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Well first off lets discuss what click fraud is. Click fraud happens in Pay Per Click advertising when a person, computer or automated script clicks on an ad for the purpose of generating revenue without having any interest in the actual ad. Huh? Well basically someone displays your Pay Per Click ads on their website and they figure out ways of clicking on those ads, in turn generating money for themselves, without search engines realizing the clicks were fraudulent. Or to put it in even more basic terms, someone is scamming the money you are using for Pay Per Click advertising.

Well Should You Be Afraid?

Yes, you should definitely worry about click fraud, it does happen and the major pay per click search engines (Google, MSN, Yahoo) have finally admitted this. Funny, all it took was a lawsuit against Google and one against Yahoo and now they are being proactive about disclosing click fraud data.

What Are Search Engines Doing About Click Fraud?

Google recently released information about Invalid Clicks saying that less than 10% of all pay per click traffic is fraudulent. However, they state that they do know about this fraud so they refund the advertisers this money, in most cases before the advertiser is even charged for the click. Google also refunds you even if you have been charged for fraudulent clicks. Most advertisers don't know this is even happening, but if you open up your Google AdWords account and check your billing summary you might notice something on your statement that looks like this - "Adjustment – Click Quality". This is just Google's way of saying; hey we are looking out for you, here is some of your money back. However, Google also states that about .02% of click fraud does go completely undetected.

What Does This 0.2% Mean to Me?

Well do the math. If you spend $1,000 a month for 12 months this equates to $240 a year that goes to fraudulent clicks. If you spend $5,000 a month for 12 months this equates to $1,200 a year that goes to fraudulent clicks. And this is just assuming that Google really only misses .02% of all fraudulent clicks. You get the picture. Put in your yearly spend and multiply by .02% and this is an estimate of how much you are giving away to fraudulent clicks.

What Can I Do About It?

Well, you are not going to avoid click fraud all together but if you want to advertise via the Pay Per Click model you are going to have to learn to live with some fraud. There is one basic principle to help combat click fraud. Watch your traffic like a hawk. Look for sudden spikes in activity or other suspicious activity. Take full advantage of the reporting software that the Pay Per Click Engines provide and look at your reports daily. Better yet, utilize some third party reporting software or get your log files from your webmaster. If you believe you have been a victim of Click Fraud, contact your account representative immediately.

Now What?

If you don't have the time or ability to recognize click fraud, then you should think about acquiring a PPC Management and Optimization firm or specialist to look after your interests. Not only will they be able to recognize suspicious activity, they will know how and whom to report it to. On top of that they should also be able to help you achieve a better overall return on investment for your Pay Per Click campaigns.

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