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Facebook Faces Fraud Allegations

Facebook's revenue target for 2009 is reportedly $550 million, nearly twice last year's $280 million; a large part of that revenue derives from cost-per-click (CPC) advertising from small advertisers. But recent news and complaints about click fraud of up to 100% has made these advertisers angry.

Complaints (on WickedFire) revolve around massive click fraud and Facebook's relative indifference to the problem. These are not the usual click fraud complaints that advertisers have leveled against search engines for years, such as bots falsifying the number of clicks that never convert to purchases or other action. In those cases, the advertisers see the clicks.

Now advertisers are saying that Facebook is recording and charging for clicks that don’t exist at all, even from bots. Tracking software (Prosper202 or raw Apache logs) shows numbers that are 20-100% lower than what Facebook is recording.

The posts on WickedFire indicate that Facebook does not officially acknowledge the problem, let alone give out refunds. They do, however, ask advertisers to send in logs to show the discrepancy. Yet advertisers who did go to the trouble to do this aren’t getting the response they want.

One advertiser complained: "I was asked to send in my logs so I spent over an hour compiling logs over the time period in question, and they replied with their […] scripted [expletive deleted]. I was sooo […] pissed, since I took the time to do that and they churn out a 2 second response."

In a comment to the post, Facebook Brandon McCormick addressed the matter:

This is Brandon on the Facebook communications team. I wanted to chime in to make sure that our voice was part of this discussion and to clarify how we are addressing this issue. We take click quality very seriously and have a series of measures in place to detect it. We have large volumes of data to analyze click patterns and can identify suspicious activity quickly. Over the past few days, we have seen an increase in suspicious clicks. We have identified a solution which we have already begun to implement and expect will be completely rolled out by the end of today. In addition, we are identifying impacted accounts and will ensure that advertisers are credited appropriately.

In February, a study by Penn State University reported a lower click-through rate across major search sites than previously assumed.

An earlier report put click fraud rates at 17.1% in 4Q08, versus 16.6% in the same period in 2007.

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