Ad Analytics Firm Adometry Raises $8M Series D, Led By Shasta Ventures

NATASHA LOMAS

Ad analytics company Adometry, the combined entity created when Click Forensics acquired Adometry and kept its branding, has announced it has closed an $8 million Series D round, led by Shasta Ventures, with Austin Ventures and Sierra Ventures also participating. As part of the funding round, Shasta Venture’s MD, Jason Pressman, will join Adometry’s Board of Directors.

The company said it plans to use its latest funding to accelerate product development on its analytics platform, Adometry Attribute, as well as recruit staff and expand into new territories. It currently says it processes and analyzes “tens-of-billions of impressions and advertising transactions” per month on behalf of its customers.

Adometry sells tools to help advertisers and marketers determine how cross-channel media campaigns are performing and identify ways they can be optimized. Its approach to measuring campaign effectiveness involves aggregating data from multiple sources and signals, rather than just identifying the “last click” and giving that all the credit for the purchase.

Here’s how the company explains its analytics platform on its  website:

Adometry Attribute uses a “data-driven,” probabilistic approach to determine what should receive the credit. Adometry identifies every conversion and “look-back” over the previous time period to find all the touch-points that user saw prior to the conversion. It then determines the probability of each conversion sequence – with and without an event – and then uses the ratio to determine the importance of the omitted event.

Advanced Attribution offers a number of benefits when compared to simple attribution models. To start, Attribute takes into account any and all available data streams, and analyzes all data instead of sample sets, yielding a highly accurate and insightful model for marketers to judge their marketing efforts by. Attribute is also integrated with numerous data providers and pulls additional third party data for increased accuracy, scalable marketing analytics and reporting depth that allows for truly actionable insights to be uncovered.

Commenting on the funding in a statement, Shasta’s Pressman said: “We believe Adometry has built a unique and sustainable business at the intersection of several exploding market dynamics. Using big data to optimize and influence advertising spend is the future of marketing, and many of the world’s largest brands already rely on Adometry’s robust platform and expertise. We are thrilled to lead this round of funding and excited about Adometry’s continued growth and success.”

Adometry’s full release follows below.

ADOMETRY RAISES $8 MILLION IN LATEST ROUND OF FINANCING
Funding to Fuel New Products and Expansion into New Geographies

AUSTIN, Texas – January 21, 2013 – Adometry, Inc., a leader in cross-channel attribution, today announced that it has completed an $8 million round of financing. The company will use the funds to accelerate its product roadmap, recruit top talent and expand into new territories.

The financing was led by Shasta Ventures and includes participation from Austin Ventures and Sierra Ventures. Adometry also announced Shasta Venture’s Jason Pressman will join Adometry’s Board of Directors.

As a result of the funding, the company plans to accelerate product development on its Adometry Attribute^™ platform, which provides marketers with acomprehensive lens through which to analyze and optimize the performance of their cross-channel marketing campaigns. Through unique integrations with leading programmatic buying platforms, advertisers can also automatically funnel performance data and optimization recommendations from Adometry’s platform to real-time bidding engines to optimize media and channel investments for active campaigns.

“Our focus has always been to deliver the best possible products for advertisers so that our customers and agency partners around the world are better able to understand and make decisions about their marketing spend,” said Paul Pellman, CEO of Adometry. “We are humbled by the overwhelmingly positive feedback we’ve received thus far and look forward to delivering even greater value through our Attribute platform by offering new capabilities and features in the coming year.”

“We believe Adometry has built a unique and sustainable business at the intersection of several exploding market dynamics,” said Jason Pressman, Managing Director at Shasta Ventures. “Using big data to optimize and influence advertising spend is the future of marketing, and many of the world’s largest brands already rely on Adometry’s robust platform and expertise. We are thrilled to lead this round of funding and excited about Adometry’s continued growth and success.”

For more information on Adometry, visit www.adometry.com or follow us on Twitter: @Adometry.

About Adometry

Adometry, Inc. redefines marketing analytics by combining and interpreting previously silo-ed sources of big data to generate actions that improve return on advertising spend and increase sales. Through its SaaS-based attribution platform, Adometry processes tens-of-billions of marketing touch points from online and offline media channels for some of the world’s largest advertisers to identify the true consumer purchase journey. Adometry’s scientifically proven methodology and flexible, easy-to-implement solution generates the industry’s most accurate insights, in the shortest amount of time. Headquartered in Austin, Texas, Adometry is privately held and backed by Austin Ventures, Sierra Ventures, Shasta Ventures and Stanford University. For more information, visit www.adometry.com.

Is Click Fraud A Ticking Time Bomb Under Google?

Clem Chambers, Contributor

It was a long time ago when Google enjoyed the reputation for being the “do no evil” un-corporation.

The studied PR that created Google’s reputation as the coolest corporation ever has slowly eroded away.

After years of using Google as the window on the Internet people have begun to realize Google knows more about them than they know about themselves. The penny has dropped that all is not well–you go to a humor site and Google serves an ad about a subject you’d surfed in the past and realize Google is targeting you.

The famous “creepy line,” espoused by their ex-CEO has become clearer and scarier to many as their Internet sophistication has increased and it is making people nervous.

Videoing your door step with a roving camera car was a turning point for Google’s reputation. Only the most innocent amongst us felt this was a benefit. The latest generation of burglars thought it was great, but it was a violation of privacy that set off Google’s reputation slide.

Google once owned the hearts and minds of the Internet but it was the ripping of open, private Wi-Fi connections by its camera car that set off Google’s fall from grace.

You have to be very forgiving to see this as a simply mistake. As forgiving as the British government are, they were still shocked to discover that the explanation given to the U.S. Feds was both different and more sinister than the innocuous one they got from Google and accepted.

With its engineer reportedly taking the Fifth amendment, the once saintly Google seems to have donned a more sinister cowl.

Yet these outrages are as nothing to the real bomb threatening to nuke Google. War dialing is just the tip of the iceberg.

At the last count (December 2011) Google had sales of $38 billion USD. This is a colossal sum of money with the bulk (96%) of this cash coming from advertising. This revenue comes from AdWords/AdSence. To put this sum into perspective, per year it is about $100 for every U.S. citizen and a week or two of the U.S. national deficit.

