Anchor Intelligence To Audit Click Fraud

Palo Alto based Anchor Intelligence, which was called FraudWall until last week, may be part of the long term solution to the click fraud problem that plagues the big cost-per-click advertising networks (Google, Yahoo, Microsoft in particular).

Click fraud has been around as long as CPC marketing was first introduced by GoTo in 1998 (GoTo renamed to Overture and was acquired by Yahoo in 2003 for $1.7 billion). Google and Yahoo generally avoid the subject, but some outsiders estimate that as many as 20 – 25% of clicks are fraudulent – by people either trying to drive up the advertising costs of competitors, or by clicking on the ads displayed on sites they control.

Much of this fraud is detected by the ad networks and removed. But some of it isn’t. And it’s clear that the ad networks have conflicting incentives. Fraud directly drives revenue. Fixing it increases credibility, which is an indirect benefit. But the conflict naturally leads people to assume that the ad networks don’t fight click fraud as hard as they could.

Frankly, it’s not appropriate for the ad networks to be completely trusted to solve the problem, since they have a financial incentive not to. That’s where Anchor Intelligence comes in.

They, like competitors Click Forensics and Authenticlick, will be a neutral third party that audits the ad networks and report on fraud. Not only are they conflict free, but the fact that they will see traffic and clicks from multiple networks gives them an advantage. More data should mean better results.

Anchor Intelligence founder Ken Miller says they are working with fifty or so partner ad networks and advertisers. And he says a new big ad network partner will be announced shortly. Miller won’t say how they price deals.

The company has had two rounds of financing – a $2 million Series A in January 2007 from a slew of angel investors (Ron Conway, Baseline Ventures, Rajeev Motwani, Ram Shriram, Peggy Taylor, Jeff Jordan and Mike Maples). They raised an additional $4 million in September 2007 from JK&B Capital and earlier investors.