Wired has an intriguing article on the state of online advertising and the use of click spam to defraud advertisers.
Pay-per-click is the fastest-growing segment of all advertising, reports the Interactive Advertising Bureau. Last year, Yahoo! alone ran more than 250 million individual listings, according to Michael Egan, the company’s search-marketing director of content strategy. Yahoo! doesn’t break out PPC earnings separately in its financial statements, but Goldman Sachs analyst Anthony Noto believes that keyword advertising accounted for about half of the company’s estimated $3.7 billion in revenue for 2005. PPC is even more lucrative for Google. According to Noto, Google will end 2005 with $6.1 billion in revenue. About 99 percent of that revenue comes from keyword ads (over 56 percent from AdWords, according to the company’s most recent quarterly financial statement, and 43 percent from AdSense), making Google a bigger recipient of ad dollars than any television network or newspaper chain. All of which is to say that little blue text links, a type of advertising that barely existed five years ago, are poised to become the single most important form of marketing in the US — unless click fraud ruins it.