In a new report by Harvard professor Ben Edelman shows how he believes Google and its partners inflate conversion rates and, in turn, increase advertising costs. From his report:
Google and its partners systematically inflate advertisers’ conversion rates by interceding in transactions advertisers would otherwise have received for free. This conversion-inflation syndication fraud overstates the true effectiveness of the ads Google delivers — leading advertisers to pay more than they should.
He cites four cases that can be read in full in his report, but here is a summary:
| Traffic source | How users are found | What would have happened had Google and its partners not interceded |
| WhenU – adware | User requests advertiser’s site. Adware covers advertiser’s site with pay-per-click listings. | Advertiser’s site displays as usual, with no covering popup. User stays at advertiser’s site, and advertiser pays no PPC fee. |
| SmileyCentral – toolbar | Reconfigured browser tricks user into running a “search” for a site’s domain name. | User’s browser retains its ordinary configuration. User runs a direct navigation, and advertiser pays no PPC fee. |
| Typosquatting | User misspells advertiser’s domain name. | User’s browser shows a list of alternatives, and user selects one — reaching advertiser’s site at no charge. Or, user sees an error page, notices the misspelling, and corrects the spelling to reach the advertiser’s site without a PPC fee. |
| Chrome – browser suggestions | User typing a web address is encouraged to run a search instead. | User finishes typing the site’s web address and reaches the advertiser’s site without a PPC fee. |
Personally, I might not agree 100% with all these cases. We may dig deeper into this report at a later time.
Related Topics: Channel: SEM | Google: AdWords
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