Austin Business Journal, December 5-11, 2008
It's never easy to be the messenger of bad news. But it's even harder when the bad news is being delivered to industry titans (think Google and Yahoo) who don't want to hear it, and especially not from some ambitious but unknown newcomer.
So how did Click Forensics, a start-up in this very position, avoid being shot? First, by being right, and then by finding a way to solve the problem no one wanted to admit was there.
The problem was click fraud, and that's where the company, launched in 2006, first found opportunity. It began when the founders, Tom Chavret and Tom Cuthbert, both working at a web analytics firm, began to notice anomalous activity on a client's advertising campaign. They dug deeper and found that it was invalid traffic caused by click fraud.
Uncovering the fraud was only the beginning. The next step, as CEO Paul Pellman describes it, was to quantify the problem. "We had to ask, 'How big a problem is it?'" he says. "There was no data out there."
And so the company started the arduous work of identifying the scope of the fraud by offering a free service to online advertisers—the Click Fraud Network—that compiled a broad, rich data set that could then be analyzed.
The result of that analysis was the quarterly Click Fraud Index, which reports on the prevalence of fraudulent traffic. The latest report pegs this activity at around 16 percent, a huge problem for an industry that spends $15 billion on search advertising in the U.S. alone. "There are bad people out there making a lot of money off this," says Pellman, "and they're not going to go away quietly."
As the word 'forensics' implies, it takes a lot of sleuthing to keep up with the fraudsters, many of whom are now using sophisticated, automated botnets to perpetrate the fraud. To evaluate the validity of impressions and clicks, the company relies on intensive data mining and detailed heuristics that create what Pellman calls a machine-learning environment. "Over time," he says, "we get better and better as we get more data and our rules get more sophisticated...and that is what allows us to stay a step ahead of how changes in invalid traffic are being perpetrated." He adds, "It's really, really difficult to do what we do, so we've had a huge technical and operational challenge."
And if keeping up with ever-advancing fraud techniques is hard, imagine what it's like to bring this data to the companies whose bread and butter is selling those lucrative impressions and clicks. "It's been interesting over the last couple of years," says Pellman. "We've gone from having very difficult conversations with the search engines, these big 800-pound gorillas, challenging this small little start-up and saying there's not a problem and we're taking care of it for you, to the point where many of them are now working with us."
So how has Click Forensics been able to convert the skeptics into believers? Transparency. "Transparency is a competitive advantage," says Pellman. "It makes advertisers more comfortable, and so they actually spend more money."
But the company's ambitions go beyond identification of fraud, which is why Pellman says the company is more accurately a traffic quality management service. "It's not just about finding sources of invalid traffic, but also identifying the relative value of the traffic," he says. "That all comes down to the propensity of traffic to convert, and so we leverage the same heuristics and data mining capability to not just identify invalid traffic, but also to score traffic based on its relative value to the advertisers."
According to Pellman, the ability to score traffic based on quality—in a standardized way—gives advertisers information that they just didn't have before. Right now, he says, "there's some level of understanding and standardization of quantity of traffic people are buying, but there isn't around the quality of traffic they're buying."
Looking ahead, this is where Pellman sees Click Forensics' contribution to the Internet. He foresees an online media space where fraud prevention, transparency and traffic quality will be essential to gaining advertisers' trust. "If you think of every other media channel," he says, "there's a third-party service out there that helps advertisers confirm that they're getting what they paid for." By managing quality and adding transparency, he adds, "it'll put more power in the hands of advertisers, but that, frankly, is the way it should be. They're ultimately the client."
With billions in advertising dollars at stake, and fraudsters intent on claiming a piece for themselves, Pellman believes his company is well-positioned to grow from ambitious newcomer to industry titan. As he puts it: "We think there's lots more to do, and we're bullish about the opportunity in front of us."
Questions about my freelance services and rates? E-mail me at tiffany(at)tiffanyhamburger.com or call at (512) 524-6786
Hi. I'm Tiffany Hamburger. I'm a full-time freelance writer and editor based in Austin, Texas. I've written and edited professionally for a decade on a wide variety of subjects.
Industries and subjects with which I've worked:
Types of documents I've written and/or edited:
In my spare time, I like to (surprise!) read and write, teach fiction, travel as much as I can, make messes in the kitchen and run with my dog, who is also my receptionist.
"Tiffany: you're the best copywriter I've ever worked with, hands-down. Not only that, but I've had many writers do very similar work, and, so you know, the work you did should have taken AT LEAST 10 times as long. Oh, and the quality far exceeds any rational expectation."
— Christian Hunter, CEO, Attention Ventures
"Tiffany Hamburger is quite simply an AMAZING copy editor. After years of marketing a personal care product, only to find that embarrassing typo or grammar error on the final carton or brochure, in spite of reviews by numerous Quality Control people, Tiffany has revolutionized our process! She is prompt, thorough and very easy to work with. Our Product has technical information which she was able to read through and properly edit with incredible accuracy. In the past, we have had numerous "professionals" serving in this capacity for us, but none have come close to the quality and timeliness of Tiffany's work. Thank you!
— Dr. JE Ellington, INGfertility, LLC
"Tiffany is one of the brightest, most careful writers I've worked with. Her attention to detail and commitment to a quality reader experience were standouts at drkoop.com."
— Monica Maldonado Williams, Editor-in-Chief, GivingCity Austin
"Thank you for the great writing you have been doing for our magazine, RTOHQ...Our editor, Neil, has told me he loves your writing also and that you are a real professional and it is a pleasure working with you."
— Bill Keese, Executive Director, APRO
"Speaking as a retired professor, Tiffany is an outstanding teacher. She has great enthusiasm and conveys her love of the written word. I learned so much and found every minute of class fascinating."
— Gail Clinton, professor emeritus