A large proportion of this money, $10 billion, comes from advertising Google places on third party Web sites. You can start a Web site, put your content on it and place Google AdSence ads on it and start earning money right away. It’s the spigot of money many Web sites rely on to stay in business.

Google has a monopoly on this, at least as far as the definition goes by the regulators that define them. In any event, Google is the $39 billion gorilla in this business and $10 billion of  third party advertising is a lot of money.

Click fraud is the ticking bomb. It is also a term I was unable to find in Google’s recent year end statement but it exists, Google won’t deny that. Apparently Google click fraud is less than 2%, whilst Click Forensics says overall it was 19% in 2010.

You can Google the numbers yourself and they are astounding.

So let’s forget the percentage of click fraud on Google search engine because whilst it’s still fraud and it is nasty only Google is making billions from it. Let’s instead focus on the Google network of third party sites.

Google thinks that click fraud is 2%, that’s $200,000,000 of third party Web site fraud. This is a huge theft from advertisers everywhere. $200,000,000 is drug baron scale criminality.

Put another way, by that calculation the yearly carve up of this ill-gotten loot is $101 million dollars a year to criminals and $99 million to Google.

But wait, what if it is the 19% Click Forensics say? That is a $1 billion dollars hit for criminals. This is a Madoff or Stanford scale scam. Who are these criminals earning a billion dollars in click fraud?

A quick Google search reveals that at Christmas the FBI busted a single outfit that was generating $14 million from click fraud. In this case they were Estonians and Russians. Then there was the case of Android apps infected with click fraud bots in China, it doesn’t take long to realize that criminals from around the world have been draw to this ocean of money like flies to honey.

In the old days, when butter wouldn’t melt in Google’s mouth, being the platform for hundreds of millions of dollars of fraud didn’t seem to attract anyone’s attention. But with Google now at war on many fronts with regulators around the globe, cookies, unfair competition and war dialing the knives are out.

When they ask about click fraud and start wondering about the kinds of people around the world enriching themselves with illegally gained income it will open up a can of worms for Google they will find hard to close.

The governments of the west have tried hard to keep criminal cash out of the financial system so that terrorists, drugs and mafia kingpins find it hard to launder their money. It is hard to get criminal cash turned into bank balances, click fraud gains however go straight into the financial system without touching the sides.

This billion dollar money laundering short circuit is not just a concern for those in authority, it is a magnet from those looking for illicit gains that come ready laundered.

It’s the perfect crime and as the news flow underlines–it’s organized.

Google is a mammoth company, with an income torn from old media who are failing under the onslaught of a World Wide Web that Google effectively controls. Click fraud is the dirty secret of the Web and while it’s extent is kept under wraps and its scale unacknowledged, it will remain a ticking bomb under all the search engines, and as the king of the hill, Google’s in particular.

Clem Chambers is CEO of leading financial markets Web site ADVFN.comand author of 101 Ways to Pick Stock Market Winners or A Beginners Guide to Value Investing now out on Kindle.

Hello Adometry!

Click Forensics Acquires Adometry; Adopts New Company Name

Now Adometry, Company Continues Expansion Into Online Display Ad Verification and Attribution

AUSTIN, Texas--(BUSINESS WIRE)--Click Forensics®, Inc. today announced that it has acquired display ad verification technology provider Adometry of Redmond, Washington. In addition, Click Forensics announced it has changed its company name to Adometry. The moves are designed to support the continued expansion of the Click Forensics product line for the display advertising market.

In February 2010, Click Forensics launched a beta version of its cross-channel ad analytics suite for online display advertisers, which was tested by some of the world’s top brands and ad inventory providers. The integrated offering is designed to help advertisers, agencies, ad networks and publishers to manage audience verification attribution and campaign optimization through a single platform.

“The key challenge online marketers face today is accurately measuring and improving the performance of their online ad campaigns as they flow across a changing landscape of ad networks and web sites,” said Paul Pellman, CEO of Click Forensics and the new Adometry. “With the addition of ad verification technology from Adometry, our ad analytics suite integrates all the pieces of display campaign measurement and optimization in a single offering for brand advertisers.”

Over the past year, Click Forensics has continued to build out its technology offerings for display advertisers. The solution suite, which helps brands measure and improve the performance of their online display campaigns, complements Click Forensics ad analytics technology for PPC marketers. Online marketers can also use the two offerings together to manage their hybrid display and PPC campaigns.

“We’re excited to join forces with the Click Forensics team,” said John Dietz, founder of Adometry. “The company works with the world’s top online advertisers, publishers and ad networks. Our technology will enhance the current capabilities Click Forensics provides to display advertisers as we work together to build out new features for its powerful ad analytics suite.”

For more information, visit www.adometry.com or follow us on Twitter: @Adometry.

About Adometry, Inc.

Adometry, formerly Click Forensics, Inc., provides scoring, auditing, verification, and attribution metrics to optimize results for online advertisers, agencies, publishers, and ad networks. Tracking billions of impressions in real-time, reporting on where they appeared, for how long, and to what effect; the Adometry mission is to bring greater levels of transparency and accountability to the online advertising industry. Headquartered in Austin, Texas, Adometry is privately held and backed by Sierra Ventures, Austin Ventures, Shasta Ventures and Stanford University. For more information visit www.adometry.com.

Select media coverage:

 

Click Forensics Acquires, Becomes Adometry And Launches Ad Analytics Suite

TechCrunch - ‎12 hours ago‎

Click Forensics this morning announced that it has purchased display ad verification technology provider Adometry and that it will be changing its company name to Adometry as a result of the transaction. Terms of the deal were not disclosed. ...

Click Forensics is now Adometry

Seattle Times (blog) - Brier Dudley - ‎12 hours ago‎

Redmond analytics startup Adometry is being acquired by Click Forensics, an Austin, Texas-based company. Click Forensics is renaming itself Adometry and will continue investing in the Redmond office, adding two more employees immediately. ...

Click Forensics is now Adometry

InternetRetailer.com - Paul Demery - ‎7 hours ago‎

Click Forensics Inc., known for its tools that monitor fraudulent clicks on pay-per-click ads, has acquired online ad analytics firm Adometry Inc. and taken its name. Terms were not disclosed. The combined company will be better able to help ...

