A new type of cyberfraud is on the rise - click fraud. Google and Yahoo are among the leading providers of advertising links, usually targeted to the audience based on the contents of a page (see below for example of Google’s AdSense/AdWords ads.) Newsweek has an article about the rise of "click fraud" and how Google and Yahoo are struggling to adjust the definition of "good-faith click," their policies, and methods of preventing this new type of fraud.

One of the major goals for the Internet advertisers is to figure out how to measure "real" clicks and filter out scripts or other software or devices that simulate clicks and run the bill for some innocent advertiser. Because advertisers pay based on number of clicks, there are many instances where an advertiser pays a premium dollar for highly sought keyword (can be as much as $12 per click for ‘refinance,’ for example) only to find that the clicks did not result in any meaningful traffic or leads. Google, Yahoo, and others are afraid that this rise in fraud may scare advertisers off to other media such as TV or print.

Based on stories of small advertisers or web site operators who spend $100 on an AdWords budget and see their budget disappear in dubious clicks, it seems like Google and Yahoo should get serious about a major revamp on how they detect fraudulent clicks and protect their advertisers who pay per click. For example, one of the methods Google uses currently is to track the IP address of the "clicker" and then match this against other clicks from this IP within certain intervals. I suspect that this information is also included in some "expected" clicks algorithm that should try to "guess" whether the clicks was real or not (by real I mean ‘good-faith’ click with the purpose of obtaining more information about the good/service offered.) 

Another way AdWords is abused is for competitors to "click" on each other’s advertisements, trying to "zero" each other’s advertising balances. With increased methods and tactics of ad-clicking, this starts to look like a cyber-war between tech-savvy competitors where Google (or Yahoo, or other companies) are providing the weapons and the battlefield. The increased sophistication of the fraudsters is demonstrated by how they use zombie computers or worms all over the Internet to generate false "clicks" so that Google’s fraud detection technology can be fooled as the traffic would seem to come from different and geographically separated machines.

How big is this problem? It is big. According to Newsweek it is a $9B per year market and if the rise in click fraud continues, it is likely that this pie will shrink dramatically.