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Click fraud is a common form of fraud that victimizes pay per click advertisers on the internet. The term refers to a person, or sometimes a script or robot, who clicks on ads in order to generate revenue or to damage an advertiser, but has no legitimate interest in the offer being promoted.The motivation behind click fraud is purely for financial benefits.

It can be as small scale as a first time web master clicking the contextual ads on his website, or a large multi-national organization running scripts and hiring workers to click on advertisements. In other instances, it may be competing companies clicking on advertisements in the search engines in order to drive up the advertising expenses of their competition. In nearly all cases, the motivation for click fraud falls under one of the following reasons:

• Internet publishers wanting to generate revenue for themselves by fraudulently clicking on advertisements, or encouraging others to click on ads when they visit the website.
• Internet advertisers wanting to cause financial harm to competitors by intentionally clicking on their advertisements and driving up the cost of advertising.
• Ignorance or misapprehension. Newcomers and young individuals are unaware of the damage they are causing to advertisers when they click on an advertisement they are actually not interested in. They don’t realize that the sponsors have to pay out of their pockets for each click. Sponsors have a lot of competitors and usually pay 0.20$ - 1$ for one click. If all these clicks don’t convert into customers who really are interested in the website or product, false clicks could eventually drive them out of business.
• Support or charity. Online surfers who like a certain website sometimes feel the need to give back to the owner of the website. They do that by clicking advertisements on that particular page in belief they are helping out the webmaster but in fact are harming the advertiser and his budget.
• In rare cases, the advertising company themselves may be involved in click fraud to drive up their own revenue. This type of fraud is usually exclusive to small time ad networks, and generally isn’t a problem if you are advertising with a reputable company.

Where Click Fraud Occurs

The majority of click fraud occurs on websites that display contextual advertisements such as Google Adsense. The reasons for this are simple enough to figure out. The owner of the website gets paid every time that someone clicks on one of his ads. People realize that they can make quite a bit of money if they can find a way to get a large number of clicks to their advertisements. Click fraud can also occur on the search results pages in the major search engines. This form of click fraud is usually someone who is trying to do financial damage to their competitors. In other cases, click fraud may occur across large networks of websites. These are underground ad clicking networks who commit click fraud on a large scale. The overwhelming majority of click fraud occurs on publishers websites, and not in the search engines themselves. There is much more of a financial motivation when publishers can be paid for having people click on their advertisements.

Accepting Click Fraud As Part Of The Business

Advertising networks have made drastic improvements to prevent click fraud over the years, and continuously improve security measures on an ongoing basis, click fraud still exists, and if you are an internet advertiser, you have to expect it to happen to you. While it is going to happen on occasion, there are some things you can do to minimize the risk of it happening to you:

• Only advertise on reputable search networks. Google, Yahoo, Microsoft and other companies have extensive click fraud prevention methods in place. Many smaller networks don’t have any protection in place, therefore exposing you to a much larger amount of risk.
• If you advertise on the contextual networks, keep a close eye on your clicks, conversions, and where your ads are being displayed. The larger networks all have advanced targeting options in place that allow you to monitor where your clicks are coming from. Keep a close eye on this, and if you suspect fraud, pull your advertisements from those websites.
• Plan for it. It’s estimated that between 2% to over 35% of all clicks on the internet are fraudulent. No one knows for sure, but you need to plan for it. A good rule of thumb on the larger networks is to plan for 15% of your budget to be lost due to click fraud.
• Use click fraud prevention software. There are countless programs on the market built specifically to help advertisers detect click fraud. If you think that you are losing money to click fraud, then investing in one of these programs is probably a smart idea.
• Report it if you think it’s happening to you. If you’re experiencing click fraud, report it to the advertising network. In many cases if the advertising network discovers that you are receiving fraudulent clicks, they will offer you a refund and help you to put a stop to the fraud.

Conclusion

As an internet advertiser you need to be aware of the risks that click fraud presents to your business. You also need to understand that preventing 100% of click fraud is impossible, and that it’s a part of the business that you will need to learn to plan for. While click fraud is probably going to happen to you at some point, there are ways that you can minimize your risks. Keep a close eye on all of your clicks and conversions. If you suspect fraud pull your advertisement, and let the network know that you suspect foul play. Click fraud is a serious issue, but if you are smart about it, you can drastically reduce the impact that it has on your business. Even with the problems presented, studies show that pay per click advertising is still one of the best ways to advertise your business, because it allows for extremely detailed tracking of ad performance and overall return on investment.