Click Forensics Takes Adometry's Name With Its Tech

ADOTAS - ‎9 hours ago‎

ADOTAS – Traffic monitor Click Forensics and ad verifier Adometry are looking to be the talk of the online advertising space with their nontraditional integration — can you believe the acquirer is taking the acquiree's name? Heavens to Betsy!...

Click Forensics makes acquisition

Austin American-Statesman (blog) - Lori Hawkins - ‎10 hours ago‎

Austin-based Click Forensics said Tuesday it has acquired display ad verification company Adometry and will make that its new company name. Founded in 2007, Click Forensics develops software that ...

Click Forensics Acquires Adometry; Adopts New Company Name

Business Wire (press release) - ‎13 hours ago‎

AUSTIN, Texas--(BUSINESS WIRE)--Click Forensics®, Inc. today announced that it has acquired display ad verification technology provider Adometry of Redmond, Washington. In addition, Click Forensics announced it has changed its company name to Adometry. ...

Click Forensics acquires Washington firm

Austin Business Journal - Christopher Calnan - ‎11 hours ago‎

Online fraud detection company Click Forensics Inc. has bought Washington State-based Adometry Inc. and adopted the acquired company's name. Adometry, which was founded in 2008, employed five workers. The company develops display advertising ...

Adometry Acquired By Click Forensics

Northwest innovation - ‎12 hours ago‎

Redmond-based Adometry, a provider of online advertising analytics services used by online advertisers, agencies, publishers, and ad networks, has been acquired by Click Forensics. Financial details of the acquisition were not announced....

Malware And Malvertising via @adexchanger

The online advertising world continues to be challenged by ne'er-do-wells as Click Forensics released results from its latest quarterly, deep-dive into the company's fraud detection data. The Company identified challenges with display advertising where "a pop-up or pop-under (...) rotates brand advertisers' banner ads every 10-15 min in an effort to seemingly boost impression figures." Read the release.

CEO Paul Pellman discussed the latest on malware and malvertising.

AdExchanger.com: How is the malware scheme you describe reaching websites - through display ads from exchanges, specific ad networks? Any ideas on how it can be prevented?

PP: The Click Forensics Malware Lab has been finding two generic types of malware.  The first, more common version, is actually installed on the visitor's machine as a result of some other seemingly innocent download.  It can be spread via e-mail attachments or through lots of "freeware" that people install on their machines.  Once installed, these Botnets can take control of browser functions or simply open pop-unders to display ads for nefarious ad networks.  The best way to prevent these is for visitors to be diligent and use updated antivirus software from Symantec, McAfee, and others.

The second type is not really malware at all, but is the one more commonly talked about in AdExchanger circles.  Namely, visitors to ad supported sites get served all sorts of ads that they never see, whether in pop-unders, zero-by-zero iFrames, or invisible pages.  The generic term for these schemes is "ad stuffing."  Advertisers can protect themselves from both types of fraud by employing ad verification and/or audience verification platforms.

What IS the malware? Any trends there?

Much of the malware we found recently came from different types of toolbars.  These are browser plug-ins that purport to assist with search or provide some other value for the visitor (weather, sports scores, etc.), but in reality are also hijacking browser activity for the benefit of the author.  One toolbar we found turned organic search results into paid clicks by routing searches to a parked domain site and channelling clicks through several ad networks.  It's very difficult to trace which are complicit in the fraud and which are innocent participants.

From a marketer's perspective, would using frequency caps or buying on a CPC basis might lessen the impact of inflation impression?

Frequency caps might help a display advertiser minimize the impact of these schemes, but it can't defeat them completely.  As far as converting everything to CPC, it might work in the very short term but, as we well know, click fraud becomes an issue.  The best protection is the diligent monitoring of campaigns and the use of an audience/ad verification platform.

I didn't see you mention malvertising versus malware in your release. Do you distinguish between the two?

We use "malvertising" to refer to ads that send visitors to a place that is bad for them.  The ad itself may not be infected, but its intention is to trick the visitor into doing something damaging.  For example, the ad on NewYorkTimes.com a little over a year ago warned visitors to click through to a site where they could "update their virus protection."  Of course the download included all sorts of malware, but the ad itself was more accurately described as malvertising.

By John Ebbert

Click Fraud Falls In Q4 2010

The overall click fraud rate in Q4 2010 was 19.1 percent which was lower than the Q3 2010 all-time high of 22.3 percent, but higher than the 15.3 percent rate for Q4 2009, according to the latest report from Click Forensics. 

Click Forensics Malware Lab identified a new malware scheme targeting display banner ads. The program performs a pop-up or pop-under and rotates brand advertisers’ banner ads every 10-15 min in an effort to boost impression figures.

In Q4 2010, the countries outside North America producing the greatest volume of click fraud were Japan, the Netherlands, the Philippines, Sweden and France, respectively. 

“While the overall click fraud rate dropped last quarter for CPC advertising, we saw the emergence of new schemes focused on display advertisements,” said Paul Pellman, CEO of Click Forensics. 

“We are investigating the malware-driven attacks in more detail, but early evidence points to an impression inflation scheme. It’s something we will examine more closely and report on later this year.”

http://www.webpronews.com/topnews/2011/01/26/click-fraud-falls-in-q4-2010

Tom Cuthbert 

@tomcuthbert

Click Fraud Climbs With Mobile Gear

By ALEX MINDLIN

Published: October 31, 2010

Over the last year, the rate of click fraud has risen drastically, reaching the highest rate since measurement began in 2006, according to Click Forensics, a firm that analyzes traffic on behalf of advertisers and ad networks.

Enlarge This Image

Tony Cenicola/The New York Times

Click fraud is the practice of creating dummy Web sites to host online ads, peppering those ads with computer generated-clicks, and then collecting money from unwitting advertisers for those clicks. The clicking is often carried out by “botnets,” or networks of hijacked personal computers, harnessed together by a virus.

Paul Pellman, the chief executive of Click Forensics, said that the firm had begun seeing fraudulent clicks routed through mobile devices, like wireless Internet cards. Such clicks are harder to detect than those coming from wired computers because the wireless card effectively disguises the origin, lumping them in with legitimate mobile users under a single originating address.

“The mobile traffic is getting to be large enough that they can hide within that traffic,” Mr. Pellman said. 

