News.com reports " Click fraud rate lower than expected " based on a study by Click Forensics.
The Click Fraud Index shows that the overall, industry-wide average click fraud rate is 13.7 percent. The click fraud rate at top-tier search engines such as Google and Yahoo is even less, at 12.1 percent, the data show. The rate rises to 21.3 percent at so-called Tier 2 search providers and 29.8 percent at Tier 3 search companies, according to the Index.
Pundits including Henry Blodgett and Mark Cuban have long suggested that click fraud is rampant...approaching 30% to 50% of all clicks. Click fraud is when a web site owner clicks on ads on its own site to generate revenue for themselves, or when a company clicks on a competitors ads to drive up their costs. The claim is that they use automated software robots or pay people in third world countries to manually click on the ads.
The major search engines have sophisticated algorithms for detecting click fraud and remove it before it gets to their customers accounts. Based on my experience at AltaVista it is fairly easy to detect and disregard click fraud. You look for things like frequency of clicks per minute, number of clicks coming from the same IP address, seconds spent on the site, etc. This also explains why the Tier 1 sites have lower click fraud than the Tier 2 and 3 sites, The Tier 1 sites are more sophisticated and spend more money on click fraud detection and prevention.
Google recently settled a click fraud class action suit for $90M in advertising rebates. This settlement of $90M versus the billions of ad revenue indicates that click fraud is a much smaller problem than the alarmists have suggested. Good news for advertisers and search engines.
