Service drains competitor's Adwords budget • Hacker News Board

Re: Service drains competitor's Adwords budget

#11

Post by at-fates-hands » Fri, Jul 25, 2014, 11:04 PM UTC

I remember seeing a lot of scripts that did the same thing back in the early 2000's. Back then people were hijacking servers and then using proxies to hide their IP addresses. Back then, you could either use it to increase your own ad revenue, or have them click on your competitors ads so yours would show sooner.

Either way, this is why I tend to advise my clients to stay away from any paid advertising on the internet. It's a total sham. Either you get lucky and get some traffic with zero conversions, or your budget is wasted by someone using fraud.

Re: Service drains competitor's Adwords budget

#12

Post by dangrossman » Fri, Jul 25, 2014, 11:15 PM UTC

jusben1369 wrote: post #5

opendais wrote: post #3

I do wonder since he is using a gmail account if it is a honeytrap. That seems like a very, very dumb thing to do if one's objective is to defraud Google. His entire client list will be accessible through them.

Does he really defraud Google? They're still getting paid.

They get paid for another month, or maybe a few, until the advertiser sees that their ads now cost more than the revenue they bring in, as the fake/purchased clicks don't ever buy the company's products or services. At that point logic dictates that they cancel their ads with Google. Google would have earned that bit of money either way, but now they've lost all the future revenues from that business.

If you dig into almost any AdWords account and make a custom report that includes the "invalid clicks" column, you'll see that they already don't charge advertisers for a very large percentage of ad clicks. I have an "invalid activity" credit in my billing statement just about every month, which is an automatic refund for potentially fraudulent clicks that weren't detected immediately. You don't generally have to ask for the refunds, it's in their best interest to cancel those clicks and keep advertisers' ROI positive so they continue paying in future months.

Re: Service drains competitor's Adwords budget

#13

Post by spullara » Fri, Jul 25, 2014, 11:28 PM UTC

johnvschmitt wrote: post #8

As opposed to how VC's drain competitor's adwords budgets? Meaning, this is too often how I see competitive bids going over time: 1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin. 2) Your competition gets in, & has similar price/costs, & bids $11 on the ad. 3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in busines…

Like open source developers stealing the money of commercial software vendors?

Re: Service drains competitor's Adwords budget

#14

Post by opendais » Fri, Jul 25, 2014, 11:46 PM UTC

johnvschmitt wrote: post #10

opendais wrote: post #9

Earlier quoted context omitted.

There is a difference between actively and maliciously targeting adwords to destroy people's money and healthy competition b/t pools of capital/businesses. You are engaging in false equivalence.

I'm not saying that the VC-backed company is intentionally or maliciously poisoning the healthy profit of the competition. I'm saying that it's an unintentional byproduct of the otherwise naturally healthy approach to "grow first, profit later". Just like, I'm about to release a free game in the app market, no IAP, no cost, as I'm generous. But, that can & does have unintended consequences in the ecosystem to make it…

Fair enough but by bringing it up in a thread about someone with a botnet screwing people over...its pretty reasonable to conclude that is what you meant.

Re: Service drains competitor's Adwords budget

#15

Post by jfoster » Sat, Jul 26, 2014, 12:01 AM UTC

johnvschmitt wrote: post #8

As opposed to how VC's drain competitor's adwords budgets? Meaning, this is too often how I see competitive bids going over time: 1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin. 2) Your competition gets in, & has similar price/costs, & bids $11 on the ad. 3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in busines…

I think the effect that you describe can happen. You seem to be suggesting that it's controversial, but I don't see it. If they want to make a loss and pay that much, good luck to them. They must be doing it with the expectation that it will somehow be worth it in the long-run, and it's their money (or the VC's money) that they're playing with.

Re: Service drains competitor's Adwords budget

#16

Post by notahacker » Sat, Jul 26, 2014, 1:04 AM UTC

opendais wrote: post #14

johnvschmitt wrote: post #10

Earlier quoted context omitted.

I'm not saying that the VC-backed company is intentionally or maliciously poisoning the healthy profit of the competition. I'm saying that it's an unintentional byproduct of the otherwise naturally healthy approach to "grow first, profit later". Just like, I'm about to release a free game in the app market, no IAP, no cost, as I'm generous. But, that can & does have unintended consequences in the ecosystem to make it…

Fair enough but by bringing it up in a thread about someone with a botnet screwing people over...its pretty reasonable to conclude that is what you meant.

Whilst most VCs aren't doing anything anywhere near as patently unethical as funding a Clickfraud-as-a-Service app, if they're "disrupting" competition through little more than willingness to make negative profit margins on each sale, that competition ends up just as screwed if their pockets aren't as deep. Either if way they're spending money on making you poorer rather than themselves richer in the short term it's not unreasonable to point fingers.

Admittedly, incumbent monopolists are usually far more cynical in this regard, but they're also more likely to get slapped by regulators for this kind of behaviour.

Re: Service drains competitor's Adwords budget

#17

Post by for_i_in_range » Sat, Jul 26, 2014, 1:09 AM UTC

johnvschmitt wrote: post #8

As opposed to how VC's drain competitor's adwords budgets? Meaning, this is too often how I see competitive bids going over time: 1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin. 2) Your competition gets in, & has similar price/costs, & bids $11 on the ad. 3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in busines…

There's this thing called CTR. If you can get that up and be more innovative than your VC-backed competitors, you can stop whining on Hacker News on Friday nights. Just sayin.

Re: Service drains competitor's Adwords budget

#18

Post by crdoconnor » Sat, Jul 26, 2014, 1:11 AM UTC

jfoster wrote: post #15

johnvschmitt wrote: post #8

As opposed to how VC's drain competitor's adwords budgets? Meaning, this is too often how I see competitive bids going over time: 1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin. 2) Your competition gets in, & has similar price/costs, & bids $11 on the ad. 3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in busines…

I think the effect that you describe can happen. You seem to be suggesting that it's controversial, but I don't see it. If they want to make a loss and pay that much, good luck to them. They must be doing it with the expectation that it will somehow be worth it in the long-run, and it's their money (or the VC's money) that they're playing with.

They're doing it with the expectation that deeper pockets can substitute for innovative / better products.

Sometimes they're right.

Re: Service drains competitor's Adwords budget

#19

Post by nitrogen » Sat, Jul 26, 2014, 2:17 AM UTC

for_i_in_range wrote: post #17

johnvschmitt wrote: post #8

As opposed to how VC's drain competitor's adwords budgets? Meaning, this is too often how I see competitive bids going over time: 1) You sell a widget for $100, and it costs you $50, so you spend $10 on the ad, & make $40 margin. 2) Your competition gets in, & has similar price/costs, & bids $11 on the ad. 3) After a few iterations, you both bid $49.50 for the ad, making near zero (positive) margins & stay in busines…

There's this thing called CTR. If you can get that up and be more innovative than your VC-backed competitors, you can stop whining on Hacker News on Friday nights. Just sayin.

Though the HN guidelines discourage it, I thought I'd let you know why I downvoted your comment: "stop whining" and "just sayin".

Re: Service drains competitor's Adwords budget

#20

Post by chrischen » Sat, Jul 26, 2014, 3:19 AM UTC

I'm almost certain my business was targeted by this. I even got an anonymous email from the competitors threatening me to stop the ads, at the same time mysterious click traffic drained my adwords budget. Is anyone out there an expert in this field that could help me investigate?