iProspect recently did a study which showed that the majority of people who respond to graphical ads do so via a latent action other than a click on the ad, like a search for the brand. Any such brand lift or indirect effect of advertising on content sites has generally been ignored by most advertisers because search driven ad networks want search to get credit for that conversion.

As these ad networks & search companies become more ubiquitous (going so far as creating a web browser that replace the address bar with a search box) search will get credit for many conversions that were going to happen even if those search companies did not exist.

As ignorant ad dollars have flowed online to this precision trackable environment, it is driving an increase in click fraud

Reggie Davis, vice president of network quality for Yahoo, says he believes that Google’s click fraud rate of less than 1 percent is not accurate. “We’ve disclosed that our rate, before hiring Click Forensics, was between 12 and 15 percent,” a number that includes invalid clicks, or traffic that an advertiser should not pay for, he said. According to Outsell Inc., an information industry research group, 13 percent of the total of online advertising clicks were fraudulent last year.

Even campaigns that were doing well are finding more garbage appear overnight. About a month or so ago I cleaned out some of the scammy sites from my content targeted ads. Some of which

• stole over $1,000 from me
• with abnormally high clickthrough rates
• were PageRank 2 "search engines" that I never heard of, and
• consisted of no technology other than a Google search box, and a $5 logo

I usually am more mindful of tracking that stuff, but was not recently, and when Google ramped up my traffic on the content network they simply ramped up the fraud.

In this increasingly competitive environment (where, if you have scale, you need a full time employee to manage fraud) many businesses are shifting from pay per click advertising to search engine optimization, as shown on Google Insights for Search.

Not only are businesses shifting to organic search, but so are customers. Hitwise reported:

Hitwise data indicate that the share of search traffic coming from paid listings is decreasing at the expense of organic traffic. In the four weeks to May 9, 2009, 7.25% of search engine traffic to All Categories of websites was from paid clicks. This compares to 9.84% in the same four week period in 2008 - representing a 26% decline in the share of paid clicks.

What caused such a sharp fall off? In part, some businesses stopped advertising on their brand related keywords.

0.83% of searches for "home depot" went to a paid listing in the four weeks to May 9, 2009 compared to 39.06% in 2008. Similarly, "usaa" saw 0% of clicks on paid listings in the last four weeks compared to 28.88% in the same period in 2008.

In the past we mentioned that this brand bidding was typically a money waster.

How is Google responding to this cutback in brand spending? They are now allowing branded keywords to trigger ads in 190+ more countries AND they announced that they are going to allow advertisers to use brands in the ad copy in the US next month!!!

The hope is to increase Google's revenues by

• cashing in on your branding efforts by making your brand more liquid
• forcing brands to buying traffic they would have got for free anyway

The first group of ads that will be able to qualify for this new ad channel are:

• Ads which use the term in a descriptive or generic way, and not in reference to the trademark owner or the goods or services corresponding to the trademark term.
• Ads which use the trademark in a nominative manner to refer to the trademark or its owner, specifically:
  • Resale of the trademarked goods or services: The advertiser's site must sell (or clearly facilitate the sale of) the goods or services corresponding to a trademark term. The landing page of the ad must clearly demonstrate that a user is able to purchase the goods or services corresponding to a trademark from the advertiser.
  • Sale of components, replacement parts or compatible products corresponding to a trademark: The advertiser’s site must sell (or clearly facilitate the sale of) the components, replacement parts or compatible products relating to the goods or services of the trademark. The advertiser’s landing page must clearly demonstrate that a user is able to purchase the components, parts or compatible products corresponding to the trademark term from the advertiser.
  • Informational sites: The primary purpose of the advertiser’s site must be to provide non-competitive and informative details about the goods or services corresponding to the trademark term. Additionally, the advertiser may not sell or facilitate the sale of the goods or services of a competitor of the trademark owner.

As a brand owner how can you possibly police all the shady ads that will be delivered on the Google content network? You can't. But you can try to outbid everyone else for the brand equity you already built, and hope that your ad appears. And that whole "informational sites" category is quite blurry. Watching how it evolves will reveal some surprises.

Trademark owners are generally unimpressed with the direction:

“I know of several companies spending millions of dollars a year in payments to Google to make sure that their company is the very first sponsored link” on searches for their own names, said Terrence Ross, a partner at Gibson Dunn, who represented American Airlines in its suit against Google. “It certainly smacks of a protection racket.”
...
“It is inappropriate for Google to sell my trademark for a profit,” [Ms. Spangenberg] said. “It really misleads our customers and our potential customers.”

Eric Schmidt stated "brands are how you sort out the cesspool," and yet his company is willfully misdirecting consumers searching for brands.

That says a lot about their business strategy.