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
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
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
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
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
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.
Article Source: http://www.articlesbase.com/advertising-articles/click-fraud-threatening-the-internet-economy-281.html