Microsoft is asking this question in its campaign to win advertising dollars from Google. The campaign is built around a recent study by Web analytics specialist, WebSideStory. The study compares major search engines/portals where pay-per-click advertising is utilized. Surprisingly enough, Google comes in dead last among major search engines in terms of the percentage of conversions derived from its pay-per-click ads.

The possible explanations are pretty interesting. WebSideStory commentary on the study suggests that portals (where rich content and hand-holding are prevalent) appeal to a more purchase-hungry demographic. Google, on the other hand, is built upon a foundation of simplicity and speed; perhaps this audience is less inclined to buy. More likely, however, is the rising prevalence of click fraud: pay-per-click's dirty little secret (which isn't so secret anymore).

For those who don't know about click fraud, check out the Wikipedia entry for a quick explanation. Mark Cuban has a pretty good take on how big the problem is becoming. Intuitively, my hunch is that Google takes the biggest hit from click fraud because of its size and reputation...almost the same way that Microsoft is the largest target for viruses/worms from would-be hackers. Apple fans have always bragged that they're better at virus protection than Microsoft; not much of a claim, though, when the overwhelming majority of viruses are written for Windows--not MacOS.

What does all of this mean? Things are clearly heading toward the pay-per-acquisition model instead of the pay-per-click model. Google appears to be testing something along these lines that would limit click fraud severely. I have a hundred questions in terms of how this would be implemented, but I love the direction.