Click fraud is the use of illegitimate ways to make money from a Pay Per Click program. The fraudster would either click on the advertisements on their own sites themselves or use automated programs to click on the advertisement.
It is estimated that around 14.6 percent of all pay per clicks on ads are being done using fraudulent ways. This has cost $800 million in the year 2005 alone.
Yahoo’s intelligent click through protection system has found and has not billed advertisers for billions of clicks. This includes those resulting from click fraud and clicks that were improperly billed. Yahoo also informed that they are very confident in their internal system’s ability to detect fraudulent clicks. However, it did mention that their customers and the industry have many questions and concerns about click fraud, especially given the litigation that Yahoo and other search engines have been engaged in over the past few years.
It should be noted that Yahoo has already been filed and sued for charging its pay per click advertisers for their premium ads that were being showed on illegal sites which use spyware pop-up ads to collect personal data or intrude into the browsers computer.
A Microsoft representative recently released a statement that said: “Microsoft recognizes that invalid clicks, which include clicks sometimes referred to as ‘click fraud,’ are a serious issue for pay-per-click advertising.”
However, search engine companies have refused to publish information on the amount of fraud clicks happening on search advertising. A survey by the Click Fraud Network has informed that the percentage of click fraud rate is around 14 percent. Other similar surveys have put the percentage as 20 to 30 percentages.
In another survey of 407 advertisers, it was found that 27 percent said they have already reduced or stopped their pay-per-click advertising budget, including 16 percent who have stopped spending on PPC completely. Almost seventy-five percent of the surveyed said they have already experienced click fraud. 7 percent of the advertisers said that they have requested a refund and had posted an average of $9,507.