USA Today: Escalating click fraud erodes credibility of online advertising

The level of fraudulent clicks on legit online advertisements rose to 22.3% in the third quarter, ending September 30, according to summary findings released today by online ad tracking firm Click Forensics. 

That's up from 14.1% during the same three months of 2009. "During the past quarter, we saw a growing volume of click fraud flow through a more diverse number of sources," says Paul Pellman, CEO of Click Forensics. "As advertising in videos, social networks and mobile devices continues to grow, advertisers will need to pay close attention to the quality of traffic they receive."

Advertisers have wasted tens of millions of dollars on faked clicks, as we reported in this story.

Most often, cybercriminals put up websites carrying online ads and no other content. The criminals then retain the services of cybergangs in control of sprawling networks of infected PCs, called botnets, which are directed to repeatedly click on the ads. This triggers payments to the crooks who put up the Web page.

Click fraud continues to steadily erode the credibility of Internet-based advertising, which is why Microsoft has declared war on cybercriminals who specialize in click fraud, as we reported here.

Context supplied earlier this year by Brad Smith, Microsoft senior vice president and general counsel, bears repeating.

Smith told reporters at a press briefing in May that criminals are "not alone" in getting rich. Smith outlined how Google, Microsoft and Yahoo, the biggest online advertising platform providers, also profit from click fraud, since each also gets a piece of the payment advertisers pay for each faked click.

The tech giants can "take aggressive steps" to stop click fraud, "or look the other way and make money on it," noted Smith. "We don't believe looking the other way is an option."

By Byron Acohido

Click Fraud Rate Rises to 22.3 Percent in Q3 2010

Botnet and Traffic from Mobile Devices, Video Content, Social Networks, and User-Generated Content 

Click Forensics®, Inc. today released advertising audience quality figures for the third quarter 2010 from the industry’s leading independent online advertising data reporting service.

Now in its fourth year, the Click Forensics reporting service provides statistically significant data collected from Cost Per Click (CPC) advertising campaigns for both large and small advertisers across all leading search engines as well as comparison shopping engines and social networks. Traffic across more than 300 ad networks is reflected in the data. Key findings for Q3 2010 include:

• The overall industry average click fraud rate was 22.3 percent. That’s up from the 18.6 percent reported for Q2 2010 and the 14.1 percent rate reported for Q3 2009.
• In Q3 2010, the countries outside North America with significant CPC traffic producing the greatest volume of click fraud were Japan, the Netherlands, the Philippines and China, respectively.

“During the past quarter, we saw a growing volume of click fraud flow through a more diverse number of sources, including mobile proxies,” said Paul Pellman, CEO of Click Forensics. “As advertising in videos, social networks and mobile devices continues to grow, advertisers will need to pay close attention to the quality of traffic they receive.”

Since 2006, Click Forensics has published online advertising industry data collected from the first independent third-party Cost Per Click (CPC) and online advertising fraud detection service. The service monitors online media traffic across over 300 ad networks as well as billions of clicks from top search engines, comparison shopping engines, social networks, leading publishers and advertiser web sites – providing the most accurate view of online advertising audience quality.

For more details, visit http://www.clickforensics.com/resources/click-fraud-index.html.

Moving Forward by Stepping Back

In April of 2005 I sat at my usual corner table at Krispy Kreme donuts in San Antonio.  

It had become my “thinking place” and every few weeks I would ponder life over a couple of donuts and a cup of coffee. I was reading a series of articles on the growing problem of “click fraud”.  Our former parent company, Optimal iQ, had recently found a group of fake clicks and we were intrigued by the problem.  Perhaps it was the highly caffeinated sugar rush but at that moment, I had an epiphany.  I realized the problem of click fraud was only going to get worse and more complex.  Measure this challenge against the rapid growth of search marketing and there was an opportunity staring me in the face.

Click Forensics was born in January of 2006 through the hard work of my co-founders and our dedicated team. We raised over $21,000,000 to solve a problem, execute a plan and lead the industry.  Today Click Forensics is the clear leader in traffic quality management. Our original vision was to “help ensure advertisers get what they pay for” and today that is exactly what we do.  I’m very proud of Click Forensics and excited about the opportunity to continue to serve and improve the online advertising community. In June of last year I made the decision to begin my exit from the company.  Click Forensics is growing rapidly and developing cutting edge technology our competitors can’t touch.  My role has deliberately been changing over the last year and I feel I owed it to myself and my family to explore “what’s next” for me.  So last week, I formally stepped back to a board of director position.  I will continue to help the company in any way I can and remain an active advisor, board member and chairman of the Click Quality Council. As I reflect on the last four years or so of our growth, there are eight things that come to mind that I am most proud of:

1. We raised awareness about click fraud – Sure we may have ruffled a few feathers when we

launched our Click Fraud Index ™ in the spring of 2006, but those numbers caused everyone to stand up and listen.  Google called us out in August of that year and dismissed the problem of click fraud as insignificant, claiming their own efforts to stop it were "reasonable".  The problem was hugely significant and no standards existed to stop it.  Something had to be done so we took the lead.  With the support of the advertising community, we “encouraged” Google to take the problem seriously and listen.

We brought “both sides to the table – No one wanted to talk about the problem of click fraud in 2006.  We recognized that solving this problem was in the interest of everyone in the advertising ecosystem.  We worked hard to listen to advertisers and work with search engines to develop sustaining solutions that are communally beneficial.

We built a bridge – In a groundbreaking partnership with Yahoo!, we built the FACTr™ system (Fully Automated Click Tracking and Reconciliation).  

FACTr allows advertisers to communicate directly to the ad providers via Click Forensics.  Yahoo! led the way and by the fall of 2007, Looksmart, Google and others followed suit.

We saved advertisers money – Our tools and insight are effective in identifying unwanted traffic and allow an advertiser to work with the ad provider to get what they pay for.  Hundreds of customers have used our technology to find click fraud and improve their campaign ROI.

We led the charge for standards – Working closely with the Interactive Advertising Bureau (IAB)

and dozens of online advertising companies we developed standards that were released in June of last year.  It was a team effort from Google, Microsoft, Yahoo!, Click Forensics and many others.  The result is a document that can be built upon for years to come.

