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The online advertising market is growing explosively, to the tune of a 15.7 percent share of Korea's entire advertising market. But as the market grows, so too is the grumbling of Internet advertisers. A number of small-scale online business owners have established the Online Advertisers Association and are seeking to lodge a suit against major portals and ad agencies. They claim that online advertising effects are poor compared to the costs, citing severe damage from "click fraud" above all else.
¡ß Small businesses complain of 'click fraud'
The core of online advertising is search ads, and the typical model for search ads is the so-called "cost per click", or CPC, scheme. For example, when an Internet user types the term "flower delivery" into a portal search engine and clicks on a link in the search results to a company's website, the company is charged a fee for that click.
The problem is the CPC model is vulnerable to what is known as click fraud, which involves fraudulently clicking on ad links to deliberately increase an advertiser's costs. In one such case, Jongno district police in February arrested a tradesman who allegedly made bogus clicks to jack up a rival company's costs. Small-scale online advertisers say click fraud affects a considerable number of online search ads.
The portals and ad agencies don't filter clicks very well, some advertisers claim. "The CPC-based advertising scheme may appear ideal, but click fraud can be infinitely fabricated, making the ad effect futile," says a member of the Online Advertisers Association. "Advertising service providers should admit that they cannot completely block the abuse with technology and come up with consumer-oriented refund policies."
But portals and agencies maintain they have a globally-verified click fraud prevention system and are working to continuously improve it. Ad agency Overture, which boasts a 70 percent market share of Korea's online ad market, employs several methods to prevent fraud. Its Click Filter Report shows how many ad clicks translated into actual transactions, and its "continental cut-off" service blocks clicks from places such as Africa where there's little need for Korean ads.
¡ß Similar disputes abroad
The dispute over click fraud has echoes overseas. U.S. online survey agency Click Forensics said in February that click fraud took up 28.3 percent of the online ad market including on Google and Yahoo in last year's fourth quarter. Major U.S. portals claimed the actual rate was only around 10 percent but the controversy didn't die down easily.
The continued dispute at home and abroad is because online ad effects are not as evident as they were in the early years of Internet commerce. An e-business site administrator says, "A search ad easily made W1 billion in weekly sales four or five years ago but the effect is offset by cut-throat competition these days."
Another reason is limited access to information. Advertisers want the IP addresses of ad clickers revealed but portals and ad firms are reluctant to do so out of privacy concerns. "Google, as a foreign firm, doesn't disclose any ad-related data. A state-approved third party agency could in this case step in for verification purposes," says Korea Internet Contents United president Lee Jung-min.
(englishnews@chosun.com )
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