Harvard researcher Ben Edelman on Tuesday released a report tying Yahoo Inc. to adware vendors that he claimed were displaying pop-up advertising that appeared to commit click fraud.
The online report, "The Spyware -- Click-Fraud Connection -- and Yahoo's Role Revisited," traces what appears to be click fraud that starts with the adware vendor and eventually leads to Yahoo. In between are online marketing companies that sell advertising.
Click fraud is a term used to describe a practice that looks to overcharge advertisers who pay each time a Web site visitor clicks on their ads. Click fraud is usually committed by competitors trying to boost the advertising cost of rivals, or by unscrupulous Web site operators. Clicks can be inflated either by people clicking on the link, or by an automated system.
Yahoo sells pay-per-click ads on its Web portal, and also displays ads through syndication agreements with partners. It's the latter, according to Edelman, that has gotten Yahoo in trouble.
Oftentimes, Yahoo partners sell the portal's ads to other marketing firms, who in turn sell them to someone else until eventually they appear on adware.
Adware is software that's downloaded onto people's computers without them knowing it. The software is usually installed when people lured by spam visit a malicious Web site, or when they download software that secretly contains adware. Adware often tracks people's Web travels and delivers pop-up ads related to the content of a visited Web site.
Yahoo was not immediately available to discuss the matter, but the company did issue a prepared statement.
"Yahoo! takes the quality of its search ad distribution network very seriously," the company said via e-mail. "We are carefully investigating the claims that have been raised. Once we determine the sources of these implementations, we will take appropriate action, which could include terminating a feed, ending a relationship with a partner or taking legal action against an offending entity."
Edelman claims his research shows that pop-up screens containing Yahoo ads automatically register a click with Yahoo's marketing arm Overture as soon as the ad appears, irrespective of whether the viewer clicked on a link. Assuming the click is registered in Overture, Yahoo would then share revenue with its advertising partner, who would share revenue with its partner, etc.
As proof, Edelman includes in the report video that shows the ads in action, and logs of the traffic that links the bogus click to Overture. The logs were obtained using a packet logger that provides a snapshot of all the traffic flowing through Edelman's ethernet cable, which connects his computer to the Internet.
"Packet logs and the video together are overwhelming proof," Edelman said.
In using the packet logger, Edelman said, "I can see what happened. I can see the traffic was a click fraud."
Edelman lists four examples in his report. The adware vendors are 180solutions, Look2me/ Ad-w-a-r-e and Qklinkserver.com/Srch-results.com. Advertisers listed in the trails between Yahoo and adware vendors include Intermix Sirsearch, Searchdistribution.net, Improvingyourlooks.com, Ditto.com, Nbcsearch and ExactSearch.
180solutions denied any wrongdoing, saying that people receiving its advertising opt-in to the service in order to receive premium content at no charge.
"At no time are clicks 'faked' - the user is simply sent advertising based on keywords from his/her browser session," the company said in a statement. "180solutions is committed to working diligently with all advertising partners to ensure they are in compliance with codes of conduct and best practices.
"Additionally, any third party provider that we work with is required to provide documentation that they have the right to redistribute listings through our network."
Being linked in a chain does not indicate any wrongdoing on the part of an organization, since advertising displayed in adware can be several companies removed from the original seller. Yahoo, therefore, may not know that its pay-per-click ad is showing up on adware.
Nevertheless, the portal's syndicated ads have become a favorite among adware vendors, who are finding it increasingly difficult to sell their services directly to advertisers, Edelman said.
"Yahoo has become the advertiser of last resort for spyware vendors," said Edelman, who defines spyware as any software that tracks a person's Web travels without permission.
Edelman reported in August that Yahoo ads had appeared in adware, prompting the portal to cancel distribution contracts with some vendors, the researcher said. Despite those steps, Yahoo needs to get more aggressive, because vendors delivering adware are now hiding in complex advertising channels such as pay per click.
"Yahoo cannot expect these fraudulent techniques to disappear," the researcher said.
Yahoo in November joined other Internet heavyweights, including America Online, in backing a plan to certify software as adware and spyware free. Dubbed the Truste Download Program, it's essentially a white list of software that meets a number of criteria. The Washington, D.C.-based nonprofit Truste administers the program.
Edelman, however, recommeds that Yahoo goes beyond Truste and limit its exposure to potentially bad practices by prohibiting partners from re-syndicating ads, or implementing more aggressive testing methods to find abuse.