Online Lead Gen and Click Fraud: Help or Hurt?

Click fraud is suddenly everywhere in the news: a page-one investigative piece in “BusinessWeek,” a critical two-page take in “Fortune,” articles in major newspapers. Something’s going on here, although it could well be lots of smoke and little flame. According to “BusinessWeek,” some big Web players have put together an alliance to pressure major search engines to get more serious about cracking down on click fraud. It has many permutations but essentially causes advertisers to pay for leads of a dubious, if not fraudulent, nature.

It’s too early to tell whether all this bad publicity and advertisers’ complaints will lead to real change, or whether companies like Yahoo and Google will find enough incentive to do more to combat click fraud and whether the fuss will stimulate politicians and regulators into action.

On the latter front, my guess is it won’t. In the Gratis Internet case, the company was sued by New York Attorney General Eliot Spitzer for allegedly perpetrating the largest consumer privacy breach in Internet history. Attorneys general want to appear to be consumer crusaders. There are guaranteed headlines and political hay to be gained from their efforts. But at this point (rightly or wrongly), the only entities ripped off by click fraud are businesses. It takes a lot of black headlines to goad attorneys general into coming to their rescue.

If enough advertisers become disillusioned with search because of click fraud, other Internet advertising areas (co-registration, for example) could benefit from a shift in spending. Co-registration and lead generation compose just over 6 percent of all Internet ad spending, and the space continues to grow like wildfire. But there’s a fair amount of cleaning up to do to ensure the positive activity continues.

In the short term, the real growth is in direct response, not branding. If keywords generate customers within your allowable, do you really care if 10 percent of the clicks are fake? I don’t. My firm buys a bunch of search and gets mad business out of it for our clients, so we’ll continue to buy it even if one of my competitors or a bot clicks the link. Bring it on!

I do believe Google and Yahoo will aggressively address the issue. They have big plans to sell advertisers on search branding, but I honestly don’t care, so long as my metrics hold.

At a recent speaking engagement, I was asked to envision lead generation a year from now. Today, we have a wild West situation where, in too many instances, anything and everything goes, so long as someone, somewhere is making money.

It’s a bright future indeed if all players involved get serious about the hard work that must be done to execute the process in an optimal fashion. At a conference last week, you could tell from the audience interaction there remain many questions about co-registration, though it’s been around for a long time. Although companies like Procter & Gamble enjoy huge responses for brands like Olay when consumers opt in for product samples or coupons, there are still too many advertisers showing the wrong offers to the wrong demos, like an electronics retailer delivering the same message to 16 year old and a 45 year old.

Then, there are advertisers who squander the leads they pay for by not taking the follow-up and follow-through process seriously. One client pays us to generate leads through co-registration. They initially told us we could deliver those leads to them once a month. Why bother? If the Pony Express were still in business, that time lag might make sense, but not in an era of real-time data transmission. Don’t even get me started on advertisers who don’t know exactly where all their offers are running. They’re flirting with trouble from the Eliot Spitzers of the world.

A year from now, online lead generation will look and work the same, but some fringe players will have fallen by the wayside. One major reason several dozen companies have joined the Online Lead Generation Association (OLGA) and are helping spread the word about best practices is because they know what a valuable asset lead gen can be to an advertiser’s marketing arsenal, particularly when direct response — both on- and offline — is all the rage.

The future will also bring more co-registration activity from abroad, but consumer habits vary from country to country, as our experience indicates. Why is it people in, say, Germany opt in to all kinds of offers but buy next to nothing? A year from now, we’ll hopefully have figured this out. Meanwhile, there’s plenty of action coming from people in Asian countries, so all’s not lost.