The Future of Pay-per-Click

In a story that hasn't seen wide publicity, Google and Yahoo News have been sued by an online gift shop for allegedly overcharging on "pay-per-click" (PPC) advertising.

Lane's Gifts and Collectibles says in a Miller County lawsuit that the Internet companies charged it for advertising traffic not generated by bona fide customers... Lane's alleges a conspiracy in which the companies worked with one another to create an online environment that harms advertisers. The companies, it says, "have grown the Internet PPC (pay per click) advertising market while failing to disclose that they have routinely and systematically overcharged and-or overcollected for PPC advertising revenue from their customers."

In the past, Google and Yahoo have both disclosed the risk of fraudulent click-throughs. After all, who can guarantee that someone clicking on your ad isn't your competitor (trying to drive your costs up) or a bot of some kind?

Here's another real risk I haven't seen publicized: distributed zombie attacks on the PPC model and specific customers.

If the crooks controlling zombie networks so decided, they could easily blow up the PPC market by randomly clicking on advertisements -- thousands a minute. It would be extremely difficult for the ad networks to detect and then shield advertisers from the effects of random, distributed source IP addresses.

Or the zombie networks could target a specific advertiser by driving up their specific CPC costs.

Either way, the CPC business could get ugly quick.