Advertising "Click Fraud" Rampant Online?

"Pay-per-click," by far the most popular form of online advertising, recently came under fire as charges of rampant "click fraud" gather steam on the Web.

Google and Yahoo! earn the majority of their money through sales of advertising to tens-of-thousands of online merchants, companies, and professional.

In fact, some estimate that 99% of all Google's revenue comes from advertising sales. Unfortunately, allegations of click fraud may well rain on Google's otherwise sunny parade and cause a whole scale revamping of current online advertising practices.

Pay-per-click advertising does exactly what it sounds: advertisers pay for each click on their ad, usually mixed in among search engine results or displayed on relevant websites.

"Click fraud" occurs when, for whatever reason, an ad gets clicked by someone or something (usually an automated "bot" that simulates clicks) with no intention of ever buying anything from the advertiser.

The sole intention of click fraud is to simply drain an advertiser's budget and leave them with nothing to show but an empty wallet.

Who commits click fraud?

Usually an unscrupulous competitor who wants to break a rival's bank, online "vandals" who get their kicks causing other people grief, or search engine advertising affiliates who want to earn fat commissions by racking up piles of bogus clicks.

Regardless of who does it or why, click fraud appears to be a growing problem search engines hope stays under their advertising clients' radar.

This problem isn't exactly news to the search engine giants.

In fact, on page 60 of their 3rd quarter Report for 2004, Google admits that they have "regularly refunded revenue" to advertisers that was "attributed to click-through fraud."

Google further states that if they don't find a way to deal with this problem "these types of fraudulent activities could hurt our brand."

Bottom line for Google and Yahoo! (which owns Overture, the Web's largest pay-per-click search engine): as word of click fraud spreads across the Web, they must act quickly to calm the nerves of advertisers who could well abandon them over doubts about the veracity of their advertising charges.

The search engines all claim to carry measures that identify and detect click fraud, but details about how they do it and to what extent remain sketchy.

They claim revealing details about security would compromise their efforts and give the perpetrators a leg up on circumventing their defenses.

This sounds good, but affords little comfort to advertisers who feel caught between losing out on their best traffic sources and paying for advertising that won't result in revenue.

One way to protect your business against click fraud is to closely monitor your website statistics.

Look for an unusually high number or regular pattern of clicks from the same IP address.

If you need help, enlist the aid of your hosting provider to aid you in spotting suspicious trends in your website traffic.

Also, a number of services such as ClickSentinel.com have sprung up online to help advertisers spot and quickly analyze and compile the data necessary to effectively dispute fraudulent click charges with the search engines.