Click Fraud ? Threatening the Internet Economy

One of the most popular forms of Internet advertising is pay-per-click (PPC). Merchants place ads with search engines like Google or MSN and the ad appears whenever someone enters a relevant search.

If the ad is clicked the merchant pays a fee ? anywhere from 5 cents to $100. It?s a fabulous idea ? ad campaigns targeted at your most likely customers.

It?s such a fabulous idea that Google, the king of PPC, grossed $1.24 billion in the first 3 months of this year ? most of it from advertising revenue.

Watch out, though. There?s trouble in PPC land. The flip side to PPC is a phenomenon called ?click fraud? or ?click spam.?

There are two types of click fraud. The first type occurs when someone maliciously clicks on your PPC ad to drive up your advertising costs. It could be a competitor or a disgruntled former employee.

The second type of fraud involves clicking on affiliate ads to generate income. Affiliate ads are placed on third party web sites and each time someone clicks on an affiliate ad the web site owner receives a commission.

Industry observers believe that affiliate click fraud is the biggest problem of the two. Either way, the result is the same ? advertising budget depletion with little gain for the merchant.

Either type of click fraud can be accomplished with the use of automated ?robots? or by hiring an army of workers. The India Times reported in 2004 that a ?growing number of housewives, college graduates, and even working professionals across metropolitan cities are rushing to click paid Internet ads to make $100 to $200 per month.?

How serious is the problem? It?s hard to judge exactly, but click fraud is commonly estimated at 20% to 35% of all PPC ad campaigns.

A recently launched lawsuit alleges that Google is aware of the magnitude of click fraud and does not do enough to alert advertisers of the problem.

The class action suit launched by Click Defence says that "Google has an inherent conflict of interest in preventing click fraud since it derives the same amount of income from each fraudulent click as it does from each legitimate click."

The $10 million lawsuit quotes Google Chief Financial Officer George Reyes as saying that click fraud is ?the biggest threat to the Internet economy.?

Click Defense is a Colorado company specializing in click fraud detection. They claim that they themselves became a victim of click fraud when they advertised with Google?s Adwords program this year.

They are seeking damages for breach of contract, negligence, unjust enrichment, and unfair business practices.

A Google spokesman said that the case is unmerited and that Google will defend itself ?vigorously.?

Copyright 2005 by Ross MacIver

This article may be redistributed freely on the Internet or in ezines as long as the resource box and hyperlinks remain intact.

Ross MacIver is the director of Best Online Content. We provide quality content for your web site and offer a full range of design and SEO services.

More PPC Advertising Articles

Google for Resellers: Leveling the Resell Playing Field
With so many people trying to make money on the web and so many products being sold with resell and master resell rights, it's a wonder anyone can make any money at all at it!Indeed, most people don't.Why?Sometimes it's because people get in on the tail end of the product being sold and start trying to resell it just as the original creator decides to start giving it away for free.

How to Save Money on the Adwords Network
Over the years I have had many accounts with Adwords, spending a small fortune with the Adwords service. So naturally I have picked up many cost saving tricks.

Independent Search Engine & Directory Network (ISEDN) - Breaking News!
Watch out for a shift in the pay-per-click (PPC) industry, happening right now! This shift is finally going to give smaller search engines and directories the ability to tap into the PPC market, currently monopolized by the big guns online (Google, Yahoo & MSN). They will attain this lofty goal by banding together and delivering paid ad placements on a mass community scale for a fraction of the cost.

Run a Profitable Google Adwords Pay Per Click Campaign
Google and Yahoo-Overture control over 90% of the PPC market and as such you should seriously consider using them if you want the maximum possible exposure to targeted web traffic through PPC advertising .Sign up for the Google Adwords program is free but they require a $5 USD deposit before they will start to display your ad copy.

Secret Reasons Why Some Businesses Can Afford to Bid Ridiculous, Amounts On Pay-Per-Click Keywords
The other day I was talking to one of my consulting clients on the phone about the return on investment from his Google Adwords campaign. And, he asked me a question that I get several times a week from clients and other online marketers.

Google Adwords Guide II - Why Use Negative Keywords
When you are running a Google AdWords campaign, it is important to include negative keywords. You should consider the use of negative keywords if some of the keywords or keyword phrases in your campaign are broad and generic.

The AdSense Formula for Making Money
I often get asked what the secret is to making money with Google's AdSense program. This often comes from people who are dreaming of setting up websites chock full of high-paying keywords for particular niche subjects and then sitting back and watching the money roll in.

How Do You Make Money From Google Adwords?
Can you really make money from this?Late 2003, I think was the first time an ebook popped up that claimed that one could make money from Google Adwords.The main method that was revealed involved combining Google Adwords and the Clickbank affiliate program, to make money, online, everyday almost on autopilot.

The Sensible Way To Earn Money With Google AdSense!
Dear friends,Google AdSense has rapidly gained a status of an independent online business model. Many average people with a little knowledge of HTML are earning a fortune with AdSense.

AdWords Work: They Really Do!
In 2003 I was accepted by Google into their AdSense program. Without a doubt, it has been a profitable relationship for both parties as they continuously serve up high paying content related ads and we share in the spoils.