AdSense arbitrage

You may have noticed little Google ads on this blog, placed through their AdSense program. A snippet of JavaScript on this page is executed by your browser, which then loads the appropriate text ads from a Google server. The ads are targeted by key word and the placement of the ads is sold in a key word auction to advertisers.

I put the ads up mainly out of curiosity -- as you know, I am fascinated by all things Google :-)

What I've learned recently is that certain key words are very valuable. If you are reading this blog and see ads related to, e.g., hedge funds, derivatives, FX trading, volatility, etc., you can send me a dollar just by clicking! Please click early and often -- you'll be transferring funds from rapacious luxocrats to a humble physics professor ;-)

Bruce Schneier has a nice article on click fraud (Google's greatest weakness at the moment) in Wired News. Note I am not encouraging click fraud -- my readers really are interested in stochastic volatility and Black-Scholes :-)

Google's $6 billion-a-year advertising business is at risk because it can't be sure that anyone is looking at its ads. The problem is called click fraud, and it comes in two basic flavors...

But the overarching problem is both hard to solve and important: How do you tell if there's an actual person sitting in front of a computer screen? How do you tell that the person is paying attention, hasn't automated his responses, and isn't being assisted by friends? Authentication systems are big business, whether based on something you know (passwords), something you have (tokens) or something you are (biometrics). But none of those systems can secure you against someone who walks away and lets another person sit down at the keyboard, or a computer that's infected with a Trojan.