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I don't doubt that click-fraud in Google advertising is common, maybe so common that it represents the majority of clicks. But I also believe that fraud causes

I don't doubt that click-fraud in Google advertising is common, maybe so common that it represents the majority of clicks. But I also believe that fraud causes a discount in the price over time. After all, very few people really buy clicks; what they're buying, however indirectly, are conversions: people that buy something, or sign up for their newsletter, or whatever. And when they set an ad budget, they do so with an empirical idea of the conversions/click, which will vary from context to context. Fraud drives down conversions/click, which in turn drives down the amount of money one is willing to spend on a click, which in turn reduces demand and drives down the price/click of advertising.

ksk 10y ago
>Fraud drives down conversions/click, which in turn drives down the amount of money one is willing to spend on a click, which in turn reduces demand and drives down the price/click of advertising. In an ideal world, yes, but it can also cause businesses to spend _more_ on pointless things like redesigning their ads, buying more ads for other keywords, etc. Then there is the fact of new businesses popping up as other businesses cease to exist. Information asymmetry ensures that not everyone knows about click-fraud, whether it is currently affecting them, how to avoid it, etc. The real world is too messy.
- vannevar 10y ago
  As someone who lost a few hundred dollars several years ago to Google ad click fraud, I agree. The market is not perfectly efficient, and people are still hurt by friction as the price goes down.