Many of you were likely bombarded this weekend by multiple emails from Google AdWords announcing the details of the $90 million click fraud settlement in Arkansas. To be clear, this is not a new settlement – it is the same one that was announced last March. The emails you are now getting are part of Google’s obligations in the settlement.
As I noted when this settlement was originally announced, I believe that the only people who truly win from this settlement are Google and the plaintiffs’ lawyers who filed the class action. I am not going to rehash my arguments in this post, but I do think there additional points worth commenting on.
It’s Worse Than I Thought
First, I was wrong about the value of this suit to the law firm filing it. Perhaps naively, I wrote in March: “My guess is that a $90 million lawsuit will probably return at least $1-2 million to the law firm that filed the suit.” When you look at the actual terms of the settlement, you’ll see this whammy: “Class counsel [the law firm] intends to seek a maximum of 33 and 1/3 percent of the settlement fund, or $30 million, in attorneys fees and expenses in this case. Under the settlement, Google has agreed that it will not oppose an award of up to $30 million to class counsel.” Translation: this $90 million settlement could quickly be whittled down to $60 million if the court agrees with the plaintiff lawyers’ demands.
You may be asking yourself: why would Google agree terms that on their face seem outlandish? Well, consider this potential scenario: Google and the plaintiffs’ lawyers are discussing a settlement. The plaintiffs lawyers give Google a choice: you can fight us over attorneys’ fees and we’ll demand that you actually pay out $90 million to plaintiffs, or you can let us collect our $30 million and we’ll craft a settlement that makes it difficult if not impossible for plaintiffs to actually collect meaningful damages from you (for example, by giving Google sole determination of click fraud, but putting the onus on the plaintiffs to research potential click fraud, by giving advertising credits instead of cash, and by limiting claims to a two month window). If you were Google, which route would you take?
Should You Opt Out?
As with any class action lawsuit, you have the option to “opt out” of the class. This basically means that you are rejecting the terms of lawsuit and you are opting to individually sue Google instead. Generally speaking, this is an option in name only. After all, how many marketers actually have the resources to sue Google (it will likely cost six figures to try such a case).
So my sense is that unless you believe you have millions of dollars of unresolved click fraud claims, the risk-return ratio for opting-out isn’t in your favor. And if you do have millions of dollars of click fraud, you are probably a big enough Google advertiser such that you should leverage your internal Google contacts first to try to get a refund before resorting to a legal action.
How Can You File a Good Claim?
OK, so let’s say that you aren’t going to opt-out of the suit and you do believe you were victimized by click fraud between 2002 and today. What can you do to make sure you maximize the value of your potential claim. Here are a few steps:
1. File during the filing period. Your claim must be received between June 19 and August 4th – if its late, you get nothing, no exceptions.
2. Consider retaining a click fraud firm that is able to analyze your log files. My sense is that most click fraud occurs in one of two ways: an irregular number of clicks on a particular keyword, or an irregular number of clicks from a particular IP address or referring URL. A company like Clicklab or Authenticlick can do this for you, although if you have a lot of clicks to analyze, the prices can get somewhat steep. Remember this point though: the key here is that you are analyzing historical clicks, not future clicks.
3. When in doubt, include questionable clicks in your claim. If you have the slightest inkling that some clicks could be click fraud, make sure you add these into your claim. There is no advantage (at least as far as I can tell) to being selective about your claim.
4. Plan ahead for the next lawsuit. It’s possible that this settlement might not even end up being validated by the court. There is another class action that was filed in California, and the Arkansas court is holding a hearing in July “to consider whether the settlement is fair, reasonable and adequate.” In the meantime, you owe it to yourself to sign up for a click fraud service (like the ones mentioned above) and to start collecting evidence for the future. There is currently at least one free service (The Click Fraud Network) that may be worth using while you deciding whether to make a purchase of an advanced service or not (note, however, that this service is for future clicks only, not historical clicks).
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