We worked with some of the best – Our customer list includes industry-leading advertisers like Vegas.com, Progressive Insurance, Experian and EBay.  On the ad network side our clients include leaders like Adknowledge, Turn, Yahoo! and Lycos.  The relationships I have made through customers, partner companies and industry leaders means a lot to me (even Shuman!).  The online advertising industry is vibrant and growing.  Some of the brightest people I have ever been associated make this industry great.

We caught click fraud – We have an incredible team of scientists, engineers and developers. Many of them have PhD’s and tremendous industry experience.  We have put their knowledge to work by innovating ahead of the fast moving bad guys.  One example of this is our identification of the “Bahama Botnet”, an organized group of fraudsters using a highly sophisticated approach.  Our discovery of this (subsequently alerting Microsoft, Yahoo! and Google) saved advertisers from paying for these clicks.  Additionally, it forced the bad guys to change their approach.

We changed online advertising… for good – The work that we have done and continue to

do is meant to have a sustaining effect on online advertising.  Improving traffic quality in real time means that publishers and ad networks can send out highly qualified clicks to advertisers and enhance trust.  This relationship, built on standards and delivered on quality, will accelerate the growth of online advertising for years to come.  We are proud to play an important part in the ecosystem.

I have enjoyed the opportunity afforded me to play a role in our company and the industry.  I'm deeply appreciative of the support, encouragement and hard work from our employees, partners and board of directors.  It's been an amazing five year ride! And so now I look ahead.  Currently, I’m enjoying an “entrepreneurial sabbatical” to consider options and explore opportunities over the next few months.  I’m enjoying time with friends and family, traveling and learning about new businesses.  I’m keeping busy by consulting with an advertising technology company, joined the advisory board of an NBA agent firm and of course reading, writing and learning.  At some point, I’ll head back to Krispy Kreme.  There are an unlimited supply of donuts, coffee and problems to solve.  I can’t wait~ Tom Cuthbert

Click Fraud Gets Slicker

Andy Greensberg of Forbes has written about the problem of click fraud for years.  In fact it was Forbes who published a "debate" between Shuman Ghosemajumder of Google and me that helped set the record straight about discrepancies.  While the problem of click fraud has been widely covered by media outlets ranging from the Wall St. Journal to Search Engine Watch, Forbes (and Greenberg) have always been on the leading edge.This is still the case today as Andy wrote and excellent piece on the problem titled, "Google Faces The Slickest Click Fraud Yet."  The article focuses on the work of Harvard professor Ben Edelman.  Ben's site (www.benedelman.org) is an impressive compilation of research and reports on a wide range of topics with a focus on spyware, click fraud and online advertising. The article highlights "a new form of click fraud that accomplishes what online fraud watchdogs might have once thought impossible: a scam that not only simulates valid clicks on a Google ad sold to an advertiser, but seems to result in a real customer who spends money on the advertiser's site."  This is the worst case scenario for an advertiser and Edelman is right on in his method of identifying the threat.  While this approach is limited in it's ability to scale, it is the most significant finding since Click Forensics identified the "Bahama Botnet". I applaud the work of Ben Edelman and others as well as Andy and the folks at Forbes for continuing to shine the light on this ongoing problem for our industry.  For over four years now, we have been on a mission to "ensure advertisers get what they pay for".  As long as Google lacks transparency, there will be click fraud.  Ben ends by saying, "Google owes its advertisers something better than that."  I agree and we need more guys like Ben to help hold their feet to the fire. Tom Cuthbert

Beware the “Bahama” Botnet

By Steve O'Brien, Click Forensics Just when you thought the fraudsters couldn’t get any more sophisticated … they surprise you.  Click Forensics researchers have recently discovered one of the most advanced sources of click fraud we’ve seen.  We’ve named it the “Bahama botnet” because when first discovered it was redirecting traffic through 200,000 parked domain sites located in the Bahamas.  It has since been reprogrammed to redirect through other intermediate sites hosted in Amsterdam, the U.K., and even San Jose, CA, but the Bahama name stuck. Interestingly, the Bahama botnet appears to be closely related to the recent spate of “scareware” attacks, such as the one perpetrated against The New York Times digital site just a few days ago, reported by ComputerWorld.  Visitors to the NYTimes.com site were greeted with a pop-up informing them their computer was infected and directed to an authentic-looking site where they could install a program called Personal Antivirus.  Users duped into purchasing this phony software were then infected with a Trojan that gave control of their computer to an unknown third party that we now know to be part of a gang in the Ukraine. We believe the Bahama botnet is controlled by this same gang, or their neighbors down the street. 

More info about the “Ukranian fan club” can be found in Dancho Danchev’s excellent security blog.  We’re pretty sure the Bahama botnet is related to the Ukranian fan club and the NYTimes.com scareware because they each phone back to a bogus “Windows protection” domain located on the same IP address. These sources were originally identified by the Black Hat community, but we believe Click Forensics is the first to discover the breadth and depth of click fraud being perpetrated by the botnets it controls.  And the botnet is incredibly insidious. The video below shows the botnet in action, caught on film and narrated by Click Forensic’s own Matt Graham, the infected machine will exhibit some really funky behavior.  Clicks on organic search results are redirected through a series of parked domains across a number of top-tier ad providers (search engines and ad networks), eventually arriving at an advertiser unrelated to the original query.  The user is momentarily confused, but likely just performs the search again, this time with easy success. [youtube=http://www.youtube.com/watch?v=gzEqrOmzKzM&hl=en&fs=1&color1=0x2b405b&color2=0x6b8ab6&hd=1&border=1] What makes the botnet so insidious is that it operates intermittently so that the user doesn’t really know that anything is wrong.  Additionally, it can operate independently of the user because the authors appear to be building a large database of authentically user-generated search queries. [caption id="attachment_718" align="alignright" width="500" caption="Seemingly random clicks discovered through advanced pattern detection"]

[/caption] And because the queries come from many different machines (IPs) across a broad segment of the Internet population, it is very difficult to find and identify these clicks as fraudulent.  But these auto-generated clicks were not able to disguise themselves well enough to escape Click Forensics anomaly detection algorithms.  Additionally, large amounts of non-converting clicks were spotted in the data we receive from advertisers.  From there, our team was able to hone in on the source of the Bahama botnet.

