http://www.nytimes.com/2006/09/23/technology/23click.html?pagewanted=1&ei=5070&en=d53f58f7e87516f9&ex=1176177600

note: I believe that you may need a NYtimes online account to view this article, since it dates back to Sept. 2006.

Although advertising is a key component in any business’ strategy to attract new customers, there are some forms of advertisements that may be financially detrimental to a company. Obviously, it takes money to advertise, but usually the influx of customers and their money will create a balance, or preferably a surplus. But as the article above shows, pay-per-click advertising may cost companies money. The advertisement links are being clicked, and the companies are being charged, but sales are not generated. The reason for this catastrophe: click fraud.

Click fraud is essentially the act of clicking a paid link without being a prospective customer. These clicks can be generated by an automated computer program, or by people who actually spend time to click the same links over and over. Click Forensics, a consulting firm, estimates that 14% of total clicks are fraudulent. Though at first it may not seem like a significant loss, one must be aware of the figures of online paid search advertisements – about $7 billion in the fiscal year 2006. This means that some companies can lose up to tens of thousands of dollars in a matter of months due to click fraud.

However, pay-per-click advertising has not always been so troublesome. Mr. Burton, a business owner said that he used to make money with pay-per-click advertising, when it wasn’t such an expensive method. This is understandable, because even if there were some click fraud in the past, the sheer cost of pay-per-click advertising was lower and thus the impact of a little fraud was negligible. But nowadays click fraud is becoming rampant. All competitors on the same list of paid links want to be at the top, and so they resort to spam clicking links to push companies past their budget. This motive is a sad one indeed, but in such a cutthroat world of advertising of today, it is not a surprise.

What can be done about this? Unfortunately, not much. The internet is so vast that it is not easy to track every possible click, and it is not easy to come up with a solution to doing so. Big companies with a lot of money can afford to pay for some measure of fraud such as programs or even a professional pay-per-click management company. But for many smaller companies there is only so much that they can do.