Service drains competitor's Adwords budget
krebsonsecurity.com
krebsonsecurity.com
Meaning, this is too often how I see competitive bids going over time:
1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin.
2) Your competition gets in, & has similar price/costs, & bids $11 on the ad.
3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in business.
4) But, VC-backed businesses enter that market. The VC (rightly) tells the startup that they aren't going to make profit in the first year anyway, but they MUST show user-growth. And, here's the VC money to pay for user growth.
5) So, the VC-backed startup bids the ads up to $100+, far above profitability for legit bootstrapped or existing profitable companies.
That's how the ad budgets can be drained in the ecosystem.
I know a lot of investors here that don't want to take the blame for this impact and may downvote me, but I do see this happening for many keywords over time. I don't need to be popular on this issue.
You are engaging in false equivalence.
I'm saying that it's an unintentional byproduct of the otherwise naturally healthy approach to "grow first, profit later". Just like, I'm about to release a free game in the app market, no IAP, no cost, as I'm generous. But, that can & does have unintended consequences in the ecosystem to make it harder for those who do need to profit from their similar work.
Admittedly, incumbent monopolists are usually far more cynical in this regard, but they're also more likely to get slapped by regulators for this kind of behaviour.
I was just trying to spread the word to other startups that the auction-based paid advertising model might work initially, but gets really tough to sustain as it naturally evolves.
In a non-auction based method, the evolution to "zero margin" may be a slower process. Yet those non-auction methods of paid advertising (billboards, magazine, TV) are just horrible for tracking & closing the loop as to be obsolete, and are often too expensive for startups to even enter anyway.
The best advertising is to realize that your customer service/support function is not an cost, but rather an investment in word-of-mouth advertising. Investing in great customer service is often the best modern marketing.
I'm curious where you think this is the case? Remember, your arbitrary definition of appropriate might not be the same as others'. I probably won't go either way, as I think anti-trust laws in general are not appropriate, but that's a different discussion.
Moreover, may I ask what your moral argument is for such laws? From the looks of it, most people would say: "If you have a lot of money, then you're not allowed to use it to your advantage if we perceive it as predatory". With such vague terms (unless you can make it more explicit), and it will most certainly end up having a favoritist bureaucracy grow around it.
Sometimes they're right.
Life is unfair. You can either be in denial about that or learn to live with it.
Restaurant enters the space, decides to compete on price to build up audience to rake in the profits later on, giddily watches a competitor or two go out of business. Few months later another restaurant enters the same space, see the beginning of the paragraph.
There are scripts out there that scan the whole internet for servers that accept HTTP and HTTPS requests to proxy. Those scripts are set up to simultaneously HTTP(S) GET tons of doubleclick.net etc. URLs to get the site owner kicked off Google Ads. I can imagine the black hat hackers selling their services for anyone willing to hurt a competitor's income.
Obviously my server detects those attacks and blacklists them right away, but I was shocked at the ease of carrying that kind of attack. One day I really need to blog about all the shocking stuff going on online that I learned about by running a public service.
From affiliate marketing to PPC ad networks, etc., the implementing systems tend to be built as naively as possible. When you survey the implementations you quickly realize that the designers assume there are no bad actors in the known universe. Literally no thought was given to fraud.
They generally tend to be wide open to abuse, and frequently through simple URL manipulation/automation and standard HTML.
What's amazing is that billions of dollars are at stake, requiring little more than mouse-clicks. So, given that clicks are so insanely easy to simulate, you would think that these systems would be very robust; yet they are frequently the opposite. But, beyond the naivete, it is not entirely the networks' fault. They are locked in a never-ending game of cat-and-mouse with people who have very little to lose and much to gain.
This was submitted through their form to contact them about click fraud, and I never heard back. Those advertisers paid for thousands of fake clicks, and I ended up with a decent chunk of change.
I can't understand how they missed it. My clicks are level for years, and then during a couple of days, they increase 50-100x normal levels. This should have been a huge red flag.
Source: Dearth of legal action from competitors or DOJ. And make no mistake -- their competitors are litigious as fuck.
Re the absence of lawsuits, I'm not sure that is positive proof of anything.
Create a few accounts and see how far you get to $100.
Your comment actually shows a clear example, of how actually threatening legal action makes someone come to their senses, whereas any level of technical measures just gamified the situation.
This is just a case where we can collectively enter an arms race for technical solutions, or just use a bit of law and live in a sane society where this isn't on the competitive menu.
They don't even realize how much they are hurting Google in that process.
Those advertisers paid for thousands of fake clicks,
and I ended up with a decent chunk of change.
The site gets lots of visits from random IPs, all searching for the same odd phrase, such as 'Female Impotence' in this case.
Google adwords/adsense didn't win by being a monopoly, they won because they were simply the best. Then they became a monopoly.
That seems like a very, very dumb thing to do if one's objective is to defraud Google. His entire client list will be accessible through them.
If you dig into almost any AdWords account and make a custom report that includes the "invalid clicks" column, you'll see that they already don't charge advertisers for a very large percentage of ad clicks. I have an "invalid activity" credit in my billing statement just about every month, which is an automatic refund for potentially fraudulent clicks that weren't detected immediately. You don't generally have to ask for the refunds, it's in their best interest to cancel those clicks and keep advertisers' ROI positive so they continue paying in future months.
These particular hackers obviously have a service that Google's Invalid Clicks detection cannot pick up and it's successfully depleting advertisers' budgets -- hence the positive reviews they have.
Google insisted that if there are any fraudulent clicks, they are detected automatically and we are not be charged for them. But it was essentially impossible to know if that's true. I guess it doesn't really matter: at the end of the day you tally up your metrics and AdWords is either worth it or not. Still a very frustrating experience.
Either way, this is why I tend to advise my clients to stay away from any paid advertising on the internet. It's a total sham. Either you get lucky and get some traffic with zero conversions, or your budget is wasted by someone using fraud.