Yahoo Admits Problem Clicks Reach 15%

    March 22, 2007

Now that Yahoo CEO Terry Semel has gushed we expect to see “some very exciting numbers” in Q1 from Yahoo, in part due to the launch of Panama, the company has decided it’s time to tackle click fraud head-on.

Yahoo has today announced the promotion of Reggie Davis to a new position within the company – vice president of marketplace quality. Basically, his role will be to reduce the amount of click fraud on the Yahoo search network and improve relations with advertisers, or what CNET is calling a “click fraud czar.”

Along with the move comes details from Yahoo on the “discard rate” – similar to Google’s “invalid clicks” – it sees on the Yahoo Search Marketing platform.

Davis said the “discard rate,” or percentage of clicks that for some reason or another were problematic and thus the advertiser is not billed, averaged between 12 percent and 15 percent at Yahoo. The rate of fraudulent clicks, those designed only to run up charges to the advertiser, is a “subset” of that total discard rate, he said.

Assuming we’re comparing apples to apples, this puts Yahoo above Google’s “less than 10%” invalid click rate. If Yahoo wants to have any chance in catching Google, it needs a competitive platform – check – and it can’t afford to let Google convince the world they have click fraud under control, while Yahoo doesn’t. With today’s appointment, Yahoo’s somewhat following Google’s lead in their public efforts to reduce click fraud paranoia, now let’s see if they can actually bring the rate down.