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Google's Click Settlement: Should You Opt In or Out?

  |  May 26, 2006   |  Comments

Some thoughts on Google's settlement and what action you should consider taking.

If you have a Google AdWords account or purchased Google advertising through an ad agency, chances are you received an email alerting you to the Google click fraud settlement and that you'll be able to submit a claim form for your share of a court-approved settlement between Google and the settlement class represented by Lane's Gifts and Collectibles et al.

Nearly every Google advertiser is covered in this litigation, so it isn't something you can ignore because you're busy thinking of new keywords, changing bids, or negotiating your next media buy. Being a Google advertiser puts you in the class in this suit, so this applies to you.

I'm not a lawyer, so nothing in this column constitutes legal advice. However, I do have some thoughts on this issue and on the settlement's current wording. The following column is just my opinion. If you feel you need legal advice or opinion, talk to a legal professional before you make a decision.

First, you must take action. If you fail to file a claim during the period of June 19, 2006, to August 4, 2006, you seem likely to get the worst possible outcome: you'll be included in the class but your claim will be forfeited (or rejected if it shows up late). Therefore, the purpose of this column is to help you evaluate your choices and make a decision about what action to take regarding this litigation. The settlement site is very clear about your need to take action: "If you are a member of the class, your legal rights are affected by whether you act or do not act."

If you purchased Google advertising through a third party such as an ad agency and paid for that advertising at cost, the agency will likely forward a copy of the settlement letter. (Note to affiliate marketers and those who buy media selling leads or orders and sell those to marketers on a cost-per-action/order or revenue share basis: my interpretation of the facts is you are the buyer of the media and therefore have the right to make a decision regarding whether to accept the settlement or not.)

Most people I've talked to want to know what exactly they can gain by accepting the terms of the Lane's Gifts settlement. All we know for sure is you'll get some share of the $60 million remainder on the settlement after the lawyers take their piece of the action, as authorized by the court. The settlement will be doled out to all the claimants based on their claims of click fraud and their overall spending. A formula will be developed that weighs the spending during the period and the settlement money (ad credits) will be spread out in the form of ad spending credits (which can only be used to pay half of your Google bill).

I'd imagine total spend from January 1, 2002, to the present will be the primary factor, given that many claimants are likely to estimate on the high side with respect to the amount of suspected click fraud (as a percentage). The more claimants there are, the smaller piece of the pie each claimant will likely get. That's the nature of class action lawsuits, where there is a fixed sum being distributed to all the class claimants whose claims are accepted.

The notice describes your likely settlement in this way: "For example, if the amounts that you paid to Google for the affected ads were 1% of Google's revenues from online advertising since January 1, 2002, you would be eligible to receive 1% of the total available credits. You must certify in your claim form the percentage of your ads you believe were affected by 'click fraud.'" This would seem to indicate both your spending and the level of estimated fraud are factors. I'm hoping that once the claim forms are available, there will be more clarity on the issue.

Below, your legal rights regarding the settlement and reasons you might want to opt for each of the options:

  • Do nothing. If you don't do anything now, you'll still be eligible to file a claim form from June 19, 2006, to August 4, 2006. If you don't file after having "done nothing" (taking neither of the below options), you will be unable to participate in any later settlement and you will get nothing. That would be unfortunate.

  • Exclude yourself from the class. If you exclude yourself by following the instructions on the settlement site, you leave open the option of participating in a later lawsuit (or you could sue Google directly yourself, assuming you have the resources). If you think click fraud is a significantly larger problem than the settlement reflects, this is an option. But if no secondary class action suits arise, you will have missed your opportunity to participate by simply filling out a claim form.

  • Object. You can write to the court and parties about why you don't like the settlement. But unless this option is exercised by a large number of people, the court probably won't change its ruling approving the settlement. However, one vocal opponent of the settlement has filed a complaint.

You still have a few weeks to think about which option to take, but one thing is clear: you should be ready to opt in or out before the August 4 deadline.

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ABOUT THE AUTHOR

Kevin Lee

Kevin Lee, Didit cofounder and executive chairman, has been an acknowledged search engine marketing expert since 1995. His years of SEM expertise provide the foundation for Didit's proprietary Maestro search campaign technology. The company's unparalleled results, custom strategies, and client growth have earned it recognition not only among marketers but also as part of the 2007 Inc 500 (No. 137) as well as three-time Deloitte's Fast 500 placement. Kevin's latest book, "Search Engine Advertising" has been widely praised.

Industry leadership includes being a founding board member of SEMPO and its first elected chairman. "The Wall St. Journal," "BusinessWeek," "The New York Times," Bloomberg, CNET, "USA Today," "San Jose Mercury News," and other press quote Kevin regularly. Kevin lectures at leading industry conferences, plus New York, Columbia, Fordham, and Pace universities. Kevin earned his MBA from the Yale School of Management in 1992 and lives in Manhattan with his wife, a New York psychologist and children.

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