Why Small Businesses Should Be Concerned About Click Fraud - and What They Can Do to Help Minimize It

With an estimated 20 percent of total Pay-Per-Click sales having been lost to click fraud last year, small business advertisers should be aware that they could easily lose big if they don't take steps to identify click fraud in their campaigns.

The Internet advertising industry is booming, with the search engine advertising segment growing more than 55 percent last year alone. However, as with any industry, Internet advertising is plagued by its own set of complicated and hard-to-fix problems, among which click fraud ranks at the top of the list costing small business advertisers their hard-won budgets and threatening the fidelity of the industry as a whole.

How many clicks does it take to get to the center of the click fraud problem? Well, according to recent reports millions. That's just a rough estimate of the number of worthless clicks that advertisers are aware of but can do nothing about. It's been estimated that as much as 20 percent of total sales have been lost to click fraudsters. As a result the average pay-per-click now costs 45 cents, up from 40 cents in 2003 and 30 cents in 2002, according to financial analysts. In an over $9 billion industry where some bids reach as high as $12 that holds much significance.

Click fraud is not some new, high-tech crime. It began early in the history of the mainstream Internet through the use of programs that automatically surf websites to increase traffic figures. However, click fraud can be undertaken by humans as well as by software programs, intentionally and unintentionally. People are often the tools used to carry out click fraud scams. While the most common form of click fraud occurs through using online bots to click on advertisers' links or search engine spiders accidentally clicking on a link, a growing form of click fraud is executed by rogue affiliates of search engines such as Google Adwords and Yahoo Overture who host the major search engines' sponsored ads on their website and use low-wage, unqualified workers from various parts of the world, specifically India and Asia, to click on these text links and other ads so they can collect the profits. And even another form of fraud is perpetuated by advertisers' competitors clicking repeatedly on ads with the aims of depleting the competitor's advertising budget and essentially deleting their link.

The major search engine players such as Google (Google AdWords) and Yahoo! (Overture), have taken their own measures to help combat this growing problem. For good reason they are fearful that as a result of click fraud, advertisers will be dissuaded from pay-per-click advertising. Still advertisers, especially small business advertisers, must take individual measures to lower the ratio of dollars spent on fraudulent clicks. With some small businesses only having a budget of a few hundred dollars, a well-placed click fraud campaign can wipe out that small budget in a day. However, although there are numerous software programs and companies which claim they can help to locate and prevent click fraud, it is still nearly impossible for even the most advanced programs to combat specific forms of click fraud, specifically, affiliate and competitor fraud.