Eric Schmidt, the CEO of Google, as reported at ZDNET on July 9, claims that the best thing that Google can do about Click Fraud it to "let it happen." His quote, taken from the ZDNET post, included:
Eventually, the price that the advertiser is willing to pay for the conversion will decline, because the advertiser will realize that these are bad clicks, in other words, the value of the ad declines, so over some amount of time, the system is in-fact, self-correcting. In fact, there is a perfect economic solution which is to let it happen.
A thread started at Digital Point Forums discusses this assertion, and has led to some good comments. One comment wisely tempers a little of the journalistic drama used in the headline, pointing out that Schmidt claims they are trying to stop it - because it is in fact a bad thing for its advertisers. The ZDNET article also quotes Schmidt as saying that Click Fraud is the type of issue that is "great fun" for Google engineers, since it poses a challenge.
One member of DP discusses accounting for click fraud when budgeting for Pay-per-Click Internet marketing:
In fact when I run AdWords campaigns I just assume there will be a certain amount of click fraud and base my bid rate on what is a cost effective bid.
Join the discussion at Digital Point Forums.
Postscript by Barry: Just wanted to add to this, something a bit different. Ok, so we have this debate over what Eric said, right... So Google puts up a blog post this morning here stating, that some "bloggers" have pulled out "select excerpts and ignoring the context of the remarks" from Eric's presentation. So Donna Bogatin from News.com responded strongly to that, with a challenge to Google's Eric and Shuman.
Eric and Shuman at Google: If you are committed to organizing the world’s information, and making it universally accessible, then why do you covertly allude to me as “a blogger” and why do you not provide the world with a link to my “blog post?,” which you do not identify, although it is the subject of your latest post at Google Blog?
Danny Sullivan's thoughts here.