Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Why the Google Adsense Conspiracy Doesn't Make Sense

An alleged former Google (NASDAQ: GOOG  )   (NASDAQ: GOOGL  ) employee recently caused pandemonium when he made two separate anonymous claims on a website known as Pastebin, saying that Google systematically bans hundreds of high-earning Web publishers from its AdSense program.

According to the leaker, publishers who made more than $5,000 per month through AdSense were arbitrarily banned from the program right before their monthly checks were paid, and their checks were reversed to Google's coffers.

Not surprisingly, many aggrieved Web publishers, also recently axed from the AdSense program, were up in arms and "confirmed" the claims, which were, collectively, christened the ''Google AdSense Conspiracy.''

It's no secret that Google's AdSense revenue has declined sharply since 2012, when Google began shutting down many sites on the AdSense program. According to the leaker, this was also the year Google allegedly began the practice. The company also completed another purge of ad clients in 2013 to get rid of abusive toolbar products. Google's AdSense program brought in a revenue of about $12.7 billion in fiscal 2013.

Source: ZDNet

One-trick pony
The first question that immediately comes to mind is whether these claims are genuine. The second is why Google would want to interfere with its gravy train. Major tech companies such as Apple (NASDAQ: AAPL  ) and Microsoft  (NASDAQ: MSFT  ) exhibit a high degree of diversification in their businesses. For instance, Apple has six separate divisions, each segment large enough to comfortably survive on its own as a separate company if Apple decided to spin it off.

Source: ZDNet

Google began to show some semblance of diversification when it acquired Motorola Mobility in 2012.

Source: ZDNet

With the Motorola spinoff, Google is essentially back to where it started, with more than 90% of revenue coming from advertising. It would, therefore, be imprudent for the company to interfere with its bread and butter, notwithstanding the fact that it enjoys a near-monopoly in online advertising.

Punitive action
In an official blog, Google openly admitted that some of the actions it takes against web publishers are a bit extreme. The search giant routinely suspends or even disables publisher accounts for invalid activity. Quite often, the afflicted publishers are at a loss to explain why their accounts get suspended, or even how to fix it.

However, Google also dismissed the leaker's claims and denied that such a conspiracy exists. According to the company, its decision to ban rogue publishers from the AdSense program was necessary to combat the illegal practice of click fraud.

With click fraud, a computer program or web user clicks on an ad with the sole intent of generating a charge per click without any interest in the target of the ad's link. Google found it necessary to weed out the bad actors who engaged in such practices, and also those that unfairly game the system by using dubious means to attract traffic to their websites, such as buying lots of low-quality traffic instead of earning visitors organically.

Google says that the exercise was intended to clean up the quality of the display network. The company has more than 2 million publishers on its display network, and it seems inevitable that a few hundred, perhaps even thousands, will try to abuse the system.

Why the claims are untrue
The claims resonated strongly with many publishers who have been banned from Google's display network without having been given a clue as to why they got banned. With so many publishers on its network, Google's staff cannot manually monitor all websites to check for publishers gaming the system. Google has two tiers of publishers, just as the leaker claimed. Large publishers' accounts are managed by Google's staff, while smaller publishers get just the AdSense interface.

The reason so many banned publishers feel that Google cut them off unfairly is because Google does not explain the methods it uses to detect sites that have fake traffic. Doing this would reveal the methods it uses to detect click fraud, and enable fraudsters to change tactics to compensate.

Some banned publishers are sometimes entirely innocent. The fake click game has become so complicated that some websites end up being used as pivot points by fraudsters without their owners ever knowing anything about it. Apparently, Google has not developed systems that are advanced enough to detect such incidents when they occur, which leaves publishers exposed.

Regarding the publishers' paychecks being redirected to Google once their sites are banned -- that, according to Google, simply is not true. Google has said that whenever a site gets banned from AdSense, both the publisher's income, as well as Google's cut (usually half of what the publisher earns) are refunded in full to the affected advertisers.

Foolish bottom line
Google chose to take a temporary hit to clean up its display network and prevent advertisers from being scammed by unscrupulous publishers.

Google's top line is expanding at a healthy pace -- 19% during the last quarter. It seems counter-intuitive and highly improbable that the company would engage in the unethical practices described by the leaker and risk alienating its core customers in the process.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2985093, ~/Articles/ArticleHandler.aspx, 9/1/2015 10:28:15 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Joseph Gacinga

Today's Market

updated 1 hour ago Sponsored by:
DOW 16,058.35 -469.68 -2.84%
S&P 500 1,913.85 -58.33 -2.96%
NASD 4,636.11 -140.40 -2.94%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/1/2015 3:59 PM
GOOG $597.79 Down -20.46 -3.31%
Google (C shares) CAPS Rating: ****
GOOGL $629.56 Down -18.26 -2.82%
Google (A shares) CAPS Rating: ****
AAPL $107.72 Down -5.04 -4.47%
Apple CAPS Rating: ****