The Doctors Are ‘In’

In February of 2006, Click Forensics was just getting off the ground.  We recognized the problem of click fraud was a big problem and that building a solution would be tough technical challenge. [caption id="attachment_709" align="alignright" width="248" caption="Dr. Tuzhilin with the Click Forensics founding team in 2006"][/caption] We decided to bring in an expert in the field of data mining and anomaly detection in click stream analysis.  That expert was Dr. Alex Tuzhilin.  Alex spent the day with us at our offices in San Antonio and provided us a road map for the evolution of our approach to identifying invalid traffic.  His contribution to us at that point was essential and provided tremendous insight.  After reviewing our approach he commented, "Click Forensics has good data and this is a source of their advantage over the search engines. My role is to work with them to refine the scoring methodology to improve accuracy. Their approach is to incorporate as much data as possible to improve accuracy. The search providers simply don't have enough data to have the most accurate approach." Shortly after Alex visit to Texas, I received a call from the lead attorney representing Lane’s Gifts in their lawsuit against Google.  He said, “Tom, I just hired your Ph.D!”  He told me that the judge in that case had mandated that an outside consultant review Google’s click fraud detection methods and publish paper on the efficacy.  Alex spent many weeks at Google and wrote an insightful paper detailing their approach, ultimately describing it as “reasonable”.  The Lane’s Gift case was settled and Alex returned to his role as a professor at NYU. Today we are thrilled to announce that Dr. Tuzhilin has joined the Click Forensics Advisory Board.  Few individuals have had more real-world and academic experience in the measurement of online traffic quality and its effect on advertisers.  His work has helped move the industry toward standards and cooperation.  After visiting us in Austin a few weeks ago and meeting with our technology team, Alex said, “Having firsthand experience reviewing the state of the art in ad network traffic management, I was impressed with the level of technical sophistication the team exhibits and I was impressed with the directions they are going, Click Forensics has played a leadership role in helping the online advertising community to monitor quality of clicks on ads, including identification of invalid clicks. I look forward to continuing to work with the team.” In additional to Dr. Tuzhilin, we have also added Dr. William Wright, the Chief Scientist at Paypal.  Dr. Wright, a Ph.D. in cognitive science, is an artificial intelligence expert who has built numerous analytical and predictive systems over the past twenty years, including the Falcon Credit Card Fraud Detection System at HNC, the Advanced Fraud Screen system at CyberSource, and numerous adversarial modeling systems for the U.S. military.  After spending time with our team, William concluded, “Click Forensics has built a strong team of developers using very advanced machine learning and data mining techniques to detect fraud and measure traffic quality, they are pioneering a new area of fraud detection and I’m finding it satisfying to work closely with them on leveraging lessons from my past experience combating credit card and banking fraud.” One out of every five employees at Click Forensics hold a Ph.D.  Adding the expertise of Alex and William dramatically enhances our ability to meet our goal of providing the state of the art approach to traffic quality management.  I appreciate their contributions and look forward to benefiting from their knowledge in the future. Tom Cuthbert

Building on a Foundation of Success: IAB Guidelines

Over the past week four major players in the online media space have announced accreditation to the Interactive Advertising Bureau’s Click Measurement Guidelines.  This list includes Yahoo!, Google, Microsoft and Business.com.  I wanted to take a moment and explore why you should care about this development and what accreditation means for advertisers. The IAB is a publisher-focused organization that has led the process to develop click measurement guidelines.  The task force is made up of thirty or so companies representing the online advertising community.  Click Forensics has been a member since day one and participated in every step of the process. There are three main benefits for advertisers and conversely, three concerns advertisers need to keep in mind associated with the entire process.  First, the benefits; IAB Accreditation Represents a Commitment The process to become accredited to the IAB guidelines is time consuming and certainly not free.  At Click Forensics, we have first hand knowledge of this and can assure you that any company that takes time and spends the money to become accredited is committed to their customers.  The level of detail the auditors go in to is amazing.  Our community is fortunate to have auditors that have demonstrated a deep commitment to both the development of the process and the implementation of the guidelines. IAB Accreditation Demonstrates Leadership The IAB established a gating period to allow member companies and others to become accredited to the guidelines.  The companies mentioned above were the first to announce compliance.  This is important because it represents a sense of urgency among these four that enhances the urgency for others.  As an advertiser, you should reward these leaders with business.  They were first out of the gate and in my book that demonstrates leadership. IAB Accreditation Means Better Quality Traffic The IAB Guidelines are a lengthy narrative of “best practices” and rules in delivering quality traffic to advertisers.  While it is not intended to be a complete list, it serves as a firm foundation and includes practical steps to help ensure advertisers get what they pay for.  By working with an accredited ad provider, advertisers will be assured that the clicks they are buying have met the guidelines established by the industry.  This is a good thing and an excellent first step. While we applaud the efforts of the IAB, Media Rating Council and member companies who participated in this process, there are things advertisers need to keep in mind.  There was a great deal of discussion and debate during the nearly three years of meetings it took to develop these guidelines.  In that process, there were a lot of valuable and important items that fell to the floor.  This is a good start, not a perfect process.  Keep in mind the following; IAB Accreditation is a “Moment in Time” Process The process for an ad provider to become accredited is a long one.  The auditor is invited in for a pre-assessment then the actual audit begins.  At the end of the process accreditation is awarded.  The problem is there is no mechanism for ongoing compliance.  When we buy gas at the gas station there is a meter that is routinely calibrated to ensure that when we fill our tank with 20 gallons of gasoline, we get 20 gallons.  This approach is not taken nor addressed in the guidelines.  While an annual audit is suggested in the guidelines, it is still important for advertisers to be monitoring their campaigns and holding the ad providers feet to the fire for every click. IAB Accreditation Does Not Cover Everything The 27 page Guideline document is quite comprehensive.  Our task force worked hard to ensure that both the guidelines are made clear and that the standard for measurement is defined.  However, when you consider that the dominant constituency in this process was multibillion-dollar ad providers, you might imagine not everything met their liking.  A few examples of chaff that hit the threshing room floor included:

