Google, Yahoo! agree to independent click fraud audits

As the outcry by advertisers grows louder than the assurances from Google that click fraud is not a substantial problem, representatives from Google and Yahoo! publicly stated today that they would accept independent click fraud audits. Of course the true independence of any audit will need to be closely watched. The pay per click advertising business is a monster – with billions of dollars exchanged annually. Yahoo! has made more than $9 billion since 2004 from all of its online advertising, Google more than $13 billion since 2001.

The day began with Google releasing a controversial 17 page report on click fraud, alleging that many outside observers were over estimating the extent of the problem because of browser behavior. Earlier this week, Google, LookSmart, Microsoft and Yahoo! publicly formed a working group with the Interactive Advertising Bureau to establish a set of Click Measurement Guidelines.

At today’s session at the Search Engine Strategies conference in San Jose titled “Auditing Paid Listings & Click Fraud Issues,” ZDNet’s Donna Bogatin asked point blank whether the search engines would agree to independent audits of the click fraud inside their systems.

Bogatin reports that both John Slade from Yahoo and Shuman Ghosemajumder from Google committed to independent audits in the future. When pressed on a timeline, Slade said such an audit would follow the creation of the Click Measurement Guidelines. Update: If that’s supposed to mean that the industry group that these search engines are participating in is both drawing up the guidlines and providing the independent auditing – that’s obviously not acceptable. I can’t imagine that these companies would be so cynical as to think that anyone would accept that – I can’t imagine that some other party won’t be doing the auditing.

Both Google and Yahoo! are currently dealing with legal action from buyers of advertising that allege they paid for fraudulent clicks on ads. Google has offered to pay $90 million to settle a class action suit. Yahoo! may provide refunds to thousands of customers and pay almost $5 million in attorney fees.

Today’s public acceptance of independent audits shouldn’t come as a surprise given the pressure building, but it may go down as an important turning point in this industry.