CPS 49SGoogle: The Computer Science

Within and its Impact on Society

Shivnath Babu

Spring 2007

Auctions

• English auction

• Sealed-bid auctions– First-price– Second-price (Vickrey)

• Google:– When does Google do auctions?– What does Google use? – Why?

Development of the Pay-per-Click Advertising Model

For what exactly should advertisers pay and when?

• When the ad is being shown to the user• When the ad is being clicked by the user• When the ad has “influenced” the user in the

sense that its presentation lead to a “conversion event”

Pay-per-Click

• Two measures of the effectiveness of an advertisement:– Click-Through Rate (CTR): measures how often

visitors click on the ad. CTR= X/Y

– Conversion Rate: gives a sense of how often visitors actually act on a given ad, which is a better measure of ad’s effectiveness than the CTR measure.

Google’s Pay-per-Click Advertising Model

• Ad Rank = CPC x QualityScore• QualityScore--a measure identifying the “quality”

of the keyword and the ad combined• “The actual amount of money paid when the

user clicks on an ad is determined by the lowest cost needed to maintain the clicked ad’s position on the results page.”

Click fraud in AdWords

1. Make the competitor pay more

2. If you’re second, click on the competitor’s advertisement enough so that he will hit his budget for the day

3. If you knock the second guy out, you’ll only have to pay as much as the number three guy

The AdSense Program

• AdSense for Search (AFS): relevant ads are displayed as links sponsored by Google; links are produced using the same method as on Google.com

• AdSense for Content (AFC): ads are based on the content of the visited pages, geographical location and some other factors.

• What is a way that a publisher can cheat through AdSense?– The publisher can continue to click on an advertisement on their site

from Google in order to receive more money from Google.

Data Google Can Collect

• Click through information• When a user has visited a conversion page• Google is unable to get full access to all the clicking

activities of the visitors of the advertised website

Invalid Clicks and Google’s Definition

• Invalid clicks Vs. Fraudulent clicks• Problem with identifying fraudulent clicks:

– Was the click generated “artificially” or not and what does exactly “artificial” mean in this case?

Operational Definitions of Invalid Clicks

• Anomaly-based (or Deviation-from-the-norm-based): doesn’t look at what defines an invalid click, but rather what defines a “normal” click. Therefore, invalid clicks are those that significantly deviate from the established norms.

• Rule-based: a specified set of rules identifying invalid clicking activities; these experts define what valid and invalid are.

• Operational Definitions a double edged sword?– They cannot be fully released to the general public because unethical

users will take advantage. However, if the public doesn’t know, how do advertisers know exactly what they are being charged for?

Conclusions about Definitions of Invalid Clicks

The Fundamental Problem: Pay-Per-Click model is inherently vulnerable to click fraud, making it impossible to solve.

Possible solutions?

1. The “trust us” approach

2. Third Party Auditors