The impact of this fraud is something which online advertisers obviously take very seriously. Although Google, Yahoo!, their partners and other companies who host paid advertising receive a fee every time a user clicks on the ads, it is the advertisers who pay for these clicks - valid or not.
Click fraud is a double edged sword of temptation. On one side, website owners can generate revenue by clicking ads that they themselves host, and on the other side advertisers can deplete competitors advertising budgets by clicking on competitors ads. Naughty naughty!
But what does this fraud cost?
A recent study of over 400 online advertisers released by Outsell provided an estimated figure of $800 billion for the last year. This, according to Click Forensics President Tom Cuthbert, is resulting in companies "loosing sleep at night".
This is demonstrated by the fact Click Forensics antifraud network has reported that over 900 advertisers have joined within the past three months.
Other findings reported by Click Forensics show that while the larger online advertisers, Google and Yahoo!, may have the resources to separate click fraud from legitimate clicks, their level of fraudulent click is still very high. The Click Forensics report demonstrates that around 12.8% of the clicks both companies received were fraudulent, which is an increase from 12.1% reported last quarter.
Neither of these companies have spoken directly about their monitoring processes, much to the chagrin of concerned advertisers. Google CE Eric Schmidt has however commented that while click fraud continues it is not becoming widespread.
He states that "Smart people are trying to break the law, but we have even smarter people trying to prevent it."
Certainly a strong statement but only time will tell if Google's new initiative, cost-per-action advertising (only charging advertisers for clicks that produce a sale or lead), stems the steady and growing flow of click fraud.
