary but on further reflection it's really not all that meaningful.
I also found the named plaintiff's story of click fraud surprisingly flat. The named plaintiff gives an example of how he got ~10X the number of clicks after he tried to cancel his advertising, putatively because the salesperson manufactured clicks either to boost the perceived performance or to drain the advertising account before it cancelled.
However, there are a number of potential problems with this story. First, the total number of clicks at issue is small overall (the first measuring period only involves 9 clicks total), undercutting the statistical reliability of any inferences from the dataset.
Second, the measuring periods for this click comparison are very odd--the first period is Dec. 11-25, and the second period is Dec. 26-31--basically, right before and right after Christmas. I did a search on Tom Lambotte and this LinkedIn profile says he runs www.theSanDiegoMacTutor.com, described as "Professional Help, Training & Consulting for your Apple/Mac Needs." [Note: I have emailed the plaintiff's law firm's PR guy to confirm if this is the same Tom Lambotte, but I haven't gotten a response to my inquiry.] Anyone else troubled by comparing pre-Christmas clicks with post-Christmas clicks...especially if the guy provides installation and support for Apple computer products? It seems possible that a bunch of potential customers got shiny new Apple toys for Christmas and then looked for someone to help install them. At minimum, we know that shopper traffic doesn't abate after Christmas and in some cases can increase following the holiday, so the clickthrough patterns might simply reflect normal seasonality.
Third, I don't know how long it takes Google to fully index new pages to an existing high PR website, but another possible explanation is that the new Citysearch pages promoting Lambotte got fully indexed after 2 weeks, spiking traffic to the pages and increasing the absolute volume of conversion from the page.
To be clear, even if the named plaintiff's situation can be satisfactorily explained by alternatives other than click fraud, that doesn't mean the lawsuit will or should fail. On the other hand, generally a class action lawyer will try to showcase highly compelling stories in the complaint. If this is the best story they've got so far, that's pretty weak.
More on this lawsuit from News.com.
Posted by Eric at May 28, 2008 01:40 PM | Licensing/Contracts
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