Microsoft just filed a lawsuit in federal counrt against a group it charged with Click Fraud. This is probably just the tip of the iceberg of what might become a huge problem for the PPC industry, including web site owners and search engine companies.

The main difference between internet advertising and traditional media advertising is that on the internet companies can precisely measure how many people not only actually see the ad but are interested enough to take action (click through). Whereas in traditional media ads are priced based on impressions, on the internet the dominant model is more and more pay-per-click (PPC).

But the very characteristic of the internet that makes user behavior measureable also enables cheating of that metric. And if there is money to be made cheating, there is no way to eliminate growing hordes of cheaters. There are two basic situations that invite click fraud.

• Competitor click fraud – In this situation, disreputable marketers (or their agents) use automated programs (or low-cost people) to click through competitors’ ads. The intent is to quickly use up the competitors’ PPC marketing budgets on false clicks so that the ads won’t appear when real users are searching. (This is the situation that Microsoft is currently battling.)
• Self-inflation click fraud – Another, as disreputable, form of click fraud is when marketers have ads on their own sites (banner ads, AdSense ads, etc.) and then use automated programs or low-cost people to click through the ads. (I won’t provide free links to these thieves, but there are numerous web sites that solicit people to sign up to be clicking “mules”.)

This will continue to grow as a problem in the internet marketing world, and there is not much that we can do, other than be vigilant monitoring the metrics coming out of our web sites and placed ads, looking for anything out of the ordinary that might point to fraud. This is one of the activities that Domus provides its interactive customers. For more information, please visit our web site and contact us.