Yahoo has been a problem to optimize for, both organic search and in another way, in paid search.  I have noted many instances where Yahoo results have been inconsistant, difficult to measure, full of spam, and sexed up.  

To it’s credit, Yahoo has tried to fix some of that by applying an update recently, and Andre Broder was recruited (from IBM) to fix some of that problem (I think).  I’ve even talked about how PPC can steal traffic from your organic search results.

And, other bloggers such as AdHurl have commented on spam  issues while BizPodcasting has looked at the viral aspects of spam and BusinessBlogWire talks about how to fight blog comment spam (which I’ve also received several of recently). MarketingBlub came up with a solution to the spam issue and Webmetricsguru (me) talked about hosted doorway pages as a red flag to search engines that your pages are spam.

But now we have to think about Yahoo as inflating it’s own profit from PPC without actually delivering anything, according to Bill Brenner of searchsecurity.com and quotes Spyware Hunter Benjamin Edelman as having proof of this.

Harvard University researcher and spyware hunter Benjamin Edelman has been critical of Yahoo’s relationship with adware distributors in the past. In his blog last August, he posted several examples of what he calls syndication fraud — cases where Yahoo placed advertisers’ ads into spyware programs and charged advertisers for resulting clicks.

….His latest research outlines how spyware "completely fakes a click — causing Yahoo to charge an advertiser a ‘pay-per-click’ fee, even though no user actually clicked on any pay-per-click link." This, he said, is an example of click fraud.

..Edelman said he has direct proof of click fraud and uses his latest blog entry to present a long list of evidence: videos, screenshots and packet logs "showing exactly what happened and who’s responsible." 

You can see this How Yahoo Funds Spyware and the whole thing is layed out here.

Edelman’s solution: In my (his view) view, Yahoo — and other PPC networks facing similar problems — should begin by developing and distributing clear rules for who may syndicate their ads. Last year a Yahoo spokesperson told eWeek that "Overture screens its distribution partners to make sure they gain user permission before downloading software." "Permission" may sound clear-cut, but in practice it’s a surprisingly imprecise concept. What about "permission" obtained under false pretenses — like promising to fix a user’s clock or to improve security, but actually adding advertising software?

What about "permission" obtained from a user at a kids site? What about syndicators that buy traffic from advertising software installed without consent, but that don’t make such software of their own? PPC networks need rules that speak to these situations — presumably forbidding all these methods of trickery and deception.

I think it’s time for Yahoo, Google and MSN (the big three) to clean up their polices and make advertising more transparent.