Yahoo Class Action Lawsuit
Oh Snap! It seems like the shit may have hit the fan a bit for YSM / Overture today. Apparently there is a class action lawsuit that has been filled against Yahoo for participating in click fraud. I found the article in the Washington post by the way of webmaster world.
An interesting point in the article is that it seems like Yahoo would poor on the clicks when their quarterly reporting was due, which is a brilliant strategy by them…but shady as hell. It will be interesting to see how this pans out. Advertisers have been bitching for as long as I can remember about how crappy the traffic is from Yahoo and that it has only gotten worse as time goes on.
Numerous complaints about pay per click arbitrage as well as one page domain landers have been posted all up and down the overture forum at WMW. About a week or so some dude put out some 10 minute long video documenting how wrong all this stuff is…found here at youtube.com.
The funniest thing is that GrayWolf put out a how to article (actually a series) on how to do pay per click arbitrage on his blog in a three part series. I, II, III
So there you have both sides of the fence…those complaining about the practice, and those showing you how to do it. What are your thoughts on this whole mess? How do you think this will affect the future of the pay per click market and what do the engines need to do in order to stop this?
July 6th, 2006 at 9:57 pm
I just don’t think that “engines” need to stop it.
The arbitrage players are just the “bees” who find the holes in the market and making it smooth. Arbitrage is everywhere, in sport bets, in commodities market and that’s ok. It’s just how the market works imho.
Serge
July 6th, 2006 at 10:32 pm
Serge, I disagree. I think at some point the advertisors will realize that these “holes” are being filled with their money. Arbitrage I think effects the quality of the of the traffic and thus reduces the value of it, even though the prices are not going down.
I agree it is fair that it happens, and used to play the game myself, but I think the option to opt out of these sites either by a true yahoo search only option or negative domain filtering is the answer.
July 7th, 2006 at 8:22 am
Werty, the prices will go down. It won’t last for long.
Either the advertiser splits his supreme profits with the “bee” or he’s lowering the bid. Noone will spend money on this if it doesn’t make profits.
So it’s just the matter of time for some niches IMO.
July 8th, 2006 at 11:05 pm
Serge, thanks for replying.
Well the top players are playing two markets, the lower tier ones are playing a single market… I think those playign the two have the advantage and the advertiser will see notice less than those in the single market.
I think PPC is still profitable and many businesses have grown because of the traffic, they can not afford to cut it off, but lower margins as the prices go up is a side affect that they are dealing with.
Arbitrage by definition involves a time limit so I agree with you there… I thought we would have seen less of it by now, but I am suprised how wide spread it still is. The only reason a search engine would stop allowing it is they feared they would lose customers because of it. It is profitable for all involved, except for the ones funding it…the adverisers.
Google supposedly tweaked its adwords algo to tighten down on landing page quality so we will see how that affects everything.
http://adwords.blogspot.com/2006/07/landing-page-quality-update.html