Click ID – Each click should have a unique identifier so investigations can be “apples to apples” Persistent Cookie – It’s important that ad providers can identify unique visitors to ensure they are billed for only once. Standards for Investigation – Advertisers deserve to feel confident that they get what they pay for.  By setting an investigation format and agreeing to a timeline, ad providers can build trust with customers. IAB Accreditation is a Roadmap There is a Japanese proverb that says, “Beginning is easy and continuing is hard”.  There is truth in this as it relates to the guidelines.  We have begun the process.  We have released guidelines that will make the world of online advertising a better place.  Now we should look to leadership to take the next step and continue what we have begun.  The current guidelines will serve as a roadmap to the future standards.  We need to examine the items removed, listen to the community and think of better ways to ensure advertisers get what they pay for in the future.  The roadmap has been built.  Now we need to move on. In January of 2006 as Click Forensics was just beginning as a company, I wrote the following challenge to our industry: “Define standards for what an unwanted click looks like. We believe that there are certain characteristics or attributes that are common to a large percentage of click fraud. We are working with publishers and advertisers to agree on common ground and work together to expose it. Once this is developed it should be published so that the entire community can benefit from it.” Today, over three years later, we have the cooperation of community leaders, the foundation of technical standards and the desire to continue to improve on what we have built.  I invite you, to join us as we build a future of ongoing growth and improving effectiveness by enhancing the process of online advertising.  I can assure you that both the Click Quality Council and Click Forensics will continue to support the work of the IAB and other industry organizations to work together to make our community a better place.  Let's not stop with the foundation. Tom Cuthbert

The Lens We Look Through

On a recent trip to New York, I was asked by an ad provider executive, “Which side are you on?”  At first I didn’t know what he meant, but he clarified it for me by saying that in the world of advertisers, ad networks, publishers, and ad providers, it’s important to know whose side you’re on.

When I told him that we are on the side of the advertiser he paused, thought about it and then the light bulb went off.  What’s good for the advertiser is good for our entire industry.  100% of the over $24B spent on search advertising comes from advertisers.  They pay the bills for search engines, ad providers, parked domain companies publishers as well as those of us that are working to provide tools to improve traffic quality.

Despite our diverse client base, the lens Click Forensics looks through for every decision we make is that of the advertiser.  

While Click Forensics works with a number of advertisers and agencies, we also have many clients that are ad providers.  This list includes search engines, ad networks, publishers and even parked domain companies.  The reason these companies choose to work with us is that we provide insight into the traffic quality they are selling to advertisers.  They are able to use this information to route, block, price and value the traffic to help advertisers get a better return on their ad spend.

Smart sellers look through this lens too.  Companies like Yahoo that asked advertisers how they could improve communication. The result was the cooperative development of the FACTr system enabling advertisers to communicate concerns to Yahoo.  Companies like Lycos, who realized early on that “quality matters” and began working to enhance their quality using traffic insight tools.  And industry organizations including the Click Quality Council, while made of all parts of the ecosystem, is always advertiser focused.

Advertisers drive our industry and that reality will become even clearer in the future as mobile grows more important and display begins to look like search.  We are proud of our involvement and the work of the Click Quality Council.  

 The CQC is an example of an industry organization that is not dominated by one constituency.  The over 100 members include companies from every corner and every perspective of the eco-system.  They sit around the virtual table as equals, all understanding it is the lens of the advertiser that matters. 

So as the IAB releases the Click Measurement Working Group Guidelines, it is important that they are reviewed through the lens that matters, that of the advertiser.  We should be asking, are these guidelines fair?  Do they have enough substance to improve traffic quality and help ensure advertisers get what they pay for?  Do the guidelines improve transparency and enhance trust between buyers and sellers?

I attended the IAB’s annual conference in Orlando last week and have a clear picture of their lens .  We applaud the IAB’s leadership and the work of the Media Rating Council and task force members who produced a foundational document.  Our hope now is that we can work together to build on this foundation to build trust, enhance transparency and accelerate the growth of online advertising.

Tom Cuthbert

IAB Click Measurement Guidelines

On the first day Click Forensics was formed, January 2nd, 2006, we called for standards to be developed around click measurement.  Our work and our focus has been to ensure advertisers get what they pay for.  There has been a need for standards and guidelines to help ensure this happens.  Today, the Interactive Advertising Bureau (IAB) released the highly anticipated Click Measurement Guidelines.  This document is the result of a task force that took form in September of 2006.  Click Forensics was a founding member and along with Google, Yahoo, Microsoft, LookSmart and other members of the IAB, the document is ready for public comment... your comment.Since the IAB is a publisher driven organization, we have felt a responsibility to advertisers to ensure your voice is heard throughout this process.  During the public comment phase, we want to help encourage and inject advertiser comments into the process.  It is important for you to take time and review the document.  Think about the benefits that it may have to you as a buyer and question aspects that are missing.  All ideas are good ideas and the IAB and our entire task force are eager to get feedback.  You can download a copy of the document and provide comments directly to the IAB here.  You are also welcome to provide feedback to us directly by commenting in the box below.   [contact-form]  The Guidelines are an important  foundational step for our industry.  While no one document can solve the problem of click fraud or mitigate invalid traffic, it is encouraging to us to be at this point.  We look forward to continuing to work to represent your voice and contribute toward building standards that enhance the value for online advertisers.  We are grateful to the IAB, the Media Rating Council and all the members of the task force for the hard work put in over the last few years.  Together we are making meaningful progress in building trust and making online advertising more transparent and effective. Tom Cuthbert President and Founder

Insight into the Jump in Click Fraud

This morning, Click Forensics released the Click Fraud Index numbers for Q4 2008.  The overall rate jumped to 17.1%.  This means that across our community of advertiser data, we find that one out of every six clicks are invalid and not worth paying for.  There were three factors that drove the increase. [caption id="attachment_303" align="alignright" width="300" caption="Source: Click Fraud Index"][/caption] First, the increase lines up with past increases in Q4, somewhat of a seasonal bump.  This year however, was magnified by the economic downturn and a correlating increase in cybercrime.  I wrote about this last week. Secondly, there was a 14% increase in the botnet rate, surpassing 30% for the first time.  There have been quite a few reports from McAfee, Symantec and others noting a similar trend.  Botnet attacks are becoming more sophisticated and difficult to stop. Finally, for the first time in awhile, we saw an uptick in click farm activity.  Unfortunately, there lots of sites that pay people to click on ads.  This type of activity is difficult to catch and unfortunately, advertisers lose when this occurs. While the jump is alarming, there is a growing current of cooperation to address the problem.  At Click Forensics, we continue to work with advertisers, agencies and ad providers to build solutions to ensure advertisers get what they pay for.   Coverage of the news can be found here:

CNET

WebProNews

MediaPost

TechCrunch

New York Times 

Search Engine Land 

Search Engine Watch 

Tom

Announcing the Click Quality Council

I am pleased to announce the formation of the Click Quality Council.  Around twenty forward thinking advertisers and agencies will convene quarterly to review news, share ideas and comment on recent industry developments.  The complete list of members will be released prior to our first meeting in mid October.Why is this important?  Because developing click measurement standards is a critical initiative and something we have been working toward for a long time.  In March of this year I wrote in this blog, “We need search providers to accept responsibility and work to build an industry standard.”  That process is well underway with the IAB Click Measurement Working Group.  Yahoo!, Microsoft along with other leading companies had executives engaged and in person and actively participating at the first meeting.  This shows a strong commitment from these companies in the effort of solving this problem. I am in New York as I write this attending the MIXX and OMMA events and very pleased with the support we have been getting regarding the CQC.  The Business Week cover story made clear the risks involved in pay per click advertising.  We have been aware of those threats and continue to work full time on catching click fraud.  However, the real news is the progress being made together, as an industry, in developing standards to be enforced by independent third parties. Thanks to the advertisers and agencies that have stepped forward to help with the CQC.  I look forward to reporting our progress in the coming months. Tom Cuthbert

AdTech Update

The past couple of months have been really exciting for all of us at Click Forensics. Exhibiting at the AdTech show in San Francisco was a great success and over 500 new members have joined the Click Fraud Network.  We now have over 1,200 advertisers, agencies and search providers as part of the Network.  I thought you might be interested in some stats about our members. In the advertiser group, 8% of the members are Fortune 1000 companies and several are among the largest advertisers online.  25% of the members are in the retail space, 16% in financial services and another 11% fall into the technology category.  These vertical markets, along with others, will give us a basis to study in the coming months.  There is a clear difference in each category as to the amount of click fraud that is occurring.  Look for the Click Fraud Index to release information on this in the coming months. AdTech also was the launching point for our Click Forensics 4.0 for Enterprise™ product.  This hosted solution is geared for advertisers with over 100,000 paid clicks per month.  We have had terrific interest in this area and are proud of the product.  It is a rich reporting interface and a very complete solution for the problem of identifying unwanted clicks. Tom Cuthbert

Dr. Tuzhilin Visits Click Forensics

Click Forensics has been working with Dr. Alexander Tuzhilin from NYU to further enhance our rating engine and statistical modeling approach. Dr. Tuzhilin visited with the Click Forensics’ team in San Antonio last week. The company has a goal of producing reports with the highest degree of accuracy in the industry. [caption id="attachment_693" align="alignright" width="248" caption="Dr. Tuzhilin works with the Click Forensics executive team at the San Antonio headquarters"][/caption] Dr. Tuzhilin said, "Click Forensics has good data and this is a source of their advantage over the search engines. My role is to work with them to refine the scoring methodology to improve accuracy. Their approach is to incorporate as much data as possible to improve accuracy. The search providers simply don't have enough data to have the most accurate approach." The work of Dr. Tuzhilin has helped Click Forensics build a road map for the future.  We appreciate his insight and expertise and look forward to working with him for years to come.

The Founding of the Click Fraud Network

  The problem of unwanted clicks is a real problem.  Publications from the Wall St. Journal to Inc. Magazine to Barron’s have discussed and debated this issue in great detail over the last year.  The reality is that click fraud is not going away on its own.  The Click Fraud Network™ was formed to address this issue at the highest level.  Funded by Click Forensics™, the leader in click fraud detection, we are focused on developing an industry solution to this growing problem.  Let me take a moment to share our point of view. It’s true that there are two sides to every story.  The story of click fraud is no different.  Clearly online advertising is booming.  It has been great for everyone from mom and pop advertisers to Fortune 500 retailers to search engine providers.  Pay per click advertising is relevant, measurable and the wave of the future.  And just as the television and radio industries have gone through a maturation process, so is the case with online community.  Click fraud is a real threat to both the advertising community and the search providers.  We all want a level playing field, free from malicious attempts to beat the system.  But how do we all come together to solve this problem? Search providers like Yahoo! and Google have been busy working to protect the investments of their clients, advertisers.  Both companies generate significant revenue from pay per click advertising and we believe both companies are sincere in wanting a solution.  The problem, however, is that the search providers lack the position and the data to do an accurate audit of paid clicks.  The position should be one of outside, independent, third party.  This is the approach taken with other media such as television (Nielsen) and radio (Arbitron).  The data is lacking because to accurately determine the intent of a click, you need to have behavioral data, not just the technical data.  Meaning that what a “clicker” does on the site is just as important as the technical aspects of that click.So how should this problem be solved?  We are taking the lead on three specific initiatives: 1)  Create a community of advertisers to pool information, resources and ideas.  This is the genesis of the Click Fraud Network.  Members can discuss solutions, take advantage of free reports using our patent pending algorithm to track click fraud threat levels.  The network will publish the Click Fraud Index, a site dedicated to educating advertisers on industry trends and information.  We believe it does take a community to address the issue of click fraud. 2)  Define the industry standards for what an unwanted click looks like.  We believe that there are certain characteristics or attributes that are common to a large percentage of click fraud.  We are working with publishers and advertisers to agree on common ground and work together to expose it.  Once this is developed it should be published so that the entire community can benefit from it. 3)  Agree on a format to submit reports to search providers.  If we can improve the process of communication between the advertiser and the search provider, we believe that unwanted clicks can be identified much sooner.  This process would allow for improved identification of those trying to beat the system as well as a fair forum to be sure advertisers are getting what they pay for. Click Forensics is investing heavily into our technology, the network and the solution.  We are committed to working with the entire advertising community to leverage our resources, relationships and process to build a better future.  The answers do exist and we look forward to having you participate in our community.  Thanks for taking time to consider your participation in the Click Fraud Network.   Tom Cuthbert  President and CEO Click Forensics, Inc.