Understanding Click Fraud & How to Avoid it

"The Billion Dollar Mess"

Click fraud has become what some refer to as “a billion dollar mess.” It is difficult to detect, monitor, and control. Plus, it is part of a multi-billion dollar industry. The Internet has always been known as a haven for the unscrupulous due to its anonymity. If remained unchecked, this form of fraud will wreck havoc on the Internet world we know today. What exactly is click fraud? And, how can you avoid it?

By definition, click fraud is the intentional clicking on paid advertising spots throughout the web. This intentional clicking can be the result of a person, computer program, or an automated script that simulates a human clicking. You have seen these paid advertisements, they are hard to miss. The term for this online form of paid advertising is known as Pay Per Click (or PPC for short.) This industry is growing at astounding rates and some analysts claim that it accounts for 90% of all Internet sales. In fact, Google reportedly receives an estimated 99% of their ad revenue from PPC. With 2005 revenue of $6.1 billion, that is a huge chunk.

PPC, ideally, is supposed to split the revenues (from the clicks) between the publisher (search engine) and advertiser. More simply, every time someone (or something) clicks on a paid advertisement, both the advertiser and publisher are to receive revenue. This revenue sharing is how and why click fraud started.

Click fraud, therefore, is the result of this fastest growing segment of the advertising industry (PPC.) Instead of an interested party clicking on an ad for further information, ads are being clicked on for a variety of reasons such as:
1) Harming the competition (by increasing ad expenditures) and/or
2) Purposely increasing one’s ad revenues.

Who are the perpetrators of click fraud?

1) On the smallest scale, it can be as simple as one person sitting in front of their home computer. They set up a website, and then place an advertisement on it. They, in turn, become a publisher. That same person then fraudulently clicks on the ad, thereby getting paid. This is the hardest form of click fraud to find since it is on such a small scale.