A look at the click fraud problem

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Click fraud is the act of clicking on an ad with the intention of 
falsely inflating a publisher's revenue or artificially depleting the 
budget of a competitor.
Like most crimes, it comes in degrees. On the smallest scale, a 
competitor of a pay-per-click advertiser may maliciously click on a 
competitor's ad to drive up the competitor's costs. This type of 
click fraud is fairly easily detected and actively prevented by most 
networks.
On a larger scale, fraudsters may employ real people to click on a 
pay-per-click ad. These programs, often called "paid to read/surf," 
promise members money and other rewards for clicking on ads. The 
users are committing click fraud even though they probably have no 
idea what click fraud is or the effect it has on online marketing.
Again on a larger scale, clickbots are available to for download. 
Clickbots create fraudulent clicks by following normal traffic 
patterns, making them difficult to detect.
As PPC advertising was established, search engines began to run 
advertisements not only on their own properties, but also on partner 
Web sites through syndication programs. These programs, such as 
Google's AdSense and Yahoo Search Marketing, allow publishers to post 
the engines' PPC ads on their sites. When visitors click on the ads, 
the publishers receive a commission, a portion of the fee the 
advertiser pays to the engine.
The more clicks that a publisher generates, the more commissions it 
earns. Therein lies the motivation for creating fraudulent clicks.
Determining the scope of click fraud is difficult. ClickForensics, a 
third-party provider of click-traffic auditing for advertisers, 
estimated click fraud at 13.7 percent of all clicks. If these numbers 
are accurate, that would come to $1.09 billion that the search 
engines received from click fraud revenue alone.
If that weren't enough, this figure is likely far lower than reality 
because these tools can only "see" post-click data and activities, 
missing half of the action. Click auditing firms have access only to 
their own users' data and rely on often faulty advertiser input.
For these and other reasons, it is difficult for a true figure to be 
revealed without one source monitoring a majority of traffic.
Counting click fraud isn't the solution, though. The solution is in 
detecting and preventing click fraud, which can be accomplished only 
by PPC networks. They are the only ones that can see the 
advertisement as it is being displayed and clicked on, and the only 
ones that can prevent publishers from earning commissions on 
fraudulent